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Greenville Business Magazine

SC Jobs: ‘A Steadier Growth Path’

Oct 08, 2021 03:07PM ● By David Dykes

South Carolina Department of Employment and Workforce Executive Director Dan Ellzey was bullish when state officials released August employment data.

“It is another month of good news for South Carolina,” he said.

The state’s unemployment rate dropped for the eighth consecutive month – to 4.2 percent from 4.3 percent in July.

Nonfarm employment, seasonally adjusted, rose slightly to 2,137,800 and 3.31 percent from August 2020.

All of the state’s metropolitan statistical areas posted year-over-year employment gains.

Industries that reported monthly job gains were government (+5,900); leisure and hospitality (+2,500); construction (+500); professional and business services (+500); information (+400); and manufacturing (+200).

Declines came in education and health services (-5,300); other services (-1,300); and financial activities  (-200).

Trade, transportation, and utilities remained flat.

From August 2020 to August 2021, South Carolina’s economy picked up 68,500 seasonally adjusted, nonfarm jobs.

Industries with strong growth were reported in leisure and hospitality (+26,500), which has been hard hit by Covid-19 but is recovering; trade, transportation, and utilities (+14,400); construction (+7,900); manufacturing (+7,200); education and health services (+4,600); government (+4,500); professional and business service (+3,400); other services (+1,800) and information (+1,000).

Financial activities declined (-2,800).

DEW officials said the state’s estimated labor force (people working plus unemployed people looking for work) increased in August to 2,404,270.

Not long after the figures were released, Richmond Fed economist Matt Martin noted they were part of just one month’s worth of data. That doesn’t mark a trend, he said.

Economists like to track data over time, and Federal Reserve Bank officials look at a range of data sources and outreach to the business community “to help give us a fuller picture of what’s going on,” Martin said in a conference call with reporters.

Still, he said South Carolina’s labor growth appears to be on “a steadier growth path, which is not true of all states.”

His overall take with the state’s August data report, Martin said, is that South Carolina is enjoying additional labor market recovery, although at a more modest pace than what we saw in July.

That matched what we’ve seen nationally, he said.

He added that S.C. employment gains in August in consumer-facing sectors such as leisure and hospitality suggested that consumer spending continued to be fairly robust and indicated employers are finding success in hiring workers.   

But the monthly decline of 5,300 jobs in education and health services was puzzling, Martin said. One clue might be in a decline in child-care service employment. Also, Covid-19 could have disrupted back-to-school timing and when teachers return to work, he said.

And, when asked, Martin said past data indicated a divide, as there has been for quite some time, between the health of rural versus urban areas.

Within South Carolina, the fast-growing areas of Charleston and Greenville-Spartanburg are importing workers from elsewhere in the state and other states to fill job openings, he said.

“I find it pretty remarkable some of the larger-scale assembly and manufacturing that shows up in some of these places and their ability to get at least most of the workforce they need through the door,” Martin said.  

There is the challenge in rural communities of having the economic engine to bring workers to those areas, but Covid has provided opportunities in that some workers can choose where they want to work, he said.

“Location is less important in many cases,” Martin said. “But then you have to convince someone that your place is a good place to come, even if they don’t want the hustle and bustle of a city. Those challenges remain and in some ways are very similar to what they’ve always been.”  

One cautionary note comes from Wells Fargo Chief Economist Jay Bryson and economic analyst Hop Mathews, who jointly wrote in September that history says the job boom in the manufacturing sector likely won’t last.

They said:

The number of factory jobs climbed steadily between the late 1930s and 1979. Then cutbacks started, with the manufacturing sector shedding more than 8 million jobs on balance over the subsequent 30 years.

The financial health of the manufacturing sector had deteriorated significantly by the late 1970s. Unit labor costs were surging, and profit margins were shrinking.

The manufacturing sector faced two more challenges in the 1990s: NAFTA and the emergence of China as a low-cost center of production. American manufacturers increasingly substituted capital for labor to increase local production.

These rationalization efforts helped to improve the financial health of the manufacturing sector. Unit labor costs flattened throughout the 1990s and the first decade of the 21st century.

Manufacturing employment has recently enjoyed a renaissance of sorts with payrolls rising by 1.3 million over the course of the last decade.

But productivity growth in the manufacturing sector has been anemic, unit labor costs have shot higher again, and profit margins appear to be narrowing.

Manufacturing employment likely will continue to grow, at least in the near term. Producers have hefty backorders, and job openings in the sector have surged.

But there are signs that manufacturers are beginning to ramp up capital spending again. “We suspect that another secular round of capital deepening in the manufacturing sector, which would reverse the flattening in the capital-to-labor ratio that occurred in the past decade, is in the offing.”

“We do not think that manufacturing payrolls will go into reverse, but we believe that manufacturing employment will be hard-pressed to match the gains of the past decade in the 2020s.

That bears watching.

Also this month, I’m pleased to announce we’ve hired Donna Isbell Walker as associate editor of Greenville Business Magazine, Columbia Business Monthly and Charleston Business Magazine.

Donna is a former Greenville News colleague who has a knack for covering people and places. She brings excellent copy editing skills, journalistic insight and an appreciation for all things South Carolina.

She’ll be a key asset as we move forward with several ambitious initiatives to further position our magazines as relevant and indispensable sources of business news across the state.

We plan to continue telling the success stories of South Carolina companies and helping frame South Carolina’s business narrative.

Stay tuned.