COVID-19 Toll On US Employment: One Year Look Back

March 23, 2021 | read time icon 10 min

Sinem Buber, Ph.D.
Share this

As of March 2021, it has been one full year following the mandatory lockdowns in US economy to stop the spread of COVID-19.

Looking back at the employment levels after one year, we can better measure the devastating impact of COVID-19 on the US labor markets with revised employment estimates.

According to ADP National Employment Report® revised estimates, the US labor market lost almost 20 million jobs (around 15% of all jobs) in March and April 2020. In other words, one in every 6 US workers lost their job within 2 months.

As of now, only 10 million of those jobs are recovered. Today the US labor market still needs 9.5 million more jobs to go back to the employment levels of February 2020. As of February 2021, the US employment level is still at 93% of its value at February 2020.

SUMMARY OF THE AGGREGATE EMPLOYMENT NUMBERS DURING THE PANDEMIC

 Total privateGoods producingService providing
  
Employment Share in Feb’2117%83%
Employment Share in Feb’2016%84%
Total Jobs Loss in March and April 2020
(in thousands)
-19596-2306-17289
Total Job Loss from Feb’20 to Feb’21
(in thousands)
-9598-875-8723
Attribution of missing employment in March’20 & Apr’2012%88%
Attribution of missing employment from Feb’20 to Feb’21 9%91%

When we compare the employment share of goods producing industries and the service providing industries with the share of job losses in each, we can easily see that service providing industries lost jobs disproportionately due to pandemic lockdown restrictions and a lower share of essential functions.

Though the goods producing industries composed 17% of the overall employment back in February 2020, during the first 2 months of the pandemic, they attributed only 8.5% of all the jobs lost. Conversely, the service providing industries employed 83% of the jobs in the US but accounted for 91.5% of the 20 million jobs lost during the same time.

Though the jobs losses have been disproportional, the gap was not large enough to shift the balance of the employment share between goods and services. As of February 2021, the goods producing industries employ 16% of all the jobs in the US, compared to 17% a year ago.

The Tale of Two Industries…

Although there is no industry which benefited from the COVID-19 measures, the reaction and recovery have been different for each industry.

Leisure and Hospitality Plunged…With no surprise, Leisure and Hospitality has been hit hardest among all industries following the travel restrictions. Even though both domestic and international travel restrictions have been relatively more flexible after the new year, we have not seen the impact on the industry employment numbers yet. During the first two months of the pandemic, Leisure and Hospitality lost as many as 7.7M jobs which is almost 42% of all jobs lost in the entire economy, even though the industry employed only 11% of the US workforce back in February 2020. As of February 2021, even after 11 full months into the recovery period, the industry still has 3.9 million jobs to recover, which account for 39% of the 9.5 million jobs which have not been recovered yet.

As a result of the disproportional jobs loss and asymmetrical recovery process, the employment share of the industry went down from 13% to 11% of the US workforce, according to the ADP NER® estimates of February 2021. Though the partial lift in business restrictions back in June 2020 helped to recover a small portion of lost jobs, as seen in Chart 1, the recovery has stalled since then and the industry employment is still as low as 76% of its value a year ago.

Good news… Since the announcement that the vaccine will be available to the general public by May 1st, there is hope for the industry, as well as the overall labor market, to accelerate the recovery of the remaining 3.9 million lost jobs.

SUMMARY OF THE AGGREGATE EMPLOYMENT NUMBERS FOR SERVICE PROVIDING INDUSTRIES

COVID-immune Financial Services…The story has been completely the opposite for Financial Services. Due to the recent and rapid development of FinTech services and decreasing size of the branch activities, the industry employment was already lean.

Additionally, being one of the essential functions in the economy combined with a high share of jobs that can be performed virtually unlike other essential functions such as Construction, have put the industry’s response and recovery to a completely different place in the economy.

The industry lost only 260 thousand jobs which is around 3% of all finance jobs for the first two months into the mandatory lockdown. The recovery in the industry started as early as May 2020, even before the first phase of lifting restrictions took place during the June-July time period since the industry was categorized under essential services. As of now, the industry is at 98.3% of its level a year ago, less than 1.7% shy of its full employment in February 2020.

EMPLOYMENT LEVEL OF SELECTED INDUSTRIES INDEXED TO JANUARY 2020

Dim Light at The End of The Tunnel…

Apart from the opposing stories of Leisure and Hospitality and Financial Services, the story of two other industries: Natural Resources and Mining and Information have been quite different from the rest of the labor market as well.

No sign of recovery…Both Information and Natural Resources and Mining sectors have been falling off  since the Great Recession. While Natural Resources and Mining had been hit several times not only during the Great Recession but also due to the oil price shocks, Information industry employment has undergone steady reduction because of widespread automation practices.

The responses of these two industries have been the same to the COVID-19 induced recession as well. The information industry lost almost 11% whereas Natural Resources and Mining lost 12.5% of its employment during the first phase of pandemic. Though the sudden decline in employment is similar to the rest of the industries, there has been no sign of recovery for these two industries. We have not observed any significant number of job gains even when the economic lockdown restrictions were partially lifted in the beginning of Summer 2020. The industry employment levels have been quite flat for the last 10 months.

Paycheck Protection Program Helped Small Businesses …

The story of the business size classes has been little different than the industries. During the first two months into the pandemic, small, medium and large businesses reported jobs losses almost proportional to their relative share of employment.

Small businesses in the lead for full recovery…Small businesses accounted for 27% of the job losses, aligned with their employment share of 26%. However, the Paycheck Protection Program helped small businesses with less than 50 employees recover the job losses much faster than large businesses with more than 500 employees.

As of February 2021, small businesses account for 19% of the 9.5 million jobs that have not been recovered, compared to 27% of all jobs lost in the beginning of the pandemic. As of today, small businesses recovered 66% of the jobs they lost in the first two months into the pandemic.

SUMMARY OF THE AGGREGATE EMPLOYMENT NUMBERS FOR COMPANY SIZE SEGMENT

Slowest recovery in large businesses…On the other hand, large businesses account for 57% of the 9.5 million “missing” jobs in February 2021, compared to 48% of all jobs lost during March-April 2020. Large businesses recovered only 42% of the jobs they lost during the pandemic, reporting the least gains in comparison to the share of losses among all 3 size classes.

EMPLOYMENT LEVEL OF COMPANY SIZE CLASSES INDEXED TO FEBRUARY 2020