July 2 (Reuters) – No major U.S. industry has returned to pre-recession employment levels in the 16 months since COVID-19 torpedoed the job market, a sad fact about the lasting brand of the pandemic as the nation heads towards independence day weekend.
Labor Ministry data released on Friday showed total employment in the top 10 non-government sectors ranged from 87% to 99% of their levels in February 2020, even those relatively untouched by the pandemic have yet to fully replenish their losses.
“We are an economy in transition,” Labor Secretary Marty Walsh said in an interview, adding that it will be “a few more months” before the economy hits pre-pandemic numbers in all countries. areas.
“We have to focus on the areas that might not grow – is there something else going on? Lack of supply? Permitted? Who knows what that might be.”
The fastest growing leisure and hospitality sector, creating 343,000 jobs in June, with restaurants and hotels hiring at their fastest pace since February. Even so, industry employment – which at its lowest last year lost about half of its workers – has only recovered to about 87.1% of its pre-pandemic level.
In contrast, employment in the financial sector – one of the sectors least affected by the pandemic, as many workers were able to work from home – has almost recovered, to 99.2% of its level of ‘before the crisis. But this level has not changed in three months.
In construction, it is 96.9%, a figure also which has not improved since the end of winter. Construction employment, in fact, has fallen for three consecutive months in what is typically a hiring season for the industry, with a lull officials say could be the result of a shortage of building materials. .
Overall, in none of the major industries did employment surpass February 2020 levels, when the U.S. economy was, by most accounts, at full capacity.
An important factor, according to economists, is that millions of Americans appear to have left the workforce, either to retire or to care for children or elderly parents, and it is not known when. if they will come back.
Labor force participation – a measure of the number of workers working or looking for work – was stuck at 61.6% in June, according to Friday’s report, well below the 63.3% recorded before the pandemic.
As factors limiting labor supply, including health and childcare concerns, fade, that figure is expected to rise, said Kathy Bostjancic of Oxford Economics. She expects a return to around 63% by the end of next year.
But the recovery in employment may not be uniform across industries, she said, with automation and other factors allowing some industries to constantly cope with fewer workers.
“The longer it takes for the supply / demand balances to align better, perhaps the more employers rely on automation to meet the needs of labor demand in certain sectors,” he said. she declared.
Such a move would mean higher productivity growth, if aggregate economic output remains on its meteoric growth path well above trend for this year and next. But it also suggests lower inflation, which, other things being equal, moves the opposite of productivity, decreasing as productivity growth increases.
This in turn could complicate matters for policymakers at the US central bank, who must figure out how to calibrate the policy to generate both maximum employment and stable inflation at 2%.
One bright spot in the June Jobs Report was the increased labor force participation among 25 to 54 year olds, a group unlikely to retire and in the prime of their working age. That jumped to 81.7%, from 81.3% in May, but remains down from the 82.9% level in February 2020.
“This bodes well for employment to return closer to or possibly above pre-pandemic levels if the increase continues, as I believe,” said Roberto Perli of Cornerstone Macro, although Extended unemployment benefits as well as automation and fear of infection can be accommodated, he said. “At the end of the day, I am sure that after the pandemic some sectors will perform much better than others in terms of jobs.”
With much of the job growth in low-wage industries like restaurants, the latest data may raise questions about the trajectory of household spending, a backbone of the U.S. economy.
For now, this won’t matter much, given the high level of household savings accumulated through government assistance and the savings accumulated among high-income families who could not use their funds. money for travel and recreation while the pandemic raged.
âIt would be a drag on consumption later, after excess savings are exhausted, if employment remained below for a long time before the pandemic,â Perli said.
Reporting by Ann Saphir and Howard Schneider; Editing by Dan Burns and Andrea Ricci
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