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Job Market Trends: Fact vs. Fiction

October 2, 2020

The media paints a certain picture of how the job market is performing - but what do the leading indicators and numbers say? Catch our newest TrendsTalk episode with ITR Senior Business Advisor Alex Chausovsky to learn more.

 

 

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Transcript by Rev


Hello everyone. My name is Alex Chausovsky, and thanks for joining me for the latest edition of TrendsTalk with ITR Economics. Today I wanted to talk to you about the job market, because I think that there is a lot of misconception out there. And certainly I think it's important for you to make your decisions based on the best quality and relevant and accurate data points. So, I wanted to talk to you about what numbers are actually telling us about the situation in the job market right now. Many of you I'm sure have read some of the horrific storylines and have heard all the noise surrounding the massive numbers of people in the unemployed ranks but I think you have to dig deeper. You have to ask the question, what is the relevance to me in order to really understand the ramifications to your industry and your business?

So, first let me address this notion that there are tens of millions of people in the unemployed ranks. That's simply not true. Now we had 6.2 million people unemployed before the pandemic started, before the collapse in oil prices back in the March and April timeline, and that number certainly did increase by a significant amount by April, that unemployment number reached 22.5 million. But the good news is that, it has since April, now with the latest data through August has fallen back down to 13.7 million. So, what it means is that it is a difference of about seven and a half million people that are currently in the ranks of the unemployed relative to where we were before the pandemic. That's obviously a big number and it's a negative number, but it's not nearly as negative as some people would lead you to believe. But the reality is that of that seven and a half million, that pain is most acutely felt in three key segments.

And that's the retail sector, the restaurant sector and leisure and hospitality. But even in those industries we're seeing some encouraging news, for example, retail, which peaked during the 2019 holiday season at around 16.2 million people in the employed ranks was down to 13.2 million during the periods of the shutdowns in April, but it has come back to 15 million as of August. So, overall net loss is about 1.2 million people relative to the previous peak. In the restaurant sector, which peaked last August at 12.3 million people, that employment was down to just 6.2 million as of April. But as of today, with the latest data which is through August, it's back up at 10 million people. So we see about 2.3 million jobs lost in that particular sector. And leisure and hospitality, which is by far the worst hit, that peak at 17.3 million people last July, it was down to eight and a half million people in April but it's back to 13.2 million today.

And you can see that's where the bulk of the negativity is concentrated. We have about 4 million jobs lost from that particular industry over the course of the pandemic. We are seeing encouraging signs in all three segments, but the industries that are typically associated with ITR clients namely, manufacturing and construction, are actually doing much, much better than even those three that I just described. So, specifically in manufacturing, the employment numbers peaked last August at 12.9 million. We saw that decline to 11.4 million in April, but it is now back up to 12.2 million. And in addition, there's about 336,000 job openings in the manufacturing sector today. So you can see the losses there have not been nearly as scary as what some people would have you believe.

In construction, the story is quite similar. It peaked at 7.8 million people employed as of last August, we felt the 6.5 million people in April, but today we're at 7.5 million people as of the latest data. And there's also about 250,000 openings in the construction job market right now as well. So, I think the important thing that I want to convey to you here is that you've got to be able to get past the emotions, the fear and the noise associated with some of the numbers that you're reading about online and hearing about in the media. You've got to make your decisions based on relevant and pertinent information.

So, when you think about the job market, really focus on the specifics of your industry and your sector, and then think about the implications that that has on your own plans for the future. Because as we see the economy is already showing some real evidence, green shoots of recovery. We think that that's going to build into 2021, and really that next year is going to be a very nice cyclical rising trend in the US economy coming off of a low point in the US industrial production indexed in the first quarter of next year.

So, make decisions using relevant, accurate, and reliable information. If you need some help identifying specific trends to your market, please reach out to us. We're here to help you with that. And I hope you've enjoyed our talk today. I hope that's been enlightening and interesting, and I hope it helps you understand a little bit more of the reality that's going on in the job market right now. So, with that, thank you so much for your time and I look forward to seeing you on the next edition TrendsTalk with ITR Economics. Have a great day.

About

Since 1948, we have provided business leaders with economic information, insight, analysis, and strategy. ITR Economics is the oldest privately held, continuously operating economic research and consulting firm in the US. With a knowledge base that spans six decades, we have an uncommon understanding of long-term economic trends as well as best practices ahead of changing market conditions. Our reputation is built on accurate, independent, and objective analysis.