COVID-19 pandemic reveals North Carolina’s economic vulnerability 

By: - March 23, 2020 3:44 pm

Just as it is doing with our health care system, the COVID-19 pandemic is revealing North Carolina’s economic fragility. A reliance on low-wage jobs has left families with no financial cushion, and elected leaders are scrambling to make up for our lack of an adequate social safety to save people in a moment of crisis.  

The hammer is going to fall first and hardest on poorly paid workers in restaurant, retail, tourism and other recreation jobs. After a decade of job growth being concentrated in low-wage service jobs, over one-quarter of all private sector jobs in North Carolina are now in leisure, hospitality and retail. Sadly, these are precisely the workers who can least afford to lose income and often don’t have employer-provided health care, paid sick leave or other benefits that would soften the blow. 

To make matters even worse, the collapse of service sector jobs will likely hit particularly hard the communities that were already economically struggling. Roughly half of North Carolina’s counties never recovered all of the jobs lost during the Great Recession, and many of them are the most heavily reliant on the low-wage service jobs at most immediate risk of disappearing. 

While customer services will feel the pain first, it will not stop there. The COVID-19 virus poses an economic risk unlike anything most of us have ever seen. Most economists see recession as a virtual certainty, with the only real question being how deep it is and how long it lasts. Based on projections released by Goldman Sachs and Deutsche Bank on how severely the COVID-19 outbreak may hit the U.S. economy, the Economic Policy Institute estimates that North Carolina could lose more than 160,000 jobs. As alarming as that projection may seem, leading financial institutions and economists have dramatically increased their projections of how large the economic impact of COVID-19 may prove to be in recent weeks, so the consequences for North Carolina could be even more devastating. 

Its too soon to see the real impact of the COVID-19 iofficial unemployment figures. It will be months before the headline unemployment rate for March and April come out, and it may also take some time before unemployment claims show the full extent of the damage. Initial unemployment claims jumped by a third in the first week of March, but that was before schools closed and most people started taking social distancing seriously. 

The unfortunate fact is, our economic vulnerability is rooted in decades of failed economic policy at both the state and federal levels. We’ve allowed a tiny group of billionaires to amass untold wealth while millions of Americans are one paycheck away from ruin. We’ve given out tax breaks to global corporations and the super-rich while slashing the social protections people need at times just like these. We’re going to be sorely tested in just getting through this crisis, but the long-term question is whether we learn the economic lessons this experience has to teach. 

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Patrick McHugh

Patrick McHugh is the research manager at the North Carolina Budget & Tax Center. Learn more at