The Palmetto State should expect to spend most of next next year in economic recovery rather than the record growth it was experiencing prior to the coronavirus pandemic, University of South Carolina economists said Tuesday.
January 2020 marked one of the best economies USC economist Doug Woodward said he had ever seen. And last fall, the director of the business school’s research division said wages were rising and his biggest worry was of South Carolina’s labor shortage holding back companies’ growth.
Now the state is wrestling with a 6.3 percent unemployment rate, a number Woodward and colleagues believe actually underestimates South Carolina’s joblessness.
“Given current market conditions, we don’t anticipate getting back to pre-pandemic employment levels before at least the summer of 2021,” USC economist Joey Von Nessen said Tuesday during the schools 40th annual Economic Outlook Series.
And it might lag as late as 2022 as a possible uptick in COVID-19 cases this fall has the potential to rattle consumer confidence and spending, as well as limit parental involvement in the labor force as children are schooled virtually.
Although South Carolina’s recovery from the pandemic-induced recession is off to a good start, up from a roughly 12 percent unemployment rate in the spring, the state still faces significant hurdles, Von Nessen said.
To date, the state has recovered about 62 percent of the jobs lost during mandatory business closures between March and April — well ahead of the national average — but that pace began slowing in July.
Von Nessen said those filing for unemployment now are more likely to report that their old jobs are gone.
“That’s going to continue to be a problem,” he said.
Also, while industries like residential housing and e-commerce have been strong, not all segments of the economy are recovering equally. Retail, tourism and hospitality sectors continue to struggle.
For that reason, lower-wage workers in South Carolina have been hit harder in this recession than in 2008, Von Nessen said.
“For example, employment growth has risen by an average of over 3 percent this year across all jobs requiring post-secondary education but is down 10 percent for jobs that don’t,” he said.
Where the economists see an upside for South Carolina is changes in the way the employed are working.
“To the extent that the work-from-home phenomenon becomes a permanent part of the business landscape, South Carolina will have to begin re-thinking its approach to economic development,” Von Nessen said. “Economic development may become as much about persuading workers to live in South Carolina and telecommute as it is about direct company recruitment.”
Woodward and Von Nessen said there is evidence that people are fleeing major cities in search of more space and a lower cost of living. South Carolina’s homebuilders are reporting more buyers coming from outside the state and home offices are becoming more popular in building plans.
“I think this is permanent,” Woodward said. “All of sudden South Carolina is a very attractive place to live and work.”
The Palmetto State was already seeing large numbers of people moving to Charleston, Greenville and the Charlotte suburb of Rock Hill. That’s likely to continue with the increased option to live anywhere and work remotely.