Pew reports 24.5% of nation’s hospitality and leisure jobs were lost in pandemic; Washington lost 30.5%.

Hospitality and leisure employment has suffered greatly in the pandemic. A new report from Pew analyzes the state-by-state impact.

Nationally, leisure and hospitality jobs have endured by far the largest losses of any major industry. A review of U.S. Department of Labor jobs data for August, however, shows vast differences in how the industry has held up across states. Seven had incurred sharp reductions of a third or more from February’s pre-pandemic employment totals. A few others, meanwhile, had largely recovered from an initial wave of layoffs and were down less than 10%. For areas that lean heavily on tourism and hospitality, how the industry recovers matters not only for regional economies, but also for the vital tax dollars generated to fund state and local government budgets.

Particularly hard hit were the tourism-driven states of Hawaii, Nevada, and Florida, the three states “most reliant on leisure and hospitality jobs.”  

As the map below shows, nationally the sector lost 24.5% of its jobs. In Washington, the job loss was greater, 30.5%. 

Within the industry, some sectors have been hit harder than others.

About 40% of U.S. hotel jobs (excluding casinos) and half of performing arts and sports positions have been eliminated temporarily or permanently since February, compared with 19% for restaurants and other eateries.

In September, we cited an op-ed by Anthony Anton, head of the Washington Hospitality Association, in which he wrote, 

The hospitality industry is the largest private employer in our state. Before COVID-19, restaurants and hotels employed about 300,000 people. The most recent numbers from the Employment Security Department show that 114,000 of our team members are no longer working. And for every dollar spent at a restaurant, 96 cents is put back into the local economy. Our state’s economic health and the health of our hospitality industry truly go hand in hand.

The industry’s recovery is inseparable from the state’s economic recovery. And we’d be remiss were we not to mention the potentially devastating effects of a large unemployment insurance tax hike on business in 2021.

September unemployment rates decline in 30 states, including Washington. A slow labor market recovery anticipated.

The U.S. Bureau of Labor Statistics reports today that unemployment rates continue to decline in most states, but everywhere remain much higher than the pre-pandemic rates a year ago.

Unemployment rates were lower in September in 30 states, higher in 8 states, and stable in 12 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. All 50 states and the District had jobless rate increases from a year earlier. The national unemployment rate declined by 0.5 percentage point over the month to 7.9 percent but was 4.4 points higher than in September 2019.

Nonfarm payroll employment increased in 30 states, decreased in 3 states, and was essentially unchanged in 17 states and the District of Columbia in September 2020. Over the year, nonfarm payroll employment decreased in 48 states and the District and was essentially unchanged in 2 states.

The BLS reports Washington’s unemployment rate in September was 7.8%, down from 8.4% in August and just slightly below the U.S. rate of 7.9%. A year ago, Washington’s unemployment rate was 4.1%., while the U.S. rate was 3.5%.

Tourism dependent states continued to suffer.

Hawaii had the highest unemployment rate in September, 15.1 percent, followed by Nevada, 12.6 percent…

The largest unemployment rate increases from September 2019 occurred in Hawaii (+12.4 percentage points) and Nevada (+8.9 points). 

The vice-chair of the Federal Reserve expects unemployment to remain elevated for some time.

The U.S. economy is rebounding strongly after taking a big hit because of the coronavirus pandemic, but it may be another year before the economy returns to pre-crisis levels and take even longer for the labor market to recoup lost ground, Federal Reserve Vice Chair Richard Clarida said on Monday.

“While recovery since the spring collapse in economic activity has been robust, let us not forget that the full economic recovery from the COVID-19 recession has a long way to go,” Clarida said during a virtual discussion organized for the American Bankers Association Convention.

The pandemic threw the U.S. economy into a “very deep hole” and despite recent improvements, the outlook is “unusually uncertain,” Clarida said.

The U.S. unemployment rate has dropped significantly to 7.9% from a high of 14.7% seen earlier this spring, but it may not drop below 4% again until the end of 2023 according to Fed projections.

A rough prognosis.

As pandemic wears on, business expresses concern with unemployment tax increases

The Lens reports on business concern about an impending large increase in unemployment insurance taxes. (We have discussed this as well.) Lens reporter TJ Martinell writes,

After a year of historic layoffs and unemployment claims that threatened to bankrupt the state Unemployment Trust Fund, businesses that managed to survive could soon face a fatal blow in the form of a massive hike to the unemployment insurance tax directly tied to loss of workers.

“Any cost increase right now is throwing heavy rocks at a drowning person,” Washington Hospitality Association CEO and President Anthony Anton said. The hospitality industry has been disproportionately hit by the economic shutdown; Anton estimates that 35 percent of association members will go out of business as a result.

