Published Jul 02, 2020 by Susan Moore
Earlier this year, the Gulf Coast Workforce Board’s principal economist Parker Harvey described the toll the COVID-19 pandemic and the oil downturn had already taken on Greater Houston’s regional economy. The disruptions to the regional labor market were unprecedented but Harvey had begun to see encouraging signs that a turnaround was coming through a decrease in the number employers removing job postings.
On June 25, Harvey shared his most recent insights with Peter Beard, Partnership senior vice president of Regional Workforce Development. Harvey’s visit was on the eve of new orders from Governor Greg Abbott to close bars and similar establishments and to reduce restaurant dine-in capacities to 50 percent (down from 75 percent capacity) due to a surge in COVID-19 cases across the state.
Here are the key takeaways from the conversation:
May job gains exceed expectations
Harvey expected data from the region’s May jobs report to show continued losses. However, the data imply that one out of every five of the 350,000 jobs lost between March and April were recovered. Industries with job gains included:
Harvey pointed to restrictions of elective surgeries as an indication of a possible trend shift on the horizon.
“Obviously, the situation continues to evolve, and the headline just shows just how quickly things can alter the trajectory of the recovery at this point,” Harvey said.
Areas with continuing job losses included government, with a loss of 8,100 jobs, and mining and logging, with a loss of 6,400 jobs.
May is not typically a high month for government job loss, but this year bucked the trend. Harvey said he believes the losses were tied to the absence of door-to-door decennial U.S. Census-takers and the movement of seasonal state and local government education job losses from June to May.
In April, Harvey pointed to the number of jobs being posted as one measure that would indicate a turn in the economy. Weekly analysis of these postings has lost much of its informative value due to its inherently volatile nature in general and exacerbated by a sudden disappearance of one out of every five postings on May 28. Harvey noted the uncertainty of whether the decline was a meaningful retrenchment on the part of employers or results to changes in the data collection process.
However, on a month-over-month basis, he noted that the number of ad postings slowly began to slowly increase in early May, culminating in nearly every job sector and every occupational family displaying an increase over the 30-day period between May 24 and June 23, compared to April 23 to May 23. Harvey said it was an encouraging sign.
The most notable gains came in the transportation and warehousing, health care and personal care. In April, Harvey said that increases in job postings were found across a much broader range of employers regardless of the sector compared to observations made during the previous forum on April 30th. Even still, as of June 23, Harvey saw roughly 88,258 regional job ads, compared with 150,140 on June 23, 2019 – a decrease of about 40 percent.
Unemployment rates high but show decline
Harvey said he anticipates seeing the unemployment rate in May to rise four or five percentage points above its April rate. Instead, that rate dropped from just above 14 percent in April to just below 14 percent in May. A household survey put the total number of unemployed individuals at around 463,000 in May.
The average unemployment rate across the Gulf Coast Workforce Board’s 13-county region decreased slightly, from 14.1 percent in April to 13.9 percent in May. This follows record-breaking and anomalous county-specific unemployment increases seen between March and April.
Five counties within the region experienced unemployment rate increases between April and May while eight experienced decreases.
All but two cities in the region for with the Workforce Board has data experienced unemployment decreases as well. These increases were seen in Baytown, which traditionally has the region’s highest unemployment rate, and Lake Jackson. Galveston City experienced the largest unemployment rate decrease.
The number of initial claims for unemployment insurance being filed weekly has steadily declined since their apex of 77,000 in early April. Weekly initial claims have fallen 70 percent, with only about 22,500 new claimed filed during the week of June 13 – even so, this figure is about four times higher than it would have been without the pandemic. Harvey suggests that “in essence we are flying blind,” when analyzing the unemployment rate in light of initial and continuing claims for unemployment insurance as indicators for the unemployment rate.
May national jobs report
Harvey expected to see the national May jobs report to show the unemployment rate increase to 19 percent based on consensus estimates leading up to its release. Instead, that rate reportedly dropped to 13.3 percent, with about 2.5 million jobs reportedly created.
At the same time, between 10 million and 13 million new unemployment insurance claims were filed between the April and May jobs reports. What’s more, expanded unemployment insurance benefits coupled with the reluctance of some workers to return to due to COVID-19, likely disincentivized at least some workers from resuming their previous roles.
Though it might be tempting to attribute unemployment decreases in the Galveston area to the resumption of leisure and hospitality business, Harvey noted that reopen dates span a six week period between May 1 and June 12, while the national jobs report survey has a week-long reporting period during the middle of May and so the dates don’t line up.
Jobs reports are generally lagging economic indicators but this report, Harvey said, seemed to show an inflection point in the recession nearly in real-time – not impossible but fairly unusual and very surprising. The recovery shown by the May report is closer to what Harvey would have expected to see in reports from June or July. Instead it seems, the economy skipped over intermediate steps of a continued worsening to the modest start of a rebound and into a “V-shaped” recovery of Houston’s labor economy.
Job loss aligns with educational attainment
Harvey explored the populations of those filing for unemployment claims along educational attainment lines and how it changed over time and the data makes a case for obtaining post-secondary education.
Just more than half of the claims filed by the middle of June were made by workers with a high school diploma or equivalent degree while nearly another 20 percent were made by workers with some college but no post-secondary degree. By mid-June, workers with less education than high school made up 15 percent of claimants. Workers with an associate degree had filed only 11 percent of claims while those with a bachelor’s degree or higher made up an even smaller percent.
Harvey showed how those breakdowns had changed since early March, noting general trends that the proportions of claimants with some college, an associate degree or an associate degree decreased over time while the proportion of claimants with a high school diploma or less generally increased over time.
Harvey noted that lower wage earners who found themselves unemployed were more likely to file for unemployment benefits than their high wage-earning counterparts, which could bias the data to some degree. In addition, the data imply that individuals with more education were being reabsorbed back into the job market more readily than those with less education or simply fewer individuals with postsecondary were being laid-off after the initial shock to job market in late-March.
“More education correlates with lower chance being unemployed,” he said citing this Bureau of Labor Statistics graphic showing the inverse relationship historically.
Upskilling (still) key for workforce recovery
Harvey and Beard discussed the growing need for a workforce with keen digital skills, an already growing need accelerated by business responses to the pandemic. Some businesses ceased dine-in services but initiated curb-side pickup and online ordering while others moved employees to remote work settings. Lower-wage jobs were less likely to be those that could be done remotely, he said.
Service sector jobs from the lower end to the higher end like car or home sales could be particularly affected by rapidly increasing digital disruption resulting in workers relying more on the use of digital platforms and tools and on having skills like analytical reasoning.
As he did in April, Harvey pointed to upskilling now – particularly around digital tools and platforms – as a way for unemployed individuals to prepare for reentering the workforce or as workers increasingly shift to conducting work remotely, which he believes will continue until the pandemic is abated.
“It is going to be more imperative to have digital skills than ever before partially because they can be done remotely,” he said.
“If people have the time and opportunity to do it […] try to acquire some more online training, pick up some sort of additional skills or exposure to something, anything that would at least allow you to be able to impress them the job, or at least discuss something with employer that would send the signal that you're still engaged,” he said.
“The bottom line is that we're all going to have to move forward. The economy is going to have to keep going on some level, people are going to have to continue working,” he said. “It's just a question of what that looks like and how we manage that with the potential for sub-optimal levels for economic activity for the foreseeable future.”
The UpSkill Works Forum Series presents interviews with business and community leaders, policy makers, and leading thinkers on the key workforce issues our region confronts. View recordings of the complete series on YouTube.