While not as rapidly changing as it once was, the unemployment situation in America is still a problem due to the pandemic. It seems like everywhere you go, “help wanted” signs are in the windows. Fast food restaurants are advertising for signing bonuses. You may have even heard of local small businesses closing because they can’t find new employees. Even hospitals, now once again full of COVID-19 patients, are having a hard time finding new, qualified help. Health care employment is down by 502,000 since February 2020.
While most assumed that the unemployment benefits would be hindering a return to work, the Federal Reserve noted in a recent interview that early retirement, decisions to stay home with children, and fears over the pandemic are keeping people home longer than the market anticipated.
According to a recent news release from the Bureau of Labor Statistics, overall unemployment was down .05% in July 2021 to 5.4%. Major gains were made in leisure and hospitality, which is not surprising as people resume something closer to “normal” life. As noted in the report, employment in leisure and hospitality is down by 1.7 million, or 10.3 percent, from its level in February 2020. Hopefully vaccination rates rise, and new cases don’t send those workers back home again if restaurants are forced to close indoor dining and travel restrictions are put back in place.
While for some sectors there is a shortage of workers, in some there is a shortage of jobs. Most notably, the automotive industry is facing layoffs due to the computer chip shortage. From manufacturing to sales, employees are losing their jobs.
Over the past few weeks, the mask mandates have started to take hold once again. At the same time, many local jurisdictions and private companies are now requiring proof of vaccination. While these measures may slow the spread of the virus, it is likely that this will result in businesses once again shutting down or at least scaling back their operations. Recent reports of a spread of the Delta variant in China will likely lead to longer wait times for parts and electronic components necessary for the assembly of motor vehicles. As a result, we anticipate that unemployment rates which have been declining since late last year could rise significantly over the coming weeks, though we sincerely hope that we are wrong.