Why the job market is in for a long and bumpy recovery
As David Spatafore looks at the COVID-19-depressed economy, he sees good times just ahead.
"Our plan right now is kind of shooting for summertime to be like the Roaring '20s," said the owner of San Diego restaurant company Blue Bridge Hospitality.
Pent-up demand after almost a year of social distancing and lockdowns has created a big reservoir of consumer demand, he thinks, and hungry customers will soon come surging back.
But there's a catch: Spatafore doesn't expect to hire back all of the almost 400 employees he had at the peak of his business before the new coronavrius struck.
Many economists agree with Spatafore — on both counts: the revival of the economy by Labor Day, but after an initial burst of hiring, a bleaker outlook for jobs.
On Friday, the pandemic's capacity to throw previously self-supporting Americans out of the job market was demonstrated once more on a nationwide scale when the Labor Department released a new round of jobs data.
Despite some plateauing of new coronavirus cases and a surge of hope as the Biden administration pushed to accelerate vaccinations, job growth essentially stalled in January for the second month in a row.
The economy added a measly 49,000 jobs last month after losing 227,000 in December. The nation's unemployment rate went down to 6.3% from 6.7%, but that was largely because hundreds of thousands of people dropped out of the labor force. More workers were hit with permanent layoffs last month, and 40% of the 10 million officially unemployed now have been without work for more than six months.
The economic impact of the pandemic has sometimes stemmed from government-mandated lockdowns and distancing requirements, but the more far-reaching effects may involve acceleration and intensifying trends already at work.
Even if President Biden is relatively successful in dealing with the challenges, most analysts expect recovery on the jobs side to be long and slow. Stock markets have already bounced back. And the nonpartisan Congressional Budget Office has projected U.S. economic output to fully recover this summer, but not the jobs — not until 2024.
Assuming $2 trillion in additional fiscal spending, Mark Zandi of Moody's Analytics predicted all the jobs to return in May 2023 — still more than three years for a full recovery.
The pandemic has triggered potentially far-reaching changes in consumer behavior and deeply rooted business models. It has also accelerated changes that were already underway before the coronavirus swept across the country.
Many of these changes may be welcomed, but they will also disrupt the jobs of millions of workers and businesses even if new job opportunities eventually arise.
Some jobs will shift from urban business districts to more residential areas as more people work from home. The Labor Department said 23% of employed people worked from home in January.
Also likely to outlast the pandemic: the surge in online shopping and home delivery of everything from prescription drugs to fresh vegetables, and the rise of "gig" and contract jobs. There may be fewer salesclerks at stores but more retail customer service reps handling online orders.
And many of the pre-pandemic jobs just won't exist at all.
For several years, Lillian Isabella, an actress and playwright, supplemented her income by playing the role of a patient to help medical students prepare for an exam testing their bedside skills. She's one of hundreds of people across the country who have played "standardized patients" in various programs to turn out better doctors.
But last week, after putting that test of clinical skills on pause during the pandemic, U.S. medical licensing officials decided to abolish it for good — a painful reminder of how the economic pain of COVID-19 can touch even the smallest nooks and crannies of the economy.
"When it was on, it was a pretty good form of steady work," said Isabella, 31, who lives in New York.
In San Diego, Spatafore sees some of those same factors at play in his company, which operates a half-dozen restaurants, a beach club, dessert shop and a public market.
Last March, Spatafore laid off most of his employees, calling them in one by one. His business survived the spring lockdowns with the help of family members and a $1.2-million forgivable government loan, and then got back up to 280 employees last summer before the latest COVID surge knocked his payroll back down under 100.
"It's been a roller coaster of 11 months," he said.