With the coronavirus crisis far from over when it comes to public and economic health, it’s no secret that the U.S. economy is still in serious turmoil, several months into the pandemic. The recent “Beige Book” report issued by the U.S. Federal Reserve tracks regional economies across the country is fairly grim with everything going on, but it does provide a snapshot of where we stand now, and where our economy is going in the near future.
In April, the U.S. had a record 14.7% unemployment, with 20.5 million layoffs that month—the most since World War II. Since then, the economy has started to rebound a bit because of states reopening businesses and industries, but an undercurrent of economic and public health concerns means that the uncertainty isn’t going away any time soon.
Additionally, many workers who lost their jobs and are now collecting unemployment benefits (including the additional $600 weekly benefit allotted by the temporary coronavirus recovery package passed by Congress) are hesitant to go back to their jobs—even when those jobs have returned. As of April, 38 states had a “replacement rate” of 100% or higher, which means that with unemployment benefits plus the supplemental $600, the average unemployed worker was making at least 100% of their former salary. With many concerned about the safety or practicality of going back to work during a pandemic, workers are increasingly opting to stay home for the time being instead of returning to their old jobs or finding new ones.
The Paycheck Protection Program provides businesses with funds to keep their employees through the pandemic, but many business owners have had trouble securing those loans and keeping their businesses afloat.
The way many businesses are doing business is changing as well. Remote work is becoming the new normal for industries that have employees that can do their jobs without being present in a traditional office or workplace setting. A survey of open jobs by job site Adzuna found that 6–7% of job openings currently call for remote work in the job description. With no vaccine and companies scrambling to figure out what the new workplace looks like, that number is unlikely to decrease anytime soon.
Travel & Tourism
Overall, economic activity has declined in every state and in virtually every industry. Few industries were hit harder than travel and tourism, which stopped essentially overnight as travel was restricted by stay-at-home orders and safety concerns. According to the U.S. Bureau of Labor Statistics, leisure and tourism had an unemployment rate of 28.9% in June 2020—more than 7 times the rate at the same point in 2019.
Retail sales have also been hit hard by the pandemic, with in-person shopping limited to grocery stores, big box department stores, and other “essential” retail outlets. According to the site Digital Commerce 360, 36% of retailers had to rethink their business strategies basically overnight, shifting more resources to online shopping and fulfillment. As of July, many states are broadening their retail openings as part of their reopening phases, but according to the U.S. Bureau of Labor Statistics, there is still an 11.2% unemployment rate in retail as of June.
Manufacturing is an industry that never really closed down completely during the pandemic, due to the ongoing need for food and other products. Still, the unemployment rate increased three times between June 2019 and June 2020, in both durable goods and nondurable goods. The employment picture tends to vary by region and product for manufacturing: some companies are reporting higher sales this year than last, while manufacturing for aerospace, automobiles, and energy-related products has dipped severely due to decreased demand.
Professional and Financial Services
While professional and financial services are also experiencing significant unemployment (more than doubling from its 2019 rate, according to the Bureau of Labor Statistics), this is a field where working from home is likely to stabilize the unemployment rate. Tech companies, especially, are moving to a stronger remote work model as they prepare for the future.
Real Estate and Construction
In many cities and states, non-essential construction projects were shut down by late March. As part of phased reopenings, many states are including construction, but contractors are facing significant unemployment, with government and private contracts on hold. The unemployment rate for construction jobs rose from 4% in 2019 to 10.1% in June 2020.
Real estate has been hit hard as well, with many people and companies putting off moves due to economic uncertainty. According to Marketwatch, corporate landlords are seeing a high rate of non-payment by their business tenants, often retail stores or other businesses shut down by stay-at-home orders. Residential real estate brokers and businesses are also seeing major challenges, with various state realtor associations giving brokers guidelines on how to file for unemployment as home sales struggle and in-person showings are difficult.
Healthcare would seem to be the one industry that should thrive during a public health crisis. But, the reality is that although emergency doctors and other frontline medical personnel have been on call for months now, most states and cities have stopped doing many elective medical and dental procedures, leading to staff layoffs. Health services have not been immune to the unemployment crisis, with a rate increasing from 3% to 8.6% from June 2019 to June 2020 per the Bureau of Labor Statistics.
The monthly unemployment numbers have become more promising as some jobs return and the economy tries to rebound from the steep and sharp drop of March and beyond. However, few industries are seeing rapid hiring rebounds. Those looking for jobs in this challenging climate should expect to be flexible and patient, and be open to a variety of working options (remote, in person, etc.) in order to find opportunities in the shifting job market.