Saturday, April 1, 2023

With heavier reliance on hardest-hit jobs, how will Cape Fear region bounce back? [Free]

Closed and warning signs taped and fasted to shops downtown Wilmington in early May alert customers not to enter, ask them to order takeout, or simply announce the small business’ closure due to the coronavirus. (Port City Daily photo/Johanna F. Still)

SOUTHEASTERN, N.C. — So much is still unknown about how the economy will respond, even with coronavirus-related quarantine orders lifting nationwide. When local restrictions eventually lift, the service industry will be poised to respond to several unpredictable months ahead.

Will there be pent-up demand? Has consumer confidence and spending behavior been bruised? Perhaps most importantly, will all of the jobs lost due to closures become available again, once the economy “reopens”?

Related — By the numbers: A look at the Cape Fear region’s economy and unemployment figures

Small businesses fortunate enough to land Paycheck Protection Program loans may have a better chance at making it through, covering expenses and keeping staff on the payroll. Still, uncertainties surround one of the region’s largest industries, hit the hardest from pandemic-related closures.

Jobs lost

Last month, nearly half of the jobs in the leisure and hospitality sector were lost nationwide, according to a Department of Labor update shared Friday. Of this dropoff, three-fourths occurred in the food and drink services industry.

An estimated 17,270 people are employed in the food preparation and service industry in the Wilmington Metropolitan Statistical Area (MSA), which covers New Hanover and Pender counties. The latest unemployment data out of the Wilmington MSA covers March, which does not fully encompass the pandemic’s economic toll on the industry — Governor Roy Cooper closed bars and restaurants March 17. Still, March’s numbers show the sector lost at least 200 jobs, likely an underrepresentation of the sector’s current job market.

Curbside cocktail service was never legalized in North Carolina, so bars and breweries are withstanding massive losses. The best margins at breweries and restaurants come from the tap or spout. With more breweries per capita than Raleigh or Charlotte, the Cape Fear region’s 19 breweries and their employees are seeing a sharp decline in business.

James Smith, owner of Bone & Bean BBQ, Smoke on the Water, and both The Fork ‘N’ Cork locations, said he designed his business models around a specific recipe.

“All of this just totally messes with this equation,” Smith said. “If you take one part of the equation out, if you take beer, wine, and liquor out of the equation – it messes it all up. You’re just not profitable. It’s like kicking a leg out from underneath a stool.”

Like most in the industry, Smith said his restaurants run on thin margins. Revenue is down an estimated 80% across all restaurants, Smith guessed.

Heavier reliance

As a coastal tourist area, the Wilmington MSA leans more heavily on the leisure and hospitality then the other parts of the state; at the same time, the region has half the manufacturing industry compared to the state average. In the Wilmington MSA, 15% of the workforce is employed in the service industry, compared to 11% statewide.

Because a greater proportion of the Cape Fear region’s economy is dependent on discretionary spending supported by this sector and tourism, it tends to swing harder than the nation. This means when the national economy is down, this region goes down harder. When times are good, it relishes even bigger gains.

But it also means a greater proportion of the region’s workforce is employed in lower-paying jobs, earning lower-than-average wages, in a sector that props up the entire region. According to research commissioned by the City of Wilmington, at least half of the jobs in New Hanover County are ‘lower-paying’ and provide insufficient income to afford local housing units.

That meant thousands of employees in the region were already living one paycheck shy of not being able to pay rent — even before the pandemic hit.

A long fall

In September 2019, one year after Hurricane Florence, New Hanover County had the highest year-over-year employment gain in the entire country, adding 5.8% to its workforce. Leisure and hospitality contributed to this swell, adding 1,725 jobs over the year, a 10.2% gain from 2018.

But now just seven months later, the very sector that boosted the region’s employment profile has been hit the hardest by Covid-19. In March, the leisure and hospitality industry had the biggest loss statewide, down 13,600 jobs, dipping 2.5%. April’s losses are sure to be higher.

When local employment figures had their boost in September, average weekly wages (across all sectors) in New Hanover County were $873, 10% less than the state average and 20% less than the national average.

For experienced food service employees, there isn’t much of a difference between the Wilmington MSA annual estimated earnings ($24,630) vs. the statewide average ($25,380). Hourly wages for an experienced food service employee are an estimated $11.84 in the Wilmington MSA compared to $12.10 statewide.

According to MIT’s living wage calculator, that’s 11 cents an hour shy from earning a living wage in Wilmington for a single adult, defined by earning enough money to take care of yourself and your family accounting for the cost of living in a specific area.

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