This analysis covers October 2020 data.
Context
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 improved rapidly in early summer, with strong job growth and unemployment falling. However, in recent months job additions were less robust and in October the economy actually lost jobs instead of adding jobs. Wisconsin is at the center of the spread of the virus and full recovery remains far off. Note, for perspective, that in the Great Recession of 2007, Wisconsin lost 5.8% of its jobs at the worst point of that crisis. Even after all the job growth since the March 2020 collapse, Wisconsin has 7.5% percent fewer jobs today than in February. We are in a deeper job hole than we ever faced in the previous recession. And at least in the last month, the hole is getting bigger.
In the context of increasing spread of the disease in Wisconsin (and nationally) new public health rules 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 current surge in cases of COVID-19. Wisconsin is at the forefront of spread of the disease. 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. A recovery started in April, and until October, we experienced progress on indicators each month, with more jobs and lower unemployment. But the recovery ran out of steam, and in October, jobs were lost and unemployment grew slightly. The conditions that caused this – insufficient federal investment in supporting people through the crisis, and the spread of the disease itself – make it likely that we will see losses in coming months. Without federal investment in state and local government and some source of income for the unemployed and with increasing transmission of the disease in the state, we are likely to continue to face job loss and economic crisis alongside the pandemic.
Wisconsin Job Loss: -226,000 (Jobs in October Relative to February 2020)
With 226,000 fewer jobs than in February, Wisconsin’s labor market remains in a substantial deficit. Worse, that deficit is larger than it was in September because the state lost 14,7000 jobs in October. The recovery was slowing, but we now may be falling out of recovery into another slump. The job hole is significant: our current jobs deficit still outstrips the depth of job loss 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 October, the Wisconsin labor market had 7.5% fewer jobs than it had in February.
Context
- 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 the contraction was three times the Great Recession.
- Tipping away from recovery: In October, Wisconsin lost 14,700 jobs. This is bad news after months of gains. 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, August, and September growth was weaker, but still positive. In October, the trend moved back to loss.
The current 226,000 hole is substantial and a serious problem for working people in the state. With COVID-19 on the rise, we may expect a greater hole in coming months.
Unemployment Rate October 2020: 5.7 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 October, some 179,400 Wisconsinites were looking for work resulting in an unemployment rate of 5.7%. The is well above the February rate of 3.5%.
The highest level of unemployment in this economic crisis was 14.1% in April 2020.
Recovery in Unemployment: The unemployment rate edged up after months of falling, moving from 5.4% in September to 5.7% in October.
Leisure and Hospitality Industry Hardest Hit: 76,300 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. Until October, the industry grew each month since that contraction, adding 5,100 jobs in August and another 9,300 in September. In October, however, the sector lost 7000 jobs. The industry is by far the hardest hit and 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 more losses may be on the horizon.
At the other extreme is the least impacted industry which has lost only 1.4% of its jobs: Financial Activities.
Conclusion
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. From July through September, there was improvement, but at a much slower pace. In October, the state posted job loss which is an ominous sign.
With these losses, it is clearly too early to predict that “normal” is on the horizon. This recovery is fragile increases in infection and bad jobs results in October suggest that the recovery may be temporary. 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.