By John Hood

RALEIGH — Recessions hurt. North Carolina’s headline unemployment rate hit 11.2% during the peak of the Great Recession in 2010. During the COVID-era Great Suppression of 2020, it briefly hit a mindboggling 14.2%.

During such times, we pretty much all know someone who’s out of a job, even if we’re not. And for every 10 people deemed “unemployed” by the official definition — not working at all but actively looking for a job — there are five to 10 more who are underemployed or so discouraged that they’re no longer searching.

As of March, North Carolina’s unemployment rate is a modest 3.7%. Even the most expansive measure, including the discouraged and underemployed, sits at 6.7% — very low by historical standards.

I don’t mean to whistle past the graveyard. Some economists and investors think the U.S. economy is headed for a recession later in 2025 or early 2026. I hope they’re wrong. (It would help if Washington stopped flirting with fiscal recklessness and anti-trade wars.) What concerns me at the moment, however, isn’t the prospect of a future labor surplus. It’s the reality of a present labor shortage, at least when it comes to some of North Carolina’s key industries.

Consider the agriculture sector writ large. Farming, fishing, forestry, food and beverage production, and food and beverage service represented $49 billion in economic activity in 2023, or 16% of North Carolina’s gross domestic product. Many farms, food processors and restaurants are currently struggling to hire the workers they need to meet market demand.

In a new report for the John Locke Foundation entitled Harvest on Hold, policy analyst Kelly Lester observed that “North Carolina’s agricultural sector faces a critical labor shortage driven by demographic shifts, declining interest in farm work among domestic workers, and regulatory challenges associated with hiring foreign labor.”

For some agricultural products, enterprises may be able to substitute machinery for labor over the next few years. For others, however, the required technology is neither available nor just over the horizon. Harvesting sweet potatoes, for example, is going to be a labor-intensive activity for the foreseeable future. If producers of sweet potatoes and other vegetables can’t hire and retain workers to do the job, that truly will put a costly hold on their harvests.

Lester offered several potential solutions. One is to expand agriculture education in our elementary and secondary schools through such programs as 4-H and Future Farmers of America. Another is to reduce regulatory barriers that keep farmers from investing in new equipment, hiring new workers, and building homes for their workers on land not currently zoned residential.

These are steps state and local policymakers can pursue. We also need Congress and the Trump administration to act. One priority should be to restructure the H-2A visa program that allows enterprises to hire seasonal workers from abroad. North Carolina farmers are among the nation’s most-frequent users of H-2A visas, accounting for about 7% of our total agricultural workforce, but current regulations and minimum-wage floors make the program unwieldy to administer and inadequate to meet demand for seasonal labor.

Among the reforms Lester recommended was to let the wage floors vary by location. “North Carolina should advocate for a regionally adjusted wage system that allows wages to be set based on state or county labor market conditions,” she wrote.

Critics will argue that employers already possess to power to alleviate their labor shortages: raise wages. If farms, food processors, restaurants and bars offered high pay, they’d get more applications from more (and more highly skilled) workers. Yet many of these businesses already operate on small margins — and after suffering a post-COVID bout with inflation, consumers are clamoring for lower prices, not higher ones.

Some adjustments will occur naturally, through automation. That is, as firms install more machinery and new technologies, they’ll need fewer workers — and those workers be more productive, earning higher wages.

But that solution isn’t universally applicable. That’s why Lester’s report is so timely, and its recommendations so sorely needed.

John Hood is a John Locke Foundation board member.

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