COVID-19 and Unemployment in the United States

Due to the COVID-19 pandemic, unemployment in the United States has reached the highest peak since as early as January 1948. Since April 2020, when unemployment hit its highest at 14.7%, the unemployment rate has steadily dropped to 6.9% as of October. However, the pre-pandemic rate was 3.5% in February, so we are clearly not back to normal yet (Unemployment Rate).  In the United States, unemployment spiked to 14.7% as unessential workers were either temporarily or permanently laid off. The labor market momentum indicator dropped to its lowest in many years. Labor market momentum is described as such: “A positive value indicates that labor market conditions are above their long-run average, while a negative value signifies that labor market conditions are below their long-run average” (KC Fed Labor Market Conditions). According to an article on the Business Insider website, more than 60 million Americans (about 1 in 5) have filed for unemployment insurance, which is more than the number of claims filed during the 18-month Great Recession of 2008. For scale, the peak unemployment during the Great Recession was 10% in October 2009. 

A research group by the name of the Brookings Institution found that over 37 million Americans were immediately impacted by COVID-19. These industries include “retail, passenger transportation, arts and entertainment, accommodation, restaurants and bars, and a variety of other personal services” (Berube & Bateman).

Vulnerable workers are highly concentrated in metro areas in immediate-risk industries. “Vulnerable workers comprise at least 30% of the total workforce in a mix of tourism-dependent and energy-dependent metro areas” (Berube & Bateman). As such, areas like Las Vegas, Honolulu, Myrtle Beach, and several areas of Florida were affected by the travel restrictions and bans as well as the shutdown of hospitality industries. According to the same study, the vulnerable workers are disproportionately young and possess less formal education. This is due to the fact that younger people are traditionally employed by sectors such as retail, food service, and arts/entertainment as gateway jobs to get started in their careers. Thus, many have yet to achieve higher education: “42% possess no more than a high school diploma, compared to 30% of other workers” (Berube & Bateman). This may make it more difficult, at least in the short term, to redeploy their skills into other, less vulnerable industries.

Works Cited

Berube, Alan, and Nicole Bateman. “Who Are the Workers Already Impacted by the COVID-19 Recession?” Brookings, The Brookings Institution, 17 June 2020, www.brookings.edu/research/who-are-the-workers-already-impacted-by-the-covid-19-recession/.

KC Fed Labor Market Conditions Index, Momentum Indicator. 10 Dec. 2020, fred.stlouisfed.org/series/FRBKCLMCIM.

“Unemployment Rate.” FRED, 4 Dec. 2020, fred.stlouisfed.org/series/UNRATE/.