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, job growth slowed as the summer past. This fall, the Wisconsin labor market stalled. In October and November, the state lost jobs. In December, Wisconsin added 15100 jobs making up for most of the losses in October and November.
We are still in a greater jobs hole than even at the worst of the Great Recession just over a decade ago. In the pit of the Great Recession of 2007, Wisconsin lost 5.8% of its jobs. Today, Wisconsin has 7.2% percent fewer jobs today than in February.
The intensity of the spread of the disease in the state is, for now, declining. Still, the activity is high and public health rules and the threat of the disease will continue to keep many at home in the coming months. For some workers the call back to work was a brief respite. Others are finding that their lay-offs are now permanent.
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. November had a mixed impact, with job loss alongside slight improvement in unemployment rates. December was equally mixed with addition of 15,100 jobs simultaneous with an increase of unemployment to 5.5%.
Federal investment to see unemployed workers through this crisis and distribution of the vaccine will improve prospects looking forward. But serious federal commitment to the workers who have been most harmed and to state and local governments is absolutely necessary to build the economy and support families who are in economic crisis.
Wisconsin Job Loss: -214,300 (Jobs in December Relative to February 2020)
With 214,300 fewer jobs than in February, Wisconsin’s labor market remains in a substantial deficit. While the deficit grew in October and November, the state added jobs in December. The recovery needs to be much stronger to close the jobs hole that we are in. 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 December, the Wisconsin labor market had 7.2% 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 the contraction was three times the Great Recession.
- Stalled recovery: After losses in October and November, Wisconsin gained 15,100 jobs in December. Wisconsin’s labor market remains 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. Over October and November, the labor market shrank. Jobs increases in December made up only for those small losses in the fall.
The current 214,300 hole is substantial and a serious problem for working people in the state.
Unemployment Rate December 2020: 5.5 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 December, some 171,000 Wisconsinites were looking for work resulting in an unemployment rate of 5.5%. 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: Unemployment rose last month from 5.0% in November to 5.5% in December.
Leisure and Hospitality Industry Hardest Hit: 80,200 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. Following losses of 7000 jobs in October, the sector lost another 2100 jobs both in November and December. 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 are industry which have lost very few of their jobs: Financial Activities has lost only 1.7% of its jobs and Trade, Transportation, and Utilities has lost just 1.4%.
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. Job losses in October and November were made up in December. Even so, it is clear that our current footing will not be enough to help the thousands of unemployed workers in Wisconsin who are looking for jobs.
With these losses, it is clearly too early to predict that “normal” is on the horizon. This recovery is fragile. 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.