Opinion: Fewer people are working in schools and local government than before the pandemic – but temp agencies are hiring many

Although the recovery in output, wealth and hours worked since February 2020 is notable, the US economy remains deeply scarred by the COVID-19 pandemic.

The total number of hours worked in the nonfarm economy in April finally surpassed the pre-pandemic total, the Bureau of Labor Statistics reported Friday. But there are still 1.2 million jobs missing, 500,000 of them in the private sector.

Details: US creates 428k jobs in April and wages rise again – but labor force shrinks

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Companies say they are struggling to fill vacancies because labor force growth has been weak as more people retire, do homework or avoid insecure or unsatisfactory work.

More: The only bad thing about the April job report might not be that bad after all

The impact of the pandemic can be clearly seen when looking at sectors where employment has been booming or lagging since the February 2020 jobs report, the last before the pandemic crippled the economy. Many professions that require face-to-face contact have been struggling to recover from the shock of the pandemic.

But other sectors have also stepped up hiring to meet changing work and consumption patterns, particularly in transportation and warehousing, including last-mile deliveries.

Travel hit hard

Travel jobs are hardest hit. Employment in accommodation (e.g. hotels) is down 19% (or 404,000 jobs) from pre-pandemic levels. Employment in travel agencies fell by 31% (down 69,000 jobs).

Employment in food service and drinking establishments has recovered a little better, with employment down “only” 6.4%, but that translates to a staggering 794,000 job losses.

The other part of the leisure and hospitality supersector is arts, entertainment and recreation, where employment fell by 240,000 or 9.6%.

Surprisingly, a massive public health disaster has led to a decline in healthcare and social services employment. Before the outbreak of the pandemic in early 2020, it was one of the fastest growing sectors. In April, employment in health and social care fell by 377,000 jobs (1.8%).

The education system has also been severely affected by the pandemic. Employment in private and public education fell by 382,000, most in local public school districts, where employment fell 3.9%.

Local governments have lost another 278,000 non-education jobs, more than 4% of their workforce. That accounts for most of the 340,000 non-educational jobs being lost by federal, state, and local governments.

Shift towards durable goods

One of the biggest consequences of the initial phase of the pandemic was a massive shift in consumption towards durable goods and away from services. People furnished their homes and bought vehicles instead of traveling and going to the movies.

At the same time, the supply of many goods was restricted by broken supply chains. Many manufacturers have had to limit production due to a lack of inputs, including skilled workers. The resulting gap between supply and demand led to an unusual increase in the price of durable goods.

Despite much debate about moving production back to America, US durable goods manufacturers have lost 105,000 jobs (1.3%) during the pandemic, most of them in aerospace, where demand has been slowly recovering.

Employment in the consumer goods industry rose by 46,000 (1%), led by food, chemicals and plastics.

Strong demand for goods boosted retail employment by 284,000 (1.8%), led by wholesalers, grocers, home improvement and gardening suppliers and retailers.

Demand for shipping and delivery services exploded. Employment in transportation and warehousing increased by 674,000 (or 11.6%). Courier jobs rose 30%, while jobs at sightseeing companies fell 26%.

Boom in professional services

The largest employment gains were in the largest sector: comprehensive professional and business services, where employment increased by 738,000 or 3.5%. Around a third of the jobs were in temporary employment agencies. Professional services such as legal, accounting, engineering, technology and science rose 643,000, or 6.6%. Management positions fell by 58,000.

With monthly job growth averaging more than 500,000 over the past six months, the 1.2 million job shortage is likely to be resolved soon, barring a major disaster.

But even if that happens, the American workplace will never be the same.

Rex Nutting has worked on economics for MarketWatch for more than 25 years.

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Brian Lowry

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