Counties collectively employ over 3.6 million public servants and are critical drivers in fostering a thriving community labor market. The latest data analysis highlights several trends as they relate to the state of the nation’s workforce.

As one of the largest collective employers in the country, county leaders understand the importance of a thriving labor market. Access to high-quality, stable employment is critical to a healthy, thriving community,² and is often referenced as one of the top issues for county leaders.³

County policy impacts the community workforce through regulation, training programs and economic development.⁴ Local programs aim to reskill residents for new opportunities, while county leaders drive business investment and job creation through incentives, infrastructure, and regulation.

Some counties also have specific authority on employer regulations, helping to shape local benefits, compensation and standards. Throughout the pandemic, the county response has been critical in supporting businesses both small and large.

As industries fully recover and exceed pre-pandemic employment levels, businesses and county leaders are faced with a shortage of skilled workers and a rising cost of goods impacting employee wages.

WHICH SECTORS HAVE YET TO SUBSTANTIVELY RECOVER FROM THE PANDEMIC?

Five of eight major industry sectors have recovered and now exceed pre-pandemic employment levels.

Note: Nonfarm payrolls by selected industry, January 2023.

Source: U.S. Department of Labor, Bureau of Labor Statistics: Employment Situation Summary, January 6, 2023 (Table B-1).

• The COVID-19 pandemic was an inflection point in a white-hot labor market; even as most sectors exceed pre-pandemic job levels, some are still left behind.⁵
• Labor force participation rates (i.e., how many people are available and looking for employment) suffered as workers were laid off or left jobs to take on other responsibilities.⁶
• Low unemployment rates are driving increases in wages for employees but have been unable to keep pace with the increasing cost of goods and services.⁷

• County, municipal, special district and other local government employment remain subdued despite increased demand for government services to support local recovery.⁸
• The leisure and hospitality sector, including jobs in bars, restaurants, entertainment venues, hotels and recreation facilities, has struggled to attract employees, yielding more than 800,000 jobs yet to recover from pre-pandemic levels.⁹
• Nationally, non-farm payrolls exceed pre-pandemic (Feb. 2020) levels by more than 1.2 million jobs.¹⁰

Though local government employment levels were resilient in the early months of the pandemic, full recovery has lagged. Leisure and hospitality – the sector that bore the initial brunt of the pandemic’s economic effects – has added significant jobs but is still a long way from full recovery. As the labor market has tightened, employers increasingly face the challenge of scarce workers, resulting in less efficient service and government sector operations.

County leaders helped to support the recovery of businesses through investments, including providing personal protective equipment (PPE), offering direct assistance to small businesses and supporting pandemic-impacted workers.

As the labor force continues to churn, county programs on reskilling, efforts to attract new employers and building infrastructure to support service-sector workers will continue to drive growth in industry sectors.

ARE THERE ENOUGH WORKERS TO FILL OPEN POSITIONS?

For every 10 open jobs in October 2022, there were only six individuals able and looking for work.

Note: Seasonally adjusted number of employed persons per job opening.

Source: U.S. Department of Labor, Bureau of Labor Statistics: Job Openings and Labor Turnover Survey, January 4, 2023.

• Though the opportunity for work remains high, the unemployment rate has returned to the pre-pandemic record low of 3.5 percent.¹¹
• Despite 10.5 million available jobs, the labor force participation rate remains suppressed by more than one percent compared to February 2020.¹²
• Since May of 2021, more jobs have been available in the labor market than individuals able and looking to fill them.¹³

As counties and other employers worked to fill open positions over the last few years, the candidate pool continued to narrow. Despite opportunities offering more desirable benefits, sign-on bonuses and other incentives, employers still face the challenge of a stagnated labor force participation rate. However, the increased competition to attract and retain talent could help draw participants back into the labor force.

County leaders support businesses by reskilling community members to match the needs of employers and investing in infrastructure that supports employment like public transit, roads and human services like childcare.

ARE EMPLOYEE WAGES KEEPING UP WITH RISING COSTS?

Though wages have been rising in a tight labor market, the purchasing power of employees has declined in recent months.

Note: Year-over-year change in nominal average hourly earnings, consumer price index and real average hourly earnings.

Source: U.S. Department of Labor, Bureau of Labor Statistics: Consumer Price Index, November, 2022; U.S. Department of Labor, Bureau of Labor Statistics, Current Employment Statistics Survey, November 2022.

• Nominal wages, or the dollar amount an employee receives, have averaged around five percent since the pandemic began.¹⁴
• Real wages, or the purchasing power of consumers, have declined throughout 2022.¹⁵
• Declines in real wages are derived from rising costs for goods and services, which surpassed 40-year highs between March and July 2022, exceeding year-over-year changes of 8.5 percent.¹⁶

Periods of high inflation – rudimentarily measured with the Consumer Price Index – generally lead to periods of lower real wage growth, particularly when inflation rates exceed six percent.¹⁷ In recovering from the pandemic, many factors, from supply chain issues, rising costs for businesses and, more recently, higher interest rates on debt, have driven up the prices consumers pay for goods and services. These costs have exceeded the real wages of employees throughout much of the recovery period.

As employers, county governments face the challenge of competing with the private sector, which generally is able to produce a more agile response to the changing price of labor. However, as community leaders, county policymakers can support residents experiencing rising costs by driving solutions for housing affordability, investing in solutions that reduce energy costs, attracting businesses that diversify the economy and bring high-paying jobs and, in some instances, through regulation.

• Economic output across all counties collectively increased by 5.9 percent between 2020 and 2021, rebounding from the contraction of 2.8 percent between 2019 and 2020.
• Western county economies led growth between 2020 and 2021 with a collective 6.9 percent increase.
• Seventy-seven (77) percent of county economies grew in 2021, 41 percent of which exceeded national economic growth.
• The arts, entertainment, recreation accommodation and food service sector increased the most of any industry, at 26 percent growth; conversely, the mining, quarrying and oil and gas extraction sector experienced the largest contraction at -16 percent growth.

Find the new Gross Domestic Product numbers and all of the recent data updates on NACo’s County Explorer tool, the one-stop shop for accessing county-level indicators, with more than 1,000 maps from over 100 datasets, available at ce.naco.org.

For list of sources and additional charts, see The State of the Nation’s Workflorce: January County Explorer Update