After a disappointing April jobs report, hiring is on the rise again, with 559,000 jobs added in May. While a move in the right direction, talent acquisition professionals and hiring managers still struggle to find and attract talent. As consumer demand continues to increase, specific industries are dealing with an acute hiring challenge.
Of the 7.6 million jobs that remain lost from the pandemic, close to 2.5 million are in the Leisure and Hospitality industry, which includes restaurants, hotels, and entertainment venues. The biggest challenge persists in that unemployment benefits, along with the additional $300 federal stimulus dollars, is almost equivalent to the industry’s average wage depending on the state.
At the national level, the average wage earned for this sector was $15.68 per hour for non-supervisory roles in April. At that rate, a full-time job of 40 hours per week would equate to $627 per month or $32,914 per year. This direct competition to the industry’s take-home pay is impacting people’s willingness to work. For instance, parents of young children may earn more by not working, once combining unemployment benefits with the savings of not paying for childcare.
The Talent Demand
Demand for workers has surged in Leisure and Hospitality. As of March, the industry had more than 1.2 million jobs available in the U.S., ahead of an expected boom in summer demand. Close to half of U.S. states have announced plans to opt out of receiving extended unemployment benefits by early July. This move could help states reach their pre-pandemic employment levels faster by urging people off the sidelines. Of course, factors such as childcare and fear of COVID-19 may continue to impact people getting back to work.
As many companies return to the office and tradeshows begin to spring up again, business travel is set to resume. Though without hotels for lodging or holding conferences, a full recovery will be limited. Business and consumer spending will bring money back into local economies. The result could have a lasting impact on the areas in their first wave of recouping jobs lost from the pandemic.
Additionally, many workers will likely leave Leisure and Hospitality permanently. For instance, the Construction industry lost more than two million jobs during the fallout of the Great Recession. More than a decade later, it still had not recovered all lost jobs before the pandemic began, as workers found career opportunities in another field. Look for many of those who worked in restaurants and hotels to do the same, which could increase talent supply in other areas, assuming skills are transferable or enhanced through education.
The economic outlook is positive, but since the pandemic began, more than three million workers remain out of the labor force. Talent acquisition professionals will face challenges filling roles until the supply of workers significantly increases.
While some policy issues focus on blue-collar jobs, the labor market is already incredibly tight for many occupations. As of May, jobs in management, technology, legal, architecture and healthcare practitioners already had unemployment rates of 2.8% or less.
Recruiting and hiring will require the right tools to source and win candidates. Most important will be refining compensation plans based on today’s competitive job market and shifts in talent availability.
Local Markets Adding the Most Jobs
While the U.S. employment recovery is widespread, the pace varies across the nation. The following U.S. locations recovered the most total jobs on a year-to-date basis, through April 2021.
Year-to-Date Job Gain for 2021 through April
Of note, metro data through May will be available June 18, 2021.
Many of these cities were among the hardest hit at the onset of the pandemic-induced economic fallout. Further, industry recovery will be based on varying economic influences. As a result, each city will be impacted differently.
Industry Performance & Recovery
Growth in Leisure and Hospitality is no surprise as business activity ramps up and travel rebounds, but it could be better. May’s jobs numbers indicate Construction also continues to suffer from the ill effects of material shortages. These industries are posting strong demand but face systemic challenges to their employment recovery.
Keep reading to know when LaborIQ expects to see pre-pandemic employment levels in each major sector.
Construction | Spending in residential construction is booming. Office construction spending crept to its highest level since October 2020 but remains below pre-pandemic levels. High material costs are certainly part of the increased spending, though, high demand and low residential availability will continue to drive building activity. Material shortages will dampen job growth until supply channels improve.
Financial Activities | Some subsectors within this industry now have more jobs than before the pandemic. U.S. consumer activity, driven by home and car purchases, has led growth throughout 2020 and into 2021. On the other hand, harder-hit industries, such as the rental and leasing sector, are likely to see growing demand, as consumer and business activity pick up.
Healthcare | The pandemic has reshaped the industry by making virtual visits and home health care options readily available. In the short term, increased hiring will continue, as more vaccinations boost demand and digital options remain accessible. Not only has the pandemic shifted attention to physical health but also mental health, creating a need for more professionals to serve a higher volume of patients.
Professional and Business Services | This sector had 1.4 million job openings in March, and its unemployment rate remains lower than that for the nation, particularly for the higher skilled industries such as Professional and Technical Services. This signals a tightening job market. To fill vacancies, workers will need to upskill or leave current roles for new ones. This industry was not as negatively impacted by the pandemic, but still faced challenges finding skilled workers and with parents able to find suitable childcare options.
Trade, Transportation and Utilities | This industry’s progress is linked to labor and material shortages. The Bureau of Transportation’s (BTS) Transportation Services Index reports that freight has slowed since January, squeezing industrial productivity and manufacturing shipments. Alternatively, passenger movement has continued to increase, as the pandemic eases in the U.S. and restrictions are lifted. Given these dependencies, growth may be subdued but regain momentum, once supply chain obstacles ease.
Manufacturing | Industry growth is impeded by limited availability of raw materials and not finding workers to increase output. The Institute for Supply Management® Manufacturing PMI®, which measures order activity at U.S. factories, reported May’s PMI at 61.2, slightly up from April’s PMI® of 60.7. This range indicates expansion. Though there is demand, until material and labor shortages subside, recovery and expansion will remain suppressed.
- Information | Industries in this sector have made varying degrees of progress toward recovery. During the pandemic, these industries adapted digital aspects, but some tasks require in-person work. For instance, remote work occurred in sound recording, but film production requires more in-person work. On the other hand, software publishing gained 16,000 jobs since the pandemic began. As health concerns wane and consumers engage in more in-person activities, the box office could see a boost, although home streaming options will likely have a permanent place in production plans.
Government | Government spending will have a palpable impact. Usaspending.gov reports that as of April 30, spending has already increased 18% over the same period of fiscal year 2020, which will be consequential. This includes two rounds of stimulus. As businesses reopen, how state and local governments leverage federal aid to resume services will be important to watch. Higher spending is expected to quicken the pace of recovery.
Leisure and Hospitality | Though this industry has added over 1.2 million jobs in 2021 to meet growing consumer demand, labor shortfalls continue to delay its recovery. The sheer volume of job losses has been enough to push this industry’s recovery outlook further out than other industries.
- Mining and Logging | Activity in this sector reflects the resurgence of the U.S. economy signaled by the positive May jobs report. Refinery capacity inched closer to pre-pandemic levels, reaching its highest level since March 2020. Oil prices have heated up, with the WTI and Brent crude benchmarks hitting recent highs. The increased economic activity has caused producers worldwide to have a brighter outlook.
LaborIQ by ThinkWhy reports, forecasts and advises on employment conditions and the impact to jobs, industries and businesses across all U.S. cities.