The COVID-19 pandemic has thrown a huge blow at the economies of many states, with North Carolina falling about the middle of the pack; better than most, but worse than others.
In a recent report from the U.S. Bureau of Labor Statistics, Illinois, for example, has only recovered 70% of jobs the state lost during the beginning of the pandemic and state-mandated shutdowns. North Carolina is on the other end of the spectrum, regaining 92% of jobs lost since the start of the pandemic. That makes North Carolina the 10th best state in the country for economic recovery.
“I would classify North Carolina’s economic performance since the beginning of the COVID-19 pandemic as sort of middle of the pack,” said Andrew Berger-Gross, senior economist, Labor and Economic Analysis Division, N.C. Department of Commerce. “When you compare the economic performance of the various states in our country, certain patterns emerge.”
He said states whose economies were hit hardest by the pandemic tended to have economies highly dependent on international tourism or were highly urban with large, highly concentrated cities. Or, those with strict public health measures and populations that tended to be more cautious interacting in the economy in a pandemic environment.
“We, of course, have a robust and thriving tourism sector, but our economy isn’t entirely dependent on it,” said Berger-Gross. “We are urbanizing, but compared to a lot of other states, we are still predominately a rural state. We are also a politically diverse state with some folks who are more, and some folks who are less, cautious about the pandemic. I think the middle-of-the-road public health restrictions reflect that political mix.”
Berger-Gross said he and other economic observers have concluded those are the key factors in determining whether a state performed better during the COVID-19 economy. He cited a comparison to the Great Recession between 2007 and 2009.
“You recall that the Great Recession decimated employment opportunities in the manufacturing sector,” he said. “North Carolina is a disproportionately manufacturing-heavy state. That was a recession in which North Carolina was at a disadvantage due to our industry mix. After this (COVID) recession, North Carolina is relatively well poised to bounce back compared to a lot of other states.”
“Though most states have not fully recovered the job losses from COVID-related measures and lockdowns, North Carolina is positioned better than most,” agreed Paige Terryberry, senior analyst for Fiscal Policy at the John Locke Foundation. “And with falling personal and corporate income taxes, workers will see more of their paychecks and more jobs will come to the state.”
Berger-Gross cautions that the data is preliminary and can be revised, especially at the start of the year for prior year and previous years.
All the right elements have led North Carolina to have a strong foundation that has kept most industries in place and well-positioned for future growth.
“There are a lot of fundamentals about the state that have shown through the pandemic that were in place earlier and even through the pandemic, we had strong job creation of projects that the department engaged in, one of our best years (2021) ever in fact,” said David Rhoades, communications director, N.C. Dept. of Commerce.
“We think that it is because of the fundamental building blocks that are here that are attractive to companies. Things like a workforce development system that has a good track record and is well known in site selection circles.”
Having a trained and readily available workforce is also key for companies looking to hire employees in the state. “Through the pandemic and now in the current environment that we are operating in, those fundamentals are coming even more to the forefront,” said Rhoades. “It’s one reason the state has adopted a new strategic economic development plan that focuses entirely on talent development. We are doing that with a lot of partners.”
Phasing out the corporate income tax beginning in 2025 and ending in 2031, Rhoades said, is also prominent on some companies’ radar.
Rhoades said the state’s smart policies over the years and its natural assets, including its location on the East Coast, have always been and continue to be to the state’s advantage.
“The holistic package of all those attributes, whether it be tax policy, or things like workforce development, as a whole, North Carolina has always had a good, well-rounded package that we can offer companies,” he said.