Author: Andrew Berger-Gross
Welcome to the August 2023 edition of NC Economy Watch: an update on what’s happening in the North Carolina economy and what it means for you, brought to you by the Labor & Economic Analysis Division (LEAD) of the NC Department of Commerce.
In this edition of NC Economy Watch, we examine some of the ways our economy has changed during the COVID-19 pandemic, including the rise of remote work and a resurgence of entrepreneurship.
Has COVID-19 Led to a “New Normal” for Our Economy?
The COVID-19 pandemic left an indelible mark on our lives. Whether it be a gap in our resume or an empty seat at our dinner table, many of us will carry the scars of this pandemic for years to come.
While the pandemic has clearly affected our personal lives and society at large, the lasting impact of the pandemic on our economy is less clear. Did COVID-19 represent a one-time, short-lived economic shock? Or has it resulted in a “new normal” for our economy?
One change that appears to have stuck around is the rise of remote work. Many white-collar employees packed up their laptops and headed home when the pandemic struck, opting to work remotely rather than risking exposure to the novel coronavirus. The share of workers nationwide who completed at least some work at home increased from 24% in 2019 to 38% in 2021, while the share of working hours performed at home rose from 10% to 28% [Figure 1]. In 2022, following the rollout of vaccines and return to in-person social activity, the prevalence of working from home declined slightly but remained substantially higher than its pre-pandemic rate.
Figure 1
It's important not to exaggerate the scale of this trend; most work still cannot be performed remotely, and most workers continued to report to their onsite jobs throughout the pandemic. However, for many white-collar employees and the cities where they work, the rise of remote work has been transformative, affecting commuting patterns, office real estate, and the health of downtown businesses.
Another important trend that emerged during the pandemic was an increase in entrepreneurial activity in North Carolina and nationwide. The number of new business applications in our state skyrocketed following the disruption of the COVID-19 recession and has remained at an elevated level ever since [Figure 2]. The number of business applications with planned wages, a proxy for new employers, also increased following the COVID-19 recession, although it has yet to exceed the high point it reached prior to the Great Recession of 2007-2009.
Figure 2
Entrepreneurship is a key driver of innovation, job creation, and economic growth. After years of stagnation, the pandemic-era resurgence of entrepreneurship is potentially a good sign for the health of our economy. However, the drivers of this recent uptick in startup activity are poorly understood, and its implications for the future of our economy are difficult to predict.
Decades from now, many of us will tell our children and grandchildren that we lived through a time when the world of work changed forever. Or will we? While the rise of remote work and resurgence of entrepreneurship have endured thus far, it’s possible these trends could revert back to their pre-pandemic norm in the years ahead.
Moreover, for all the things that the pandemic changed, in many ways, the pandemic-era economy remains much like the economy we had prior to COVID-19. We will explore some of the ways the economy has not changed in our next edition of NC Economy Watch.
For inquiries and requests, please contact:
Meihui Bodane, Assistant Secretary for Policy, Research and Strategy
NC Department of Commerce, Labor & Economic Analysis Division (LEAD)
mbodane@commerce.nc.gov