Directory
- 2020
- June
- July
- September
- November
- December
- 2021
- January
- Thoughts on GME and This Week in the Stock Market
- Record Home Price Levels Point to Strength in Post-Pandemic Economy
- The Stock Market Looks Overvalued, but It's Probably Not
- China GDP Growth Surpasses Expectations
- President-elect Joe Biden Introduces His "American Rescue Plan"
- Political Polarization Intensifies with Another Impeachment Along Party Lines
- Metal Demand Has a Bright Future in 2021 and Beyond
- What Happened to That US-China Trade Dispute?
- Civil Unrest, A Rising Threat to the 2021 Economy
- What's in the $900 Billion Relief Plan?
- February
- Long Term Employment Shifts Caused by the Pandemic
- Earnings Provide Positive Surprise Despite Pandemic
- Renewable Energy Under Fire in Texas
- Yellen Aims for Full Employment
- Minimum Wage Research in the Spotlight as a Hike Looks Inevitable
- Non-Residential Construction Soft in the Pandemic Economy
- March
- Views on Interest Rates and the Move in Treasury Yields
- Inflation Indicators Healthy but Still on the Rise
- Risky Assets Sell-off Despite Optimistic Economic Outlook
- The Latest on Vaccinations and What it Means for Growth
- April
- May
- Highlights of the Fed's "Economic Well-Being of U.S. Households in 2020" Report
- Relative Factors and Forward Change in Federal Funds Rate
- Can Wage Growth Keep Up With Inflation?
- June
- July
- August
- With That, We Carry On
- Supply Pressures Looking to Peak
- Cars are Still Expensive, Workers are Still Needed
- Recovery Continues, but Delta Looms
- September
- Fed Eyes Tapering While China Sees a Setback
- Review the Fed Previews
- No Tapering Yet
- Labor Day on Labor Day
- October
- Delayed or Disappearing Growth?
- Supply and Demand Mismatch will be Evident during the Holiday Shopping Season
- Workers Find Leverage in a Tight Labor Market
- Cautiously Optimistic
- Sour Expectations Take Down the Market
- November
- Q3 Earnings Were Surprisingly Good
- Inflation Weights on Bonds and Consumer Sentiment
- FOMC Tapers While Trade and Employment Flash Mixed Signals
- December
- 2022
- January
- Inflation is Getting Broader, Not Cooler
- Unemployment Insurance During the Pandemic
- A Year of Normalization
- What Will GDP Growth Look Like in 2022?
- February
- March
- April
- May
- June
- August
- Student Loans Targeted by the Biden Administration
- The Chicago Fed Index Reverses in July
- Chinese Economic Data Faltered in July
- Stellar Jobs Report Bucks Recession Fears
- September
- Bank of Japan Punished for Dovish Policy Stance
- Expect 75 Today
- Manufacturing Weakness in Germany has Implications for Euro Area Growth
- October
- 2023
- February
- April
- Q1 GDP Growth Jumps 1.1% on Strong Personal Consumption
- A Strong March Leads to a Surge in Chinese GDP in Q1 2023
- Durable Goods Retail Sales Suffer from High Interest Rates and Wary Consumers
- Choppy GDP Means UK Should Avoid Q1 Recession
- Japanese Consumer Confidence Jumps to Highest Level in Over a Year
- May
Long Term Employment Shifts Caused by the Pandemic
Jacob Hess
February 23, 2021
- Employment
- Outlook
The Bureau of Labor Statistics (BLS) is the top government department reporting on the labor market in the United States. As one might assume, it has been busy over the past year documenting the pandemic's devastating effects on employment. Since the crisis has slowed down, their research has moved from a focus on the short-term displacements of workers to a focus on how the pandemic could lead to larger shifts in long-term employment trends. The latest edition of the BLS's Monthly Labor Review dives deeper into changes to the Bureau of Labor Statistics 2019-29 employment projections.
The BLS looks at two different scenarios to update the employment projections model. The scenarios break down into "moderate impact" and "strong impact." In the words of the BLS:
- The "strong impact" scenario assumes more widespread, permanent changes to consumer and firm behavior as a way to mitigate viral spread.
- In the "moderate impact" scenario, increased telework is the primary force of economic change and has both direct and spillover effects. With more employees teleworking, the need for office space will decline, and so will nonresidential construction. Spending for employee trips to offices, including commuting costs, business travel, and lunchtime restaurant spending, are all lower here than in the baseline projections.

The most impacted industries in the short-term have been people-facing jobs in service and retail businesses that are deemed non-essential. BLS sees the pandemic's impact lasting beyond 2021 especially in retail and traveler accommodation. Both are projected to see stronger contractions in employment in the moderate or strong scenarios than original projections. Food services and drinking places are expected to see a larger drop-off with the baseline projection of 7.3% adjusted down to just 1.3% in the moderate scenario and -3.1% in the strong scenario. Employment trends are likely to be exacerbated by automation and e-commerce, in both retail (Amazon) and food service (DoorDash, Uber Eats), which will lead to less human interaction.

The rise of teleworking has been a paradigm shift brought on by the pandemic out of necessity. Businesses shifted from having the capability of incorporating teleworking to being forced to incorporate teleworking. As a result, the need to accommodate large-scale commuting of employees to and from places of work is likely to see limited growth. The air, transit, and ground transportation workforce is expected to see smaller growth in the moderate scenario, and in the strong scenario, is expected to be flat or see slight contraction.

An extension of teleworking and less commuting means less of a need for office space. As a result, the BLS sees a shake-up in the construction industry. Nonresidential construction employment is likely to decline in both scenarios despite an initial projection of a 4% plus growth rate. The effects might spill over into residential construction employment as lost workers cross over into that industry leading it to grow. Housing demand is also likely to increase with more teleworkers opting to move away from cities.

The industries that are expected to grow as a result of disruptions from the pandemic are mostly expected. Many of them are STEM-related and deal directly with the technologies that saw growth during the past year. First, employment in pharmaceutical research and similar medical research areas is projected to grow faster now as the pandemic has placed a new emphasis on public health. The successful techniques used to fast-track the vaccine have also lead to interest in those fields and optimism that they can solve other problems in medicine.

Computer systems and peripheral equipment manufacturing and design industries (growing quickly already) are expected to grow even more to supply the equipment necessary to support teleworking. The updated growth rates are huge up 19.1% for computer manufacturing and up 26.1% for computer design services, regardless of the moderate or strong impact scenarios.
With every crisis comes a paradigm shift and sometimes more than one. The COVID-19 pandemic is no different. The BLS report outlines major shifts that are likely to be "sticky" and how workforces will change because of those shifts. These workforce disruptions are more than just shifts in what kids will "want to be when they grow up" but instead representative of how firms and government will reallocate their capital to growing industries. Those new capital projects are the future of the economy and the market and what society will look like in the future.