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U.S. Jobs: Pandemic Still Undermining Employment

The COVID-colored employment picture in the United States remains murky, despite a return to work (or first-time employment) for nearly 2 million individuals. Ed Tittel looks inside the numbers.

The U.S. workforce continues to be battered by COVID-19.At the worst, somewhere around 36 or 37 million Americans were out of work earlier this year. To be sure, a gain of 1.8 million new U.S. jobs in July would normally a big number, and a good sign. Given current circumstances, however, and the size of the workforce deficit to be overcome, 1.8 million (about 5 percent of the total jobs lost) is, well, really not that much to be excited about.

 

July’s numbers also represent a profound blow to hopes for what economists call a “V-shaped recovery” (rapid decline reversed by a rapid return to normal or previous levels). 1.8 million jobs added is not a steep enough rise to tighten up the gap between fall and rise in the “V.”

 

Futhermore, with unemployment still higher than 10 percent, the comparatively modest gain is an unwelcome indicator that the road to recovery may be longer, bumpier, and generally more ugly than anyone might like (or wish for).

 

How Do the States Stack Up, and How Does America Compare to the Rest of the Globe?

 

The latest monthly report, issued earlier today, already reflects a reality that’s two weeks old. And a lot has happened in the last two weeks. Infection rates in many U.S. states are pretty high, with rates per 100,000 population running right now in a range of 29-to-39 for the worst-off states (source: this morning's Washington Post).

 

This is set against a background of a rate of 15 per 100,000 population for the entire United States, and 2.4 per 100,000 population for the entire planet. No other country has a higher COVID-19 death toll than the United States right now, and very few countries have infection rates higher than 10 per 100,000 population.

 

Note that infection rates represent the number of new cases daily; active cases represent the population currently infected with COVID-19. In the United States right now that rate is 341 per 100,000 population — by contrast France’s active rate is 67 per 100,000, Germany’s is 25 per 100,000, and Australia is at 30 per 100,000 (source: esri COVID-19 Trends in Each Country).

 

What Does the Latest Employment Situation Summary Say?

 

The U.S. workforce continues to be battered by COVID-19.Against this somewhat gloomy background, let’s examine what’s in the U.S. Bureau of Labor Statistics' latest Employment Situation Summary report. Unemployment declined by 0.9 percent to 10.2 percent, with the official number of unemployed falling by 1.4 million to 16.3 million.

 

This represents an increase in unemployment of 6.7 percent and 10.6 million individuals since the numbers reported in February. The number of temporary layoffs decreased by 1.3 million to 9.2 million which, as the report says, is “about half its April level.” So far, so good.

 

Now, let’s look at where employment gains occurred in July:

 

Leisure and hospitality went up by 592,000, around one-third of the overall employment gain reported. What goes up can also come down, of course, so next month’s numbers should be even more interesting.

 

Government employment increased by 301,000 but remains 1.1 million below the February numbers. Many of these jobs were in government education of some kind (at the local and state levels).

 

Retail trade grew by 258,000 jobs, but still remains 0.9 million below its February levels. This is another sector that may contract in the August report because of more recent COVID-19-related restrictions.

 

Professional and business services increased by 170,000, and is still 1.7 million below the February number. Most of these jobs were in temporary help services (144,000) and may also contract as well.

 

Other services grew by 149,000 jobs, with many of those in personal and laundry services (119,00). Overall, these numbers are still down by 627,000 from February.

 

Health care added 126,000 jobs, spread across practices and offices for dentists (up 45,000), hospitals (up 27,000), physicians (up 26,000) and home health care services (up 16,000). Nursing and residential care facilities were down (loss of 28,000), and the overall sector remains down (loss of 797,000) since February.

 

Social assistance increased by 66,000, with child daycare services absorbing most of that gain (up 45,000). Overall, this sector is down by 460,000 jobs since February.

 

The U.S. workforce continues to be battered by COVID-19.Transportation and warehousing is up by 38,000 for July, after more than double than amount in June (up 87,000). The overall sector remains down by 470,000 since it hit its most recent peak in January.

 

Manufacturing grew by 26,000 in July, though the sector remains down 740,000 since February.

 

Financial activities were up by 21,000 for July, with much of that in real estate, rentals, and leasing (up 15,000). The sector is down by 216,000 since February.

 

Construction added 20,000 jobs in July, after an astonishing jump of 619,000 in May. Overall, this sector is down by 444,000 since February.

 

Mining continued its slow decline in July (down 7,000), and the remaining sectors — including our home sector of Information — were pretty much flat.

 

What we see here is a broad but fragile recovery, one in which the biggest gains — especially leisure and hospitality and retail trade — are subject to quick reversals. This will continue to happen as and when people reduce their public exposure to reduce risk of infection, or to comply with stay-at-home orders that limit them to essential activities only.

 

What’s It All Mean, Mr. Wizard?

 

The Washington Post assesses things diplomatically when staff writer Eli Rosenberg observes in his opening sentence, “The job additions were sizable, but there are signs that the labor market recovery has cooled.” He goes on to comment that, against an increase of 2.7 million jobs in May, and 4.8 million in June, 1.8 million in July is somewhat less exciting that it might ordinarily be.

 

I agree that a single month of decline does not a trend make, but a dip in the slope (and a reduction of more than 60 percent in growth) from the previous month is not what anybody wants to see happening right now.

 

NPR’s coverage is likewise cautious, as it interprets July’s numbers “to suggest a long road back to full employment for the tens of millions of people who have been laid off during the coronavirus epidemic.” I can’t help but agree that these latest numbers are somewhat troubling, and do indeed suggest some bumps (including dips) in the emerging road to recovery.

 

The U.S. workforce continues to be battered by COVID-19.NPR also has this to say about how to understand Employment Situation Summary results: "The monthly report from the Labor Department tracks job gains between the middle of June and the middle of July. Much of the improvement occurred in late June. Since then, the labor market appears to have lost steam, as infections from the virus continued to climb."

 

That analysis appears to concur with my belief that the curve (and the worm) has turned, and we’ll see something smaller and different for August. Fortunately for most of my readers (and me), we work in the information sector, which can be helpfully thought of as defined by CompTIA.

 

CompTIA's definition of tech worker or information worker includes people who work for companies with an IT or software/services development focus, as well as people who work in the IT department or perform IT function at other kinds of companies and organizations. Employment across both sectors has fallen since February (see the latest CompTIA IT Employment Tracker for details).

 

IT unemployment in the United States stands at 4.4 percent, according to CompTIA's most recent analysis, which is in sharp contrast to the national average of 10.1 percent. Their more nuanced approach to IT employment shows a loss of 17,300 technology sector jobs in July, and a decline of 134,000 IT jobs across the entire economy.

 

CompTIA also finds, however, that “net IT employment is UP by more than 203,000 positions since the outbreak of COVID-19” (emphasis mine, from an Aug. 7 press release). Thus, things for IT people are nowhere near as grim as they are in other sectors of the economy — although it’s still not sunshine and roses for IT workers, by any stretch.

 

My prediction: things are about to get more interesting and variable, and not in a good way. But, as usual, only time will tell. Stay tuned, stay safe, and be well in the meantime!

 

ABOUT THE AUTHOR

Ed TittelEd Tittel is a 30-plus-year computer industry veteran who's worked as a software developer, technical marketer, consultant, author, and researcher. Author of many books and articles, Ed also writes on certification topics for Business News Daily, and on Windows desktop OS topics for TechTarget and Win10.Guru. Check out his website at www.edtittel.com.