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March employment gains point towards recovery: yet local government jobs remain largely stagnant

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    March employment gains point towards recovery: yet local government jobs remain largely stagnant

    Key Takeaways
    • Total nonfarm payroll employment increased by 916,000 in March led by job gains in leisure