A People Strategy for North Carolina: Today and Tomorrow
Several years ago, a broad range of key stakeholders examined North Carolina’s current and projected workforce needs and came to consensus on a bold goal for the state – 2 million North Carolinians with a high-quality credential or postsecondary degree by 2030. There was also broad agreement that the labor force participation rate (LFPR), or those employed or looking for work, should be at 89% for 16-44 year olds by 2030. That’s 87,000 more than in 2019. And then came along a global pandemic that upended our labor supply in ways that none of us could have projected.
When that age range is broadened to include everyone 16 and older, the state’s LFPR was 61.4% in January 2020 and has yet to rebound, with a current rate of 59.8% (March 2022). If North Carolina had the same percentage of people participating in the labor force in March 2022 as we did in January of 2020, and if everyone unemployed was employed, we would have over 300,000 more workers across the state. Finding ways to connect more underrepresented North Carolinas to the labor force will be a key focus of the February 13, 2023 Emerging Issues Forum, Talent First Economics. And while several important efforts are underway to explore the needs of businesses, IEI will examine the needs of the workers themselves to help round out the full picture of what is possible.
But that’s not the only challenge ahead of us. Birth rates are down in North Carolina and across the nation (a 36-year low in 2020) and while the US population will continue to grow (at a much slower pace), some expect it will begin shrinking in the next 40 years.
To better understand what these two challenges (low labor force participation and low birth rates) mean for North Carolina—now and in the future—IEI asked Mike Walden, PhD, William Neal Reynolds Distinguished Professor Emeritus at NC State University and President of Walden Economic Consulting, LLC, to examine our workforce trends and their impact on the state.
The NC Department of Commerce forecasts that the labor force in the state will increase to 5.8 million by 2030 with 5.1 forecasted in employment, a 5% labor force surplus (accounting for 7% in “slack”, or the difference between labor force and employment). By 2050, the labor force is expected to grow to 7.0 million and 6.3 million in employment, decreasing the surplus to 3% with slack. However, these forecasting models are based on long-held assumptions, and Walden argues that if the LFPR is 12% or more lower in 2030 or 10% or more lower in 2050, shortages would exist. And that is for the state as a whole.
When Walden examined the 16 regions NC Commerce examines for their employment projections, he found more variation. Accounting for slack, the Charlotte, Greenville and Asheville regions are expected to have a labor shortage by 2030 and 2050 with the Raleigh-Durham region falling short by 2050.