Even glancing at the news, it is apparent: The United States is experiencing a substantial labor shortage. According to the August 2021 monthly jobs report, jobs added for the month came in at 235,000 new hires, well below the expected 720,000; both of these figures are significantly below 1.1 million new workers in July 2021, according to the US Department of Labor. This results in a significant slowdown in the economy’s recovery from the COVID-19 (coronavirus) pandemic.
Seeing what’s out there
The unemployment rate is falling, but at a slower rate than expected as certain industries, primarily service and retail-based, struggle to regain the hold they had prior to the pandemic. Despite significant easing in regulations monitoring operations, demand for service and retail-based industries continues to lag; more crucially, employees are increasingly hesitant to return to such industries. Conversely, demand for the manufacturing and transportation and warehousing sectors has increased, resulting in greater wage and employment growth in related industries. While no sector has avoided fallout, each has experienced unique circumstances.
Below, Alfabank-Adres explores the employment struggles for several sectors.
Education and Healthcare Services
The Delta variant-induced surge has significantly disrupted hiring in the education and healthcare services sectors, with payroll growth decelerating from more than 75,000 hires in July 2021 to 35,000 in August 2021. Additionally, harsh decelerations in monthly payroll growth further illuminates how jobs added for these sectors are also slowing.
Unlike other sectors, demand for education and healthcare services have largely remained steady amid the coronavirus pandemic, in some cases even increasing. Thus, low demand is not to blame for sluggish hiring; instead, many employees are voluntarily leaving their professions in these sectors. The reasons are myriad, including exhaustion and fatigue as well as health and safety concerns. Prospective employees are hesitant to enter certain fields for the same reasons former employees left. Moreover, many healthcare and education industries experienced hiring shortages prior to the pandemic. As a result, these sectors are expected to experience a long road to employment recovery.
Construction
Construction-related industries have been on a rollercoaster ride since the start the coronavirus pandemic. Massive plunges in the value of private nonresidential construction, work stoppages and surging demand for residential construction have left many operators struggling to adapt to the ever-shifting landscape.
The sector’s volatile demand has resulted in similar fluctuations in employment and wages. Moreover, employers are experiencing difficulty gauging and predicting fluctuations regarding demand, as much rides on the changing pandemic landscape. As a result, many have experienced periods of under- or over-staffing.
For instance, between July 2021 and August 2021, the sector was one of few to experience payroll declines. Shrinking payroll counts indicate that the sector is currently at overcapacity and further declines in sector employees or wages is expected until labor markets reach equilibrium.
Professional Business Services
The Professional and Business Services super-sector is the combination of the Professional, Technical and Scientific Services sector, the Management of Companies and Enterprises sector and the Administrative and Support and Waste Management and Remediation Services sector.
Amid the pandemic, this super-sector has performed relatively well. Though none were immune from the pandemic’s detrimental effects, many knowledge-based industries experienced relative ease adapting to a remote work-from-home environment. Therefore, many mitigated job losses during the height of the pandemic.
Conversely, the same industries are now beginning to struggle. Though the super-sector exhibited the smallest decline in payroll between July 2021 and August 2021, this decline implies that inefficiencies are beginning to show as the shifting technological landscape enables more knowledge workers remote capabilities, shifting labor dynamics nationwide. It is not the mass exodus that industries in other sectors have experienced, but employees in this super-sector are weighing their options and often jumping ship for better offers.
Accommodation and Food Services
The Accommodation and Food Services sector has experienced the harshest disruptions amid the pandemic. Industries in this sector have reported drastic revenue losses with many shuttering their doors or significantly downsizing to maintain operations. As the economy reopened and capacity limits subsided, the sector experienced a rapid resurgence in hiring amid growing demand. Then the Delta variant entered the picture.
Demand is declining amid the Delta variant-induced surge as many consumers experience uncertainty. More crucially, sector employment is dropping at an alarming rate. For instance, between July 2021 and August 2021, restaurants and bars reported a loss of 41,500 in monthly payroll counts. While demand is waning, much of the contraction is not due to establishment closings or staff reductions, but it is because employees want out.
Though recovery has begun, the coronavirus pandemic persists and sector employees know it all too well. Consider the Hotels and Motels industry: industry revenue contracted an estimated 55.8% and employment declined 34.5% in 2020 alone. Further, an industry employee either experienced sudden job loss or the risk of reporting for a client-interacting position every day in 2020. The memories are fresh; in early 2021, as vaccines rolled out and the economy reopened, some rushed back to their jobs, but others have not been too keen. With 2020 still a fresh memory, the Delta variant’s spread resulting in an uncertain fall and winter likely hits too close to home for many industry and sector employees. The result? Between June 2021 and August 2021, the Accommodation and Food Services sector reported that payroll count growth declined more than 90.0%.
