In March 2020, the US took dramatic steps to stop the spread of COVID-19. States issued stay-at-home orders, the economy contracted dramatically, jobs plummeted, and unemployment spiked. After the collapse, the economy improved rapidly in early summer 2020. In fall and winter, the recovery sputtered, but in spring 2021 the recovery became stronger and more consistent.
Despite recent growth, Wisconsin faces a substantial jobs deficit – we’re down 137,500 jobs.
For a sense of the current state of the labor market, consider that at the deepest pit of the Great Recession of 2007, Wisconsin was down 5.8% of its jobs. The jobs hole in Wisconsin in April 2021 remains very close to what the state posted at the very pit of the last recession: Wisconsin had 4.6% fewer jobs today than before the crisis.
To make clear how working Wisconsin is doing, we compare current economic data to the last “normal” month (February 2020, before intense contraction brought about by business closures). We also provide information on month-to-month changes to demonstrate the trajectory of the recovery.
There are now solid reasons for optimism about the trajectory of the disease and the economy. Vaccinations are widely available, and COVID-19 has fallen to levels we haven’t seen for a year. Additionally, the federal American Rescue Plan has helped strengthen the economy by providing stimulus checks, support for the unemployed, investments in state and local governments, and support to families with children.
Wisconsin Job Loss: -137,500 (Jobs in May 2021 Relative to February 2020)
With 137,500 fewer jobs than before the COVID-19 economic collapse, Wisconsin’s labor market remains in a substantial deficit. We gained 3600 jobs in April, which built on the growth in March and April. Even so, our labor market has 4.6% fewer jobs today than it did just over a year ago. Wisconsin’s current jobs deficit is slightly smaller than the scale of job loss at the deepest point in the Great Recession of 2007.
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 it 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 May 2021, Wisconsin had 4.6% fewer jobs than it had before the crisis began.
Context
· At the depth of the COVID-19 economic collapse (April 2020), 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.
· Labor market progress in the spring: In May, Wisconsin added 3600 jobs following growth in April (Wisconsin added 9300 jobs) and March (state added 12,900 jobs).
Unemployment Rate May 2021: 3.9 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 May, some 119,700 Wisconsinites were looking for work resulting in an unemployment rate of 3.9%. Unemployment is still above the rate from before the COVID-19 crisis of 3.5%.
The highest level of unemployment in this economic crisis was 14.1% in April 2020.
Leisure and Hospitality Industry Hardest Hit: Down 53,300 Jobs
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 2020, at the depth of the crisis, more than half of workers in this industry had lost their jobs. The industry has been moving slowly out of that hole since the collapse, though there has been volatility in the sector with months of loss and growth across the fall and winter. The industry is by far the hardest hit and remains 18.5% below pre-COVID-19 employment levels. The sector has been adding jobs since late winter though this last month the sector again posted job losses.
While leisure and hospitality have been devastated in this shutdown, some sectors have lost very few of their jobs: Trade, Transportation, and Utilities have lost just 1.3% of its jobs and manufacturing is down only 1.1%, compared to February 2020.
Conclusion
Since the March 2020 COVID-19 economic collapse, there have been strong months of job growth and falling unemployment. These indicators improved rapidly early last summer. From mid-summer through the winter, there was uneven and slow growth. In the spring, we saw stronger and more consistent growth. As vaccination increases, we can hope for continued progress in jobs.
It is too early to predict that “normal” is on the horizon. This recovery is fragile. More than 137,500 jobs have been lost. And as we have noted throughout the pandemic, the very workers who faced the lowest wages are the ones who carried the brunt of this pandemic. With inequality exacerbated by this pandemic, we can hope that we are moving toward an economy that truly values all workers in it.