Economy: Jobs Recovery

Georgia’s labor market has healed much faster than the nation’s.

Georgia will fully recover the jobs lost to the COVID-19 recession much faster than it recovered jobs lost to either the 2001 recession or the Great Recession. Of course, the jobless recoveries that followed those recessions set a low bar.

According to some economists, the COVID-19 recession began last February and ended in May when employment began to rise. Georgia’s labor market did not get hit as hard as the U.S. labor market, so there’s less economic debris to clean up. And when the pandemic began the economy was in good shape.

In 2020, Georgia’s labor market healed much faster than nation’s. By December, Georgia had recovered 64% of the 609,500 jobs lost to the COVID-19 recession whereas the nation had recovered only 55% of the 22.4 million jobs lost. To recover fully, Georgia must add back another 216,700 jobs, which should happen sometime in 2022. The nation will need to add back more than 12 million jobs, which probably will not happen until 2023.

The recovery of the jobs lost to the COVID-19 recession was uneven across Georgia’s major industries. By December, a few industries had fully recovered, including transportation, warehousing, utilities, finance and insurance and the federal government. In fact, the federal government stands out as the only economic sector that added jobs during the recession. The finance and insurance industry fared second best, losing less than 1% of jobs and recouping those losses shortly thereafter. The transportation, warehousing and utilities industries got hit hard, losing one of every 20 jobs, but recovery was swift and those industries closed out 2020 with 4% more jobs than prior to the recession.

We have seen a V-shaped recovery in retail sales. Despite a massive shift toward e-commerce, which is less labor intensive than bricks-and-mortar retail, the state’s retailers ended 2020 within a percentage point of their pre-pandemic jobs level. Mining and logging also came close to achieving full job recovery, courtesy of the housing boom.

It makes sense that high-contact industries that provide discretionary services suffered the heaviest job losses and remain farthest from full recovery. The arts, entertainment and recreation industries fared worst, losing 55% of jobs and ending 2020 with 19% fewer jobs than pre-pandemic.

The accommodations and food services industries lost 43% of jobs and ended the year with 16% fewer jobs. The good news is that widespread vaccination of the population should cause many of the high-touch industries to see some of the largest jobs gains in the second half of this year.

Several of Georgia’s major industries ended 2020 with employment that was only 4% to 6% below their pre-COVID-19 levels, a remarkable achievement given the 10% and greater job losses last spring. Since the recession ended, housing markets soared and homebuilders have been hiring but job losses in nonresidential construction partially offset gains in residential construction. Construction employment ended 2020 4% below its pre-pandemic level. Similarly, manufacturing jobs and healthcare were down 4% at year’s end. Jobs in educational services were down 6%.

The incoming data strongly suggests that jobs in state and local government will be the slowest to fully recover. In December, Georgia’s state government was the only major economic sector where jobs were still being lost. Local government jobs had stabilized. At the end of 2020, state government employment was 5% below its pre-pandemic peak and local government employment was 4% below its pre-pandemic peak. Revenue collections are up, but an abundance of caution weighs heavy on hiring by state and local governments. Vacant positions are left unfilled and many have been, or will be, eliminated. The American Rescue Plan Act signed into law in March provides $350 billion to state and local government. That federal largess almost certainly will end the downturn in state and local government employment but it is unlikely to quickly bring back the lost jobs.

Since April 2020, job growth has brought Georgia’s unemployment rate down from its peak of 12.5% to about 5%. If labor force participation does not rise quickly, net job creation should be fast enough to bring down the unemployment rate to 4.5% by the end of 2021. It is already difficult to hire workers that have very specialized training or educational requirements. For example, there are shortages of some types of construction workers and truck drivers. Compared to the dire problems we were facing a year ago, such challenges are welcome.

Categories: Economy, Opinions