Small Businesses Are Having Trouble Filling Jobs in North Carolina

Small Businesses Are Having Trouble Filling Jobs in North Carolina

What happens now that North Carolina unemployment benefits are back to ‘normal’? Some economists hope lower benefits will make it easier for businesses to fill jobs. Others worry less money for consumers will hurt everyone. Behind these arguments, there are larger issues at play.

Loss of extra unemployment benefits could harm NC economy

Many economists worry that the expiration of the extra $600 is federal unemployment assistance will harm the US economy. After all, that extra money allowed many US households to pay rent, buy groceries, and keep paying their credit card bills.

When North Carolina unemployment benefits aren't enough to cover the bills, how does the economy react?
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Taking that money away could lead to a major decrease in consumer demand for many services. That decreased spending, in turn, could harm businesses that need to sell things to stay afloat.

For example, North Carolina food service industry has already been hit hard by COVID restrictions. If people in North Carolina don’t get extra unemployment benefits, they might be less likely to eat out even when it is safe to do so.

Decrease in weekly unemployment benefit could make it easier for small businesses to fill vacancies

However, there may be a silver lining for some small businesses. Over the summer many small business reported having trouble filling open positions, particularly for low-wage jobs.

Some believe this is because the extra $600 a week in unemployment benefits was a disincentive to work. In 2018 the average per-capita income in North Carolina was $29,456. Over 52 weeks, that’s just $566.46 per week, before tax.

An end to the extra unemployment benefits could change the incentives and make it easier for businesses to hire more people. In August, there were fewer new claims for unemployment benefits. Some economists believe this supports the theory that generous unemployment assistance makes it less likely people will return to work.

North Carolina unemployment benefits are meager in comparison to many other states.
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These concerns about the pros and cons of unemployment assistance aren’t new, though COVID-19 and the expiration of the CARES Act has brought a new urgency to the issue. What this argument obscures, however, is a larger affordability problem.

Bipartisan bickering obscures North Carolina affordability crisis

Even before COVID hit the US, many full-time workers in North Carolina couldn’t make ends meet. Currently, North Carolina’s minimum wage is $7.25 per hour. One person working 40 hours per week at minimum wage would make only $290 per week, or $15,080 per year. That’s less than half of the weekly $600 that many NC workers received under the CARES act.

That $290 per week is also not enough to keep a family out of poverty. MIT’s living wage calculator estimates that one adult with no dependents would need to earn $11.98 per hour to support themselves in North Carolina. For a family of four, with both parents working full time, the living wage jumps to $15.85.

Whichever way you run the numbers, activists and academics agree that North Carolina’s minimum wage is not livable. Until it is, one third of North Carolina’s workforce could continue living in poverty.

For more information about North Carolina’s economy, check out our featured story on racial equity in economic outlooks.