The State of Recovery

The US lost 22 million jobs at the start of the pandemic. In the most recent jobs report (March), the US economy created 916,000 new jobs and pushed the unemployment rate down from 6.2% to 6%. With the economic recovery picking up steam, new questions arise. How even will the recovery be across ethnicities? Across industries? What issues will the recovery create? This pandemic has affected some groups more severely, so recoveries in those areas are particularly important to smooth the shock.

The travel and hospitality industry was one of the worst hit by the pandemic and is still 3 million jobs short of pre-pandemic levels. Google search activity indicates that a summer travel boom is in the making, though, as resort and hotel searches are at decade highs. The gains of this summer will mainly be limited to vaccinated destinations though, leaving poorer, tourism-dependent countries behind. Tourism will bring jobs back to travel hub cities enduring an exodus of residents. Broadway, for example, employs almost 100,000 in the New York metro area. Leisure and hospitality seems on track for a strong rebound, in wealthy countries at least. Until the summer, jobs recovery has been on par with other sectors.

The restaurant industry also shows clear signs of recovery, but a new issue is finding enough workers. The National Federation of Independent Business survey found that 42% of business owners had job openings they could not fill, a record. The current recovery creates an awkward transition phase. Demand is picking up, yet people are still wary of covid risk and taping into unemployment benefits. This is reducing the amount of labor supplied, as these factors raise people's reservation wages. Many people in the restaurant sector have also transitioned into jobs like warehousing, with Amazon hiring hundreds of thousands of people.

Taking a look at the recovery by gender, Labor Department data indicates that almost 500,000 women entered the labor force while 144,000 men left it, equalizing the number of men and women having left the workforce since the pandemic's start. Such trends likely stem from school reopenings and how women "still handle main household tasks" according to Gallup data. School closures forced many women out of the labor market to care for children, but as schools reopen, this burden is lifted and female participation is rebounding. According to the Washington Post, the pandemic also affected more female-dominated industries. Women accounted for 56% of displaced workers in February 2021. With that gap now closed, the risks of long-term set backs in gender equality seem to be avoided. 

Employment has been recovering across all races, but it has not been very even. Black and Hispanic unemployment is higher than White and Asian for both men and women. Interestingly, Asian unemployment rose 1% in March. Another caveat to the rosy recovery numbers is labor force participation rate. According to the New York Times, unemployment is above 9% when accounting for the millions who exited the labor force. Getting these people back into the labor market is key closing the pandemic's disproportionate damage on minority groups' economic health. It is also central to addressing inflation concerns. If firms like aforementioned restaurants cannot find workers, they will raise wages even though there are many people who just aren't participating. This will contribute to inflation, possibly hindering quality of life improvements.

Sources:

• https://news.gallup.com/poll/283979/women-handle-main-household-tasks.aspx
• https://www.cnbc.com/2021/04/14/restaurants-see-diners-return-but-feel-a-labor-crunch-.html
• https://www.washingtonpost.com/business/2021/04/02/march-jobs-report-unemployment-stimulus/
• https://www.nytimes.com/2021/04/02/business/economy/jobs-report-march.html
• https://www.wsj.com/articles/economic-growth-is-set-to-surge-hiring-might-not-keep-up-11618738202
• https://www.economist.com/leaders/2021/04/17/the-fed-should-explain-how-it-will-respond-to-rising-inflation