Over the first two months of the coronavirus crisis, our labor-market cratered.
The number of employed North Carolinians dropped by 820,000, or 17 percent. Only 56.3 percent of working-aged residents were either employed or actively looking for jobs. That’s the lowest rate of labor force participation in modern times.
The next round of job numbers will probably be even more dismal. But have North Carolina’s economic woes been caused more by COVID-19 itself, or by government’s regulatory response to it? This is not a simple question to answer.
Generally speaking, the largest declines in employment across the United States occurred in the places with the highest rates of COVID deaths per capita, such as Michigan, New York, New Jersey and Massachusetts. And some of the lowest employment declines occurred in states with low COVID mortality, such as Texas and Kansas.
But there are exceptions. And it is also true that the states with the strictest lockdown measures tended to suffer higher-than-average job losses. As for the states that never enacted statewide stay-at-home orders — Arkansas, Iowa, Nebraska, North Dakota, South Dakota, Oklahoma, Utah, and Wyoming — all had lower-than-average job losses.
Let’s look more closely at North Carolina, South Carolina, and Tennessee. Their COVID death rates per million — 75, 85, and 49 respectively, as of May 25 — are far below the national average. But their regulatory approaches have been rather different.
Gov. Roy Cooper’s lockdown orders were more sweeping and are being lifted at a much slower pace. Consider a basic fact on the ground: foot traffic into businesses. According to data from Safegraph.com, all the states in our neighborhood saw declines of about half from mid-March to mid-April. Then people started leaving their homes in greater numbers to work and shop. They voted with their feet, either because their calculation of the personal risk from COVID-19 changed or they simply had to get on with their lives.
This happened in North Carolina, for example, even before Cooper began his glacially-paced reopening. Foot traffic into North Carolina businesses rose from 50 percent below the pre-COVID baseline on April 13, to 36 percent below the baseline on May 7, the day before Cooper’s Phase One went into effect. Since then, it has risen to 30 percent.
South Carolina and Tennessee saw roughly the same business declines on the front end but much-faster rebounds, to 15 and 19 percent, respectively. Foot traffic at dine-in restaurants has returned to 87 percent of pre-COVID levels in South Carolina and 76 percent in Tennessee. In North Carolina, the level is only 59 percent. South Carolina and Tennessee have reopened faster. People have responded by getting out more, and companies have likely been rehiring to handle the increased business.
If North Carolina has a particularly bad jobs reports next month, the governor’s go-slow approach to reopening will likely be a significant factor.
John Hood (@JohnHoodNC) is chairman of the John Locke Foundation. He can be reached by email, jhood@johnlocke.org.