Prosperity Watch Issue 24, No. 1: Creating Jobs in All the Wrong Places - State's low-wage service sector experiences most job growth since end of the recession

Forty-four months since the formal end of the Great Recession in June 2009, North Carolina’s labor market continues to struggle with sluggish job creation and persistently high unemployment. But the most troubling trend facing the state’s economy is the long-term loss of middle-wage jobs—mostly in the goods-producing sector—and their steady replacement with jobs in low-wage service industries

According to new unemployment data for February released by the N.C. Division of Employment Security last week, the state’s rate has remained stagnant over the last year, fluctuating slightly between 9.6 and 9.4 percent over the past 12 months. 

Unfortunately, the sluggish employment growth has also been accompanied by a troubling trend on wages.  In the years since the end of the recession, not only has the state produced insufficient new jobs to bring down the overall unemployment rate, but the industries experiencing the best growth in an otherwise stagnant labor market are those industries that have paid wages lower than the state average. 

As seen in the following graph based on the Quarterly Census of Employment and Wages, the goods-producing sector—consisting largely of manufacturing industries—pays an average weekly of $917, well above the state average weekly wage of $806, while in sharp contrast, the service sector pays an average wage of $784 per week.   Since the end of the recession, employment in goods-producing industries fell by 4 percent between the third quarter of 2009 (the first full quarter of the recovery) and the third quarter of 2012 (the most recent data available).  Over the same period, the lower wage service sector has seen its employment grow by 2 percent, and now accounts for 83 percent of the state’s total employment.

In effect, the state’s labor market recovery has been marked by the loss of jobs paying above the state average and the replacement of these jobs with those paying lower than average wages.
 

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