This analysis covers August 2020 data.
In March, the US took dramatic steps to stop the spread of COVID-19. Many states issued stay-at-home orders and the economy contracted dramatically. Jobs fell away and unemployment spiked.
After the dramatic collapse in March, the economy has improved, with strong job growth and unemployment falling. However, job additions are insufficient and fragile, the virus is still spreading throughout the nation, and full recovery remains far off.
Working Wisconsin is still well behind where it was before the crisis began in February 2020. Additionally, in the context of increasing spread of the disease in Wisconsin (and nationally) the pace of re-opening has slowed and the threat of the disease will continue to keep many at home. For some workers the call back to work was a brief respite. Others are finding out that there is no call back coming; their lay-offs are now permanent. Finally, and critically, it is the disease that is the problem; as long as the disease is spreading people will often choose to stay home when possible and distant when not. This means that a true and complete “recovery” is not yet on the horizon. Especially troubling is the September surge in cases of COVID-19. Wisconsin is now one of the states where growth of the disease is most substantial. The threat to both health and the economy appears to be growing again.
Given the scale of the collapse, we provide information to make clear how Wisconsin is doing relative the last “normal” month (February 2020, before intense contraction brought about by business closures). At the same time, month-to-month changes to demonstrate the trajectory of the recovery from the month of March which was the depth of the contraction. Hopefully a steady recovery started in April, and we’ll see progress on indicators each month, with more jobs and lower unemployment. That is certainly true from April to August. But the strength of recovery is slowing substantially Further increasing disease especially in September, and the restrictions on the economy as a result also portend slower recovery or even losses at some point. Federal enhancements of unemployment insurance have helped carry workers and the economy, but they ended at the end of July. Without federal investment in state and local government and some source of income for the unemployed, it is likely the recovery will continue to lose steam.
Wisconsin Job Loss: -238,500 (Jobs in August Relative to February 2020)
With 238,500 fewer jobs than in February, in August Wisconsin’s labor market remained 8% below its level before the COVID-19 crisis. Even with the growth we have had since March, this jobs hole still far outstrips job losses of the Great Recession a decade ago. A weak labor market tips the balance of power toward employers because workers are easier to replace. As a result, even for those with jobs, job losses on this scale make harder to secure overtime or ask for time off, harder to complain about sexual harassment or racist coworkers, and harder to secure wage increases. In this context, some employers are seeking wage reductions through furloughs or other means.
In August, the Wisconsin labor market has 8% fewer jobs than it had in February.
- At the depth of the COVID-19 economic collapse (April), Wisconsin was down more than 465,000 jobs or 15.5% of jobs.
- At the depth of the 2007 Great Recession, Wisconsin was down 5.8% of its jobs.
- The scale of losses in this period is three times the Great Recession.
- Recovery in jobs: +34,700 jobs in August. While Wisconsin’s labor market is well below February jobs, job growth was very strong in May (+74,900 jobs) and June (+104,600). July and August growth has been weaker, but still positive.
The current 238,500 hole is substantial and a serious problem for working people in the state. The recovery from April to August has been steady but is weakening. With COVID-19 on the rise, gains may be impermanent.
Unemployment Rate August 2020: 6.2 Percent
The unemployment rate measures the share of labor force that is actively seeking but unable to secure work. As with the overall job market, this is a measure of the availability of jobs and economic opportunity. When more workers are unemployed, there is more fierce competition for jobs and employers have more choices and greater leverage over work. Unemployment is first and foremost a crisis for the unemployed, and for those who look but cannot find work and give up looking. These are the ones who have no income from work. But high unemployment also lowers the bargaining power of workers with jobs; when there’s a long line at the door looking for jobs, employers can be less interested in keeping the workers they have around.
In August, some 190,000 Wisconsinites were looking for work resulting in an unemployment rate of 6.2 percent. The is well above the February rate of 3.5 percent.
The highest level of unemployment in this economic crisis was 14.1% in April 2020.
Recovery in Unemployment: The unemployment rate edged down again in the last month from 8.5% in June to 7.0% in July to 6.2% in August.
Leisure and Hospitality Industry Hardest Hit: 77,900 Jobs Lost
The Leisure and Hospitality Industry — restaurants, bars, hotels, etc. – has been the hardest hit in the COVID-19 economic collapse. Even before the collapse, the industry’s workforce of waitstaff, bartenders, dishwashers, housekeepers, and others suffered low-wages, volatile and unpredictable hours, and few benefits. These workers – more likely to be women and people of color – are now facing a new reality. Finding steady work in the industry is likely to remain difficult.
In April, at the depth of the crisis, more than half of workers in this had lost their jobs. The industry has grown in the time since that contraction, adding 5,100 jobs in August (relatively weak growth; well below the 48,000 jobs added in this sector in June). The industry remains more than 25% below pre-COVID-19 employment levels. The growth of the disease in the last months and corresponding bar and restaurant closures in the state mean that these gains may be impermanent.
At the other extreme is the least impacted industry which has lost only 2.9% of its jobs: Financial Activities.
Since the March COVID-19 economic collapse, there have been strong months of job growth and falling unemployment. These indicators improved rapidly across May and June. In July and August, there has been improvement, but at a much slower pace. It is too early to predict that “normal” is on the horizon. This recovery is fragile and increases in infection suggest it may be temporary. Even with the economic growth, the job loss and unemployment remain at extremely high levels. In the coming months, policy choices, both in economic policy and public health, will have enormous impact on what recovery and even “normal” begin to look like.