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CHAPEL HILL – A drive down Franklin Street shows John Quinterno everything he needs to know about the state of the restaurant industry: shuttered doors, brown paper covering the floor-to-ceiling windows or boarded-up entrances on the main drag of what is supposed to be the middle of the semester in one of the nation’s premier college towns.
Though about 290,000 North Carolinians have gone back to work in recent months, hundreds of thousands remain unemployed statewide.
Many who thought their layoffs were temporary may soon realize their jobs are gone, their employers shut down and their benefits nearing their end as a casualty of the COVID-19 pandemic.
“We are seeing more and more people saying they are on permanent layoff, and that’s being reflected in unemployment insurance data,” said Quinterno, principal with South by North Strategies and an instructor at Duke University’s Sanford School of Public Policy.
From February to April, the pandemic-induced recession eliminated 615,000 jobs in North Carolina.
“We are still down 325,000 jobs compared to February. If you put that into context, it’s pretty much where we were at the very worst part of the Great Recession,” said Quinterno, a Chapel Hill resident.
North Carolina’s unemployment rate peaked at 12.9% in April. Though it dropped to 7.5% in June, it ticked up a percentage point in July, according to the U.S. Bureau of Labor Statistics. Many of the missing jobs are in the service industry — and those whose work requires face-to-face contact are suffering the most.
Tourism has dropped sharply across the state since March. For instance, the number of passengers arriving at Raleigh-Durham International Airport from March through the end of July of this year fell by more than 80% compared with the same period last year, according to figures from the Raleigh-Durham Airport Authority.
Put another way, 2.5 million fewer passengers deplaned at RDU from March through July than the same five-month period last year — and fewer than 20,000 people arrived at RDU through all of April.
Some economists believe unemployment will climb again when federal and state aid to prop up long-term unemployed workers ends.
“A lot of those small businesses that got (federal) paycheck protection aid — that money is long gone,” Quintero said. “So, if they’re still at reduced sales, are they going to be able to ever hire back? Are they going to make it? No.”
Bureau of Labor Statistics data from August shows that of the unemployed, 60% have been out of work for 15 or more weeks – 8.1 million people. Last year in August, that figure was about 32%, with far fewer people unemployed overall at the time, so fewer than 2 million people were facing prolonged unemployment a year ago.
Many of the jobs that have disappeared in the short run are still not there, said Ted Abernathy, an economic development consultant with Economic Leadership LLC.
“Will they all come back?” Abernathy said. “The answer is probably not, but some of them will. We will bounce back when we reopen everything. The throttle when we get back to normal is confidence and consumer safety.”
Abernathy estimates that three-quarters of lost jobs will eventually return. The remaining quarter may lean heavily on the state’s community college system to learn new employable skills. More than 50 community colleges operate throughout North Carolina. The challenge is in making classes short and affordable enough, Abernathy said.
Attempts to predict the end of the economic turmoil hinge on one factor: whether there’s an effective vaccine for COVID-19, the disease caused by the new coronavirus.
“As long as the virus continues to reoccur and spread around the country the way it does, you are going to continue to see impacts on the economy,” Abernathy said.
“It’s harder to predict. You can always look at past recessions and try to understand what the echoes are going to be.”
Still, the current recession is unlike previous ones, said Mike Walden, a distinguished professor and extension economist at N.C. State University, because the recession was caused by governments closing off the economy to slow the spread of the virus, rather than financial speculation.
“Technically, the COVID recession is already over, lasting about three months,” Walden said. “But importantly, that doesn’t mean we’re back to where we were.
“It will likely take 18 months to fully recover because we are still dealing with outbreaks, uncertainty and much job disruption.”
Restaurants and other businesses that require face-to-face contact, he said, “will never be the same.”
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