NC workforce expert: Cutting aid to the unemployed may upend a shaky recovery

This Labor Day brings a paradox. On the day America celebrates its workers, federal aid is expiring for those who have lost their jobs to the pandemic.

That contrast is perhaps to be expected at a time when the labor market is a study in contradictions. Many businesses can’t find workers and many workers can’t find work, while yet others workers left jobs to pursue one in a new field. Wages are slightly up, but many sidelined workers are not coming back.

To get an assessment of what’s happening with North Carolina’s labor market, I called John Quinterno, a Chapel Hill consultant with South by North Strategies, a research group specializing in economic and social policy. Quinterno also teaches courses in regional economic and social analysis at Duke’s Sanford School of Public Policy.

Understanding the workforce these days, Quinterno said, isn’t about economics; it’s about public health. Despite much wishful thinking by government leaders and impatient employers, the pandemic is still dictating when, where and whether people work.

“Folks in Washington decided we have these vaccines now and once we vaccinate enough people the crisis will be over and everything can go back to normal,” he said. “That is not the case.”

The pandemic’s rising numbers are having a dampening effect on employment. After months of recovery, the U.S. Labor Department said Friday that the national economy added only 235,000 jobs in August – well below the 720,000 new jobs economists expected.

North Carolina’s August jobs numbers are not in yet, but the overall trend shows the state is struggling to return to pre-pandemic job levels. Payroll employment at the end of July was 48,800 – or 1 percent – below what it was in February 2020, just before COVID hit the state. When jobs that were expected to be added to meet population growth are included, the jobs gap is 130,900. At the same time in North Carolina, there are 105,400 fewer people in the labor force than there were in February 2020, a drop of 2.1 percent.

Given the rising infections caused by the delta variant and the slowdown in job creation, many Americans still need assistance, but that need is being overruled by a sense that federal relief has run its course.

“The economy is being held hostage to the pandemic. We don’t want to admit that for whatever reason,” Quinterno said. “Now we are pulling back all these supports that helped people and were generating a tremendous amount of economic stimulation.”

Two federal programs for jobless workers are ending on this Labor Day weekend. One provided assistance to self-employed people who lost work because of COVID. Another gave assistance to those unemployed for more than six months. According to Oxford Economics, the cutoff will affect more than 11 million people nationally. An estimated 8.9 million people will lose payments received under federal emergency unemployment programs. Another 2.1 million who are receiving state unemployment benefits will lose a $300 per week federal supplement.

Some conservatives think the loss of federal support will push more jobless workers to seek work, but recent studies showed that states that stopped taking the benefits saw little effect on employment.

“From a labor market perspective, we still have not undone all the damage that occurred last year,” Quinterno said. “We’ve made a lot of progress because of the support programs. Now we are pulling them all away. We are setting ourselves up for an economic slowdown.”

Extending the social safety net worked, but the economy’s health won’t stabilize until the public health crisis ends.

“I think there is still a lot of risk of the virus not being done with us and whatever economic impacts that will have,” Quinterno said. “We are potentially in for some very rude surprises as we move into the fall. We may be done with the pandemic, but the pandemic is not done with us yet.”

This story was originally published September 6, 2021 at 4:30 AM with the headline "NC workforce expert: Cutting aid to the unemployed may upend a shaky recovery."