Which industry’s workforce has been hurt the most from the COVID-19 outbreak?
Unemployment claims have reached all-time highs in the U.S. recently as COVID-19 rattles the world. The rapid shedding of jobs that started during the week ended March 21 has affected nearly every sector of the economy, from construction to manufacturing to personal services. Still, some industries remain more vulnerable than others as workers stay home and some online activities spike. Below, I examine how the share of employment claims by industry sector has changed over time.
The sector with the most unemployment claims in Massachusetts in March (including before the widespread layoffs due to COVID-19) was Food & Accommodation, which includes most restaurants, hotels, and tourism businesses. However, Food & Accommodation workers have not consistently risen as a share of all people seeking unemployment benefits (see Figures 1 and 2). In fact, new unemployment claims in that sector declined by over 18,000 in Massachusetts between the weeks of March 21 and March 28.
Figure 1: The share of new weekly unemployment claims in Massachusetts by industry sector among sectors with the most unemployed workers, March-April 2020
Figure 2: The share of new weekly unemployment claims in Massachusetts by industry sector among sectors with the fewest unemployed workers, March-April 2020
Among the only sectors to register disproportionate growth in the number of unemployment claims in the past few weeks are Retail Trade, Other Services (like gas station attendants), and Arts, Entertainment, & Recreation. None of them are particularly surprising, as stay-at-home orders eat into the sales figures of shopping malls, sports venues, movie theaters, and tourist attractions.
Meanwhile, there are many more sectors with consistently lower portions of unemployment claims than before the COVID-19 pandemic, notably including Transportation & Warehousing businesses. While transportation service cutbacks have inevitably left some workers furloughed or with reduced hours, warehousing employment has not so much fallen as shifted in focus. Amazon announced last month that it was tripling its custodial personnel in an effort to contain the spread of COVID-19 in its facilities. Moreover, many transit workers in Massachusetts are unionized, which often makes it harder to furlough them without pay.
The remaining jobs that have proven somewhat resilient during the COVID-19 crisis are either “essential” (like those in the Construction sector) or are otherwise relatively easy to perform remotely (like Finance & Insurance, Scientific & Professional Services, and Administrative jobs).
A silver lining for industries like Food & Accommodation, Retail Trade, and Other Services is that, while they’ve suffered the most from the COVID-19 pandemic, they’re also better poised than many to adapt to a post-pandemic economy. After all, such industries are usually some of the most exposed to market volatility regardless of the cause, and they’ve proved resilient before.
Perhaps a more urgent concern is that retail, gas station, and restaurant workers don’t have the savings needed to pay for groceries and housing in the meantime. The persistent growth in unemployment claims observed in these sectors in recent weeks is the result.
Andrew Mikula is the Lovett & Ruth Peters Economic Opportunity Fellow at the Pioneer Institute. Research areas of particular interest to Mr. Mikula include urban issues, affordability, and regulatory structures. Mr. Mikula was previously a Roger Perry Government Transparency Intern at the Institute and studied economics at Bates College.
