Jobs up, but long way to go
Friday’s unemployment figures are yet more proof that the U.S. economy is roaring back. They also show, however, that there are limits to the nation’s recovery so long as fear of the novel coronavirus remains.
The headline unemployment rate’s rapid decline to only 8.4 percent is the big news. It was 14.7 percent just four months ago, and millions more people weren’t counted as unemployed then because they had dropped out of the labor force. Nearly 14 million Americans have gone back to work since the height of the pandemic shutdowns. That’s a stunning rebound that President Donald Trump will surely tout.
The recovery would likely be stronger were it not for some states continuing covid-19 restrictions. Most of California, which represents nearly 12 percent of the nation’s population, remains under severe restrictions that limit most retail stores and restaurants. New Jersey reopened its restaurants and movie theaters only on Friday, and then only at 25 percent capacity. New York City still bans indoor dining, and both Pennsylvania and Washington state restrict indoor dining to 50 percent or less capacity in their most populous counties. All of these restrictions keep employment in the heavily hit restaurant industry below levels seen in other states.
The country needs to add roughly another 11 million jobs to be back at pre-pandemic employment levels. If the recovery continues at its current pace — employment is up by an average of 3.5 million per month since April according to the household survey — the nation would be back to normal by Christmas. The underlying data from the employer survey, however, shows why that’s not likely to happen.
While employment is down in nearly all sectors of the economy, much of the remaining shortfall is in the leisure and hospitality sector. Employment in that sector remains roughly 4 million people below the levels of a year ago. That number barely budged last month, and it won’t surge until people feel safe going to restaurants, bars and movie theaters at pre-pandemic levels. That’s not likely to happen anytime soon.
The continued closure of schools, colleges and day-care centers is also seriously depressing employment. The employer survey lumps people in these fields into four categories (educational services, child day-care services, state government education and local government education), and the number of workers in these fields remains nearly 1 million lower than it was a year ago. These people won’t be coming back to work until the nation’s schools and day-care centers are open and running at full capacity. Continued fears associated with reopening these entities, which require people mingling indoors at close quarters, will keep employment down for the foreseeable future.
Other dark spots pop up with a closer look at the data. Employment in the motion-picture and transportation industries remains significantly down from a year ago. Some types of retail stores, such a department stores and big warehouse superstores, are bouncing back, but employment in clothing, sports apparel and smaller retail stores remains significantly down. Temporary-help services have lost more than 500,000 jobs since last year, and myriad sectors that support office work also have lost hundreds of thousands of jobs. It’s again difficult to see how these sectors recover fully without people feeling comfortable going back to the office, taking public transit or airplane trips and shopping in-person at stores for goods they could buy online.
None of these problem areas should detract from the good news. Millions of people are back to work and enjoying the financial and personal benefits of something more akin to normal life. It could have been different, and we should be thankful for what we have achieved.
Political leaders from both parties, however, need to be prepared for the hard work that lies ahead. The economy will soon be bumping up against a ceiling that will prevent employment from rising much higher. That means we will be experiencing something more like the “jobless recovery” of the early 2000s, when stock markets rose while unemployment remained stubbornly high, as opposed to the white-hot labor market of the past four years. Solving that challenge will require policy innovation and a lot of government money.
The good news is that much of the country has experienced the V-shaped recovery Trump sought. The bad news is that it’s going to take more than letting the free market’s animal spirits run wild to get back to where we were.