Employment Effect of the COVID-19 Outbreak and Our Public Health Response

A pandemic of respiratory disease spreading from person to person that originated in China was confirmed to have reached the United States by January 2020. This respiratory disease is caused by a novel coronavirus and has been named coronavirus disease 2019 (COVID-19). According to the Centers for Disease Control and Prevention (CDC), COVID-19 poses a serious public health risk. This risk is particularly high for adults 65 years and older and people of any age with serious underlying medical problems. The CDC has made clear the importance of the federal government working closely with state, local, tribal and territorial partners to ensure an effective response to this situation. In the early stages of this response, state governments issued varying degrees of “stay-at-home” orders in late March and early April 2020 in attempt to minimize social contact to reduce the spread of COVID-19. Though these measures may very well be necessary from a public health perspective, an undesirable consequence has been a staggering spike in unemployment across the United States. In February 2020, the national unemployment was just 3.5% with 158.8 million of the 164.5 million in the civilian labor force gainfully employed. This was the lowest monthly national unemployment rate in over 50 years (i.e. since December 1969). Just two months later, in April 2020, the national unemployment rate skyrocketed to 14.7% with only 133.4 million out of the 156.5 million in the civilian labor force gainfully employed. This represents the highest monthly national unemployment rate since the Great Depression.

Though the COVID-19 outbreak and our public health response to this novel coronavirus has affected our economy across the board, employment declines have varied significantly by occupational group and industrial sector. In terms of occupational group, national unemployment is highest among those in service occupations with more than one in four (27.1%) of the 24.8 million in this occupational group unemployed in April 2020. National unemployment is lowest in management, professional and related occupations with fewer than one in twelve (7.7%) of the 66.2 million in this occupational group unemployed in April 2020. The unemployment rates in other occupations more closely resembles the current national unemployment rate, including 14.8% in sales and office occupations, 16.3% in national resources, construction and maintenance occupations and 18.2% in production, transportation and material moving occupations. In terms of industry, employment in leisure and hospitality (comprised largely of service-oriented positions) has been decimated as evidenced by its April 2020 national unemployment rate of 39.3%. For perspective, the April 2019 national unemployment rate in the leisure and hospitality industry was just 4.5%. The financial activities industry has been least affected with an April 2020 national unemployment rate of only 5.4%. These employment data clearly reveal that occupations (e.g. management analysts; financial advisors; computer programmers) in which workers have the ability to work either from home or largely in isolation from others are much more insulated from the effect of the COVID-19 pandemic and our response than occupations (e.g. waiters and waitresses; restaurant cooks; maids and housekeeping cleaners) whose very existence is dependent on providing personal service to customers in public settings.

The uneven impact on employment across occupation and industry can also be observed through state unemployment rates. In April 2020, the highest unemployment rate was in Nevada where more than one in four (28.2%) workers were unemployed while the lowest unemployment rate was in Connecticut where fewer than one in twelve (7.9%) workers were unemployed. This is not surprising given that Nevada’s economy is heavily reliant on tourism and that approximately 29.8% (415,320 out of

1,392,680) of its civilian labor force is employed in service occupations. Conversely, Connecticut’s economy is anchored in the insurance and financial activities industries with approximately 36.5% (608,250 out of 1,665,100) of its civilian labor force employed in management, professional and related occupations. Meanwhile, the April 2020 unemployment rates in Tennessee and surrounding states were as follows: 14.7% in Tennessee (471,212 out of 3,209,198 unemployed); 12.2% in North Carolina (573,118 out of 4,685,501 unemployed); 12.1% in South Carolina (288,022 out of 2,377,911 unemployed); 15.4% in Kentucky (318,274 out of 2,060,553 unemployed); 10.6% in Virginia (453,923 out of 4,297,739 unemployed); 15.2% in West Virginia (117,134 out of 771,601 unemployed); 11.9% in Georgia (581,820 out of 4,875,448 unemployed); 12.9% in Alabama (283,787 out of 2,195,299 unemployed). These monthly unemployment rates reflect historical highs (i.e. dating back to when the U.S. Department of Labor began recording monthly unemployment rates by state in 1948) in Tennessee, North Carolina, South Carolina, Kentucky, Virginia and Georgia. Remarkably, the states of Tennessee, South Carolina, Georgia and Alabama had all achieved historical low monthly unemployment rates within the first quarter of 2020.

Even as “stay-at-home” orders are gradually being lifted across the United States, without an effective vaccine expected until at least early 2021 and with social distancing thus remaining a public health necessity, it appears that high unemployment will remain a devastating consequence of the COVID-19 pandemic for the near future. In particular, unemployment can be expected to remain high in service-oriented occupations such as those in the leisure and hospitality industry as Americans will likely generally be cautious about returning to activity requiring significant social contact. One reason for optimism is that in April 2020 of all employees who lost their job, seven out of eight (87.6%) were identified as being temporarily (rather than permanently) laid off. Nevertheless, the immediacy of the severe economic strain and uncertainty imposed by the COVID-19 pandemic is unprecedented. Please continue to follow Hankins & Hankins Vocational Consulting for future updates regarding the employment effect of the COVID-19 outbreak and our public health response.

UNEMPLOYMENT RATES BEFORE AND AFTER RESPONSE TO COVID-19 OUTBREAK