Job gains lost steam as cases surged
Looking back, the numbers still seem hard to believe.
In March, Wisconsin’s unemployment rate was 3.1%. Nearly 3 million people were working. Help wanted signs were everywhere.
By April, the jobless rate had more than quadrupled to just under 14% in
Wisconsin, according to the federal Bureau of Labor Statistics.
Nationally, the unemployment rate in April was 14.7%, the highest it’s been since the federal government began collecting the data in 1948, according to a report this month by the Congressional Research Service.
It was a breathtaking turnaround brought about by the COVID-19 pandemic and the subsequent shutdowns, lockdowns and overall upheaval that occurred as the virus spread.
In Wisconsin, the unemployment rate has come down significantly since then, and was hovering between 5% and 6% in November and October, respectively.
But those numbers are somewhat deceptive because sectors of the state’s economy, specifically hospitality and travel, have yet to recover from the devastation the pandemic has wrought.
A surge in COVID-19 cases during fall has sent jobless numbers trending in the wrong direction.
“The recovery has been losing steam over the past several months; employment increased by over 170,000 during May and June but we’ve only gotten back another 75,000 since then,” Ryan
Long, labor market economist for the state Department of Workforce Development, said in an email.
“Total employment in the state is actually down by 16,000 since September.”
Long is part of a team of economists that watch labor markets in the state. He primarily covers east-central and northeast Wisconsin, including the Green Bay, Appleton, Oshkosh, Fond du Lac, Sheboygan and Manitowoc areas.
The situation in Wisconsin “closely mirrors national trends where job growth has decelerated significantly since the initial gains in the late spring and early summer,” Long said. “The latest national jobs report showed an increase of 245,000 jobs in November, which is less than half the growth in October and continues a trend we’ve seen since July.”
It’s a situation economists are watching carefully.
“While the latest employment data show continued sequential growth, the rate of improvement is slowing and the proportion of industries adding jobs is also declining,” said Abdur Chowdhury, professor emeritus of economics at Marquette University, in an email.
During the week of Dec. 14, “885,000 additional workers filed an initial claim for unemployment insurance, marking the second consecutive weekly increase and the highest reading since early September,” Chowdhury added.
The most recent numbers may end up looking worse in coming weeks.
“The bulk of the impact from the most recent spike in COVID cases will show up in the December data, which will likely be dragged down further by the lack of hiring at retailers and renewed shutdowns at restaurants and entertainment venues,” Chowdhury said.
Concerns are widespread. “Before trends improve on both the pandemic and the economy, we’re in for a rocky ride,” said Mark Hamrick, a senior economic analyst at bankrate.com. “Data on jobless claims and retail sales raise alarm about the near-term outlook.”
Also of concern is that the number of long-term unemployed workers has grown as the pandemic has continued.
“We know from the national jobs reports that long-term unemployment is becoming a bigger issue now than it was just a few months ago,” Long said.
Eventually, the situation will stabilize.
“I am not certain that I would predict jobs that are gone for good,” said Bret Mayborne, economic research director for the Metropolitan Milwaukee Association of Commerce, in an email.
The jobs might look different when they return.
“The nature of work in many sectors will adjust to the new normal (whatever that becomes) but the underlying demand for these goods and services will largely still be there,” Mayborne said.
The employment situation likely won’t improve until all sectors of the economy have recovered from pandemic-related losses.
“As the numbers indicate, the leisure and hospitality sector will take time to fully recover due to customer unease and government restrictions on business,” Mayborne said. “In general I tend to think that job levels might be pretty near full recovery by fall 2021 depending in part on how the rollout of the vaccines progresses.”
Milwaukee metro regains half of lost jobs
Mayborne said the metro Milwaukee area has regained about half the jobs it lost in the initial downturn when the pandemic first took hold.
“Using a seasonally adjusted series by the U.S. Bureau of Labor Statistics, the four-county metro Milwaukee area saw a nonfarm payroll job decline of 111,200 jobs in April vs. March,” Mayborne said.
The Milwaukee metro area has gained jobs since then, but the gains have grown smaller and actually began falling again as COVID-19 cases spiked.
In May, the metro area saw increases of 14,600 jobs, 26,800 jobs in June, 8,000 jobs in July, 5,800 jobs in August and 3,500 jobs in September “for a cumulative gain of 58,700 jobs added back in the May-to-September period,” Mayborne said.
“In October vs. September there was a 2,100 job loss leaving a net recovery of 56,600 jobs or 51% of the initial job loss,” Mayborne said.