The hospitality industry has been particularly hard hit, as discussed in a Seattle Times op-ed by Ray’s Boathouse owner Doug Zellers, who writes,

At this time last year, the restaurant industry employed more than 340,000 people in the state. As of the latest numbers, 106,000 of those team members are no longer working. Hundreds of restaurants across the state have either closed permanently, closed for the season, or scaled their operations back to a skeleton crew. And in Seattle, we’ve seen some of our iconic restaurants close.

He says the industry’s economic impact is spread wide.

In normal times, restaurants put 96 cents of every dollar right back into the local economy. At Ray’s, that means 96 cents of every dollar on your bill goes to area farmers, fishers, suppliers and restaurant staff — as well as rent and utilities, of course.

Seattle may be known for our tech economy, but our tourism, hospitality and restaurants are also a huge economic driver. Any recovery of our state will include a strong recovery of these industries.

Right. And as Anton says, increased UI taxes add new burdens on recovering businesses. More from the Lens.

Anton said the tax hike will be especially felt by small employers who are in the lowest experience-rated tax class, with little unemployment history prior to this year.

In an interview with TVW, Senate Ways and Means Committee member Sen. Randi Becker (R-2) said that unemployment tax payments for certain businesses could increase by as much as 700 percent “for something that these employers did not have any control over,” adding that if the tax hike happens “that will close many more small business stores.”

Read the article for more detail. And note this  Senate Ways and Means presentation on the UI trust fund.

About that end to negotiations on a pandemic relief package… perhaps the door has reopened.

Commenting on events in the other Washington these days is unusually tricky. Any comment should come with a time stamp and a sell-by date. We ventured into the weeds yesterday as our post of Fed chair Jerome Powell’s speech tied the health of the economic recovery to a federal relief package. Hours later, the president called a halt to negotiations. Today, it appears the halt was, perhaps, not exactly a halt but a shift in tactics.

The president has subsequently proposed two relief measures.

Only hours after unexpectedly ending negotiations on another federal coronavirus rescue package, President Donald Trump on Tuesday night urged Congress to pass standalone bills on direct payments and assistance to airlines and small businesses — all measures that would most likely have been included in the larger piece of legislation that was being negotiated between the White House and Democrats.

Major US airlines are moving to layoff 32,000 workers in the coming weeks, along with other major companies like Disney. It has increased pressure on the administration to strike a deal with Democrats. In a series of late-night tweets, Trump called on both parties to support the provisions.

“The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business,” he wrote on Twitter, adding he would “sign now.”

In another tweet posted less than half an hour later, Trump said he was ready to sign a separate piece of legislation to provide $1,200 direct payments for American taxpayers.

We expect more on this later today.  But we’ll take a pass on the give-and-take for a while.

National Business Roundtable Economic Outlook finds CEOs much more optimistic than last quarter, but still cautious.

The Business Roundtable, a national association of CEOs of some of the country’s leading corporations, released its Q3 Economic Outlook Survey today. Overall, CEO optimism is returning, though concerns remain.

Business Roundtable today released its Q3 2020 CEO Economic Outlook Survey, a composite index of CEO plans for capital spending and employment and expectations for sales over the next six months. This quarter the overall Index was 64.0, an increase of 29.7 points compared to Q2 2020. While this is the first quarterly increase in the headline index after nine consecutive quarters of decline, it remains below the historical average of 81.7. 

The survey asked about expectations for the recovery. 

In a special question asking when business conditions for their company will recover to pre-COVID levels, 24 percent of CEOs said that business conditions never declined, have recovered, or will likely recover by the end of the year. Forty percent said they expect business conditions to recover in 2021, and 36 percent said they expect business conditions to recover in 2022 or later.

The BR’s policy recommendations are consistent with the Opportunity Washington perspective.

…the index remaining far below its 18-year historical average indicates that CEO plans remain fragile and recovery requires more support to be sustained and accelerated. CEOs remain especially concerned about implications for small businesses. 

With this is mind, Business Roundtable will continue to advocate for further action by policymakers to support the public health response to the pandemic, protect jobs, small businesses and livelihoods, and make additional investments in education and worker training, especially for minority families, communities and workers, as detailed in a July 21 letter to congressional leaders outlining measures needed in Phase 4 legislation.

As Congress and the White House remain unable to reach agreement on further pandemic relief, the BR position takes on new urgency.

“The outlook of Business Roundtable CEOs has improved, due in part to actions taken by policymakers earlier this year to help Americans,” said Joshua Bolten, President & CEO of Business Roundtable. “But further major support from the federal government is necessary to prevent economic recovery from being derailed. Failure to act, along with the lack of comprehensive and coordinated efforts to stop the spread of COVID-19, would impose long term damage on the U.S. economy, hurting most the workers and small businesses least able to absorb the blow.”

Some key takeaways from the survey:

  • CEO plans for hiring increased by 20.3 points to 46.6, 11.9 points below the sub-index’s historical average of 58.5.
  • CEO plans for capital investment increased by 33.8 points to 58.8, 16.8 points below the sub-index’s historical average of 75.6.
  • CEO expectations for sales increased by 35 points to 86.5, 24.7 points below the sub-index’s historical average of 111.2.
  • In their third estimate of 2020 U.S. GDP growth, CEOs projected a 2.4 percent contraction for the year, a 1.4 percentage point increase from last quarter’s estimate.

Read more at the link.

Another drop in weekly UI claims in Washington

The state Employment Security Department reports another decline in initial regular unemployment claims.

During the week of August 2 through August 8, there were 22,140 initial regular unemployment claims (down 11.4% from the prior week) and 571,410 total claims for all unemployment benefit categories (down 13.0% from the prior week) filed by Washingtonians, according to the Employment Security Department (ESD).  

  • Initial regular claims applications remain at elevated levels and are at 307 percent above last year’s weekly new claims applications.
  • Regular Unemployment Insurance, Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) initial claims as well as continuing claims all decreased over the previous week.

Seattle Times business reporter Paul Roberts looks at the numbers and wonders if we’re seeing a plateau.

For the third week running, Washington state saw fewer new claims for unemployment insurance — another sign, perhaps, that the state’s job market may be stabilizing after months of pandemic. 

But with Washingtonians still filing more weekly unemployment claims than they were during the Great Recession — and with job seekers still outnumbering job openings three to one — Washington could also be settling in for a long, very slow slog back a pre-COVID-19 “normal.” 

Noting that prospects for the “V-shaped” recovery seem to have ebbed, he writes that the long slog scenario has gained currency.

But it’s a forecast that has become increasingly common among economists and it could already be playing out in Washington, said Jacob Vigdor, an economist at the University of Washington’s Evans School of Public Policy and Governance. “I wouldn’t be surprised to see the rapid recovery [in May and June] transition into the plateau phase as summer transitions to fall,” he said. 

His report lays out several options. It’s worth your time.

Fewer than 1 million initial UI claims filed nationally last week, a pandemic-era low.

Initial weekly UI claims have fallen below 1 million nationally for the first time in months, according to the U.S. Department of Labor.

In the week ending August 8, the advance figure for seasonally adjusted initial claims was 963,000, a decrease of 228,000 from the previous week’s revised level. The previous week’s level was revised up by 5,000 from 1,186,000 to 1,191,000. The 4-week moving average was 1,252,750, a decrease of 86,250 from the previous week’s revised average. The previous week’s average was revised up by 1,250 from 1,337,750 to 1,339,000.

The advance seasonally adjusted insured unemployment rate was 10.6 percent for the week ending August 1, a decrease of 0.4 percentage point from the previous week’s unrevised rate.

This DOL graph shows the trend.

Calculated Risk points out,

There are an additional 10,723,396 receiving Pandemic Unemployment Assistance (PUA). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.

The Associated Press reports,

The number of Americans applying for unemployment dropped below 1 million last week for the first time since the coronavirus outbreak took hold in the U.S. five months ago, but layoffs are still running extraordinarily high…

“Another larger-than-expected decline in jobless claims suggests that the jobs recovery is regaining some momentum, but … much labor market progress remains to be done,” said Lydia Boussour, senior economist at Oxford Economics.

As always, the course of the pandemic will determine the pace of the jobs recovery.

Nationally, unemployment rate down in 42 states; Washington at 9.8%; US at 11.1%.

Today’s report from the U.S. Bureau of Labor Statistics shows an improving employment picture across most of the nation. (Again, we note that the pandemic calls the shots and the future is, therefore, highly uncertain.)

Unemployment rates were lower in June in 42 states, higher in 5 states, and stable in 3 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Forty-nine states and the District had jobless rate increases from a year earlier, while one state had no change. The national unemployment rate declined by 2.2
percentage points over the month to 11.1 percent but was 7.4 points higher than in June 2019.

Nonfarm payroll employment increased in all 50 states and the District of Columbia in June 2020. Over the year, nonfarm payroll employment decreased in all 50 states and the District.

In June, the BLS reports Washington’s unemployment rate stood at 9.8%, down from 15.1% in May.

Calculated Risk reviews the data and reports, 

Currently 20 states are above 10% unemployment rate.

Four states are above 15%.

Improvement, but slow, uneven, and tentative.