In Wilmington’s job market, the economy is progressing amid recession fears

Wilmington’s job market remains strong, although rumors of a future economic downturn may force some local employers to brace for a downturn in business.

The job market remains strong at both the national and local levels, despite attempts by the Federal Reserve System to stem inflation by raising interest rates, said Mouhcine Guettabi, Wilmington’s regional economist and associate professor of economics at the University of North Carolina Wilmington.

In fact, US jobs rose by 236,000 in November, according to a recent report by the US Bureau of Labor Statistics. New Hanover County’s workforce is exceeding pre-pandemic levels, Guettabi said, and the area has recovered faster than other North Carolina cities from the economic impact of the COVID-19 pandemic.

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“We’re still seeing economic growth, job growth, even though there’s this narrative, this unease about economic decline,” Guettabi said.

He attributes this strong job market to steady consumer spending and employers hesitant to lay off workers after experiencing persistent labor shortages during the pandemic. This creates a “messy economic picture” of the labor market at the local and national level, Guettabi said.

The Federal Reserve raising interest rates in an attempt to control inflation will have an impact on businesses and the local economy, but there is a time lag between when interest rates rise and when businesses see the impact sense.

“It seems like a healthy labor market, but again, some of that uncertainty is brewing beneath the surface,” Guettabi said. “It’s just going to be that slow burn of uncertainty.”

The New Hanover County labor market is supported in part by its top five employers, which include Novant, the New Hanover County school system, the University of North Carolina Wilmington, PPD and New Hanover County.

Each organization employs more than 1,000 people, according to the NC Department of Commerce. In 2020, 104,792 people were employed by approximately 7,935 employers in New Hanover County, according to the latest data from the US Census Bureau.

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Three of the county’s five largest employers — the public school system, UNCW, and New Hanover County — are in the public sector, a factor that could help protect the county, at least in part, from sudden job changes.

The private sector tends to be less nimble than public sector firms, which means they can easily hire new staff during boom times and downsize during an economic downturn, Guettabi said.

“The structure of the institutions means we won’t see a major drop immediately,” Guettabi said, “but … these institutions still rely on revenue that will come from consumer spending or robust economic activity.”

While the region’s biggest employers may be better protected from rising interest rates and inflation, Guettabi sees other companies as more vulnerable to changes in the economy. The tourism and leisure industries, for example, could suffer if consumers refrain from traveling to save money as inflation rises.

“Any companies that do luxurious or non-essential things will be the first to leave if people start thinking very carefully about their budgets,” Guettabi said.

“When I’m unsure whether I’m going to have a job or not, everything that isn’t necessary is pushed to the background now, so the second car or the motorcycle or the boat,” he added. “The toy industry, if you will.”

Real estate companies and those in housing-related areas could begin to feel the impact of more cautious buyers as interest rates rise, Guettabi said.

The region’s top five employers are feeling the effects of rising inflation and higher interest rates as follows:

Novel health

Like many healthcare systems, Novant Health’s Coastal Region — which includes New Hanover Regional Medical Center and other facilities in Wilmington — has faced rising costs since the onset of the COVID-19 pandemic, according to Shelbourn Stevens, President of Novant Health’s Coastal Region.

Despite these higher costs, the system has been able to increase base salaries and provide bonuses to its workers – a figure that totals $65 million. The Company has also advanced its plans to establish new facilities in the Wilmington area, including Scotts Hill Medical Center and a doctor’s office under construction on the Novant Health Brunswick Medical Center campus.

In the coming year, the healthcare company plans to hire more providers in the Wilmington area. According to Stevens, Novant currently employs around 8,500 people across the coastal region.

New school system in the district of Hanover

According to Russell Clark, the system’s media officer, the New Hanover County school system is not immune to economic fluctuations. For example, changes in the economy can increase the cost of employee benefits.

The school system is financed by the federal government, the federal states and the districts. Funds from every source are used to fund various functions of the school and are subject to changes in the economy.

“As the economic swings affect all of these agencies, we feel that through our allocations and allocations as well,” Clark said.

The school is constantly looking for ways to reduce costs and expenses, which may include consolidating positions, streamlining processes, and working with vendors to find ways to reduce costs for the school.

The school system employs approximately 4,368, including 3,515 full-time and 853 part-time, according to Clark.

University of North Carolina, Wilmington

The University of North Carolina Wilmington has felt the impact of inflation in higher utility, insurance, equipment, supplies and service costs, according to Miles Lackey, the university’s vice chancellor for business affairs.

Inflation has also reduced the purchasing power of faculty and staff, an impact that has affected staff retention as university staff seek higher compensation elsewhere.

To address these challenges, according to Lackey, UNCW has “continued practices that have enabled the campus to function efficiently in the past while pursuing new opportunities to improve operations and reduce expenses in the future.” This includes leveraging competitive purchasing agreements, implementing energy saving protocols and working to improve business processes.

Lackey also pointed out that salary increases supported by the North Carolina Legislature in recent years have helped the university weather persistent inflation.

“As economic headwinds continue, UNCW is committed to continuing to provide students with the quality education they expect and deserve,” Lackey wrote in a statement to StarNews.

PPD, part of Thermo Fisher Scientific

Wilmington-based PPD is thriving, according to management.

Thermo Fisher Scientific, Inc. purchased PPD in 2021. Since then, the company has grown, according to David Johnston, senior vice president and president of clinical research at Thermo Fisher Scientific.

“For 2022, our clinical research business continues to experience significant organic growth, reflecting strong customer demand to support clinical trials for new therapies and vaccines in development,” Johnson wrote.

Thermo Fisher Scientific has added almost 5,000 employees to its workforce. This increases the company’s total workforce worldwide to around 35,000.

Johnson remains optimistic about the company’s continued growth, even during economic fluctuations.

“Thermo Fisher is incredibly well positioned to navigate dynamic economic periods,” he wrote in his statement. “The company has a strong track record of doing this, which has made it an even stronger industry leader.”

District of Neu-Hanover

Because New Hanover County is primarily funded by sales and property taxes, any changes to the property tax base or tax collection rate would have the greatest revenue impact, according to Alex Riley, New Hanover County Communications and Liaison Coordinator.

Although inflation has pushed up the cost of capital projects, the county has benefited from a strong economy with a low unemployment rate and high retail activity.

“Increased revenue has thus essentially offset cost increases,” said Riley.

So far, economic fluctuations have not prompted changes in the service, and district leaders do not anticipate layoffs. The district employs around 2,061 people.

The biggest challenge the county has faced is a tight labor market, which the county board set out to address this summer by adjusting the county’s pay scale to make wages more competitive.

To address the increased costs of capital projects, the county is relying on “value engineering” techniques and has put some of its projects on hold. As district staff begin the budgeting process for the next year, district managers are emphasizing a focus on core services and efficiency, according to Riley.

“While we hope it doesn’t happen, we are taking the necessary actions to prepare for a recessionary scenario,” he wrote.

Riley pointed out that while rising costs hit the county like any other business, the county has a mission to provide certain services to citizens despite any changes in the economy.

Reporter Emma Dill can be reached at [email protected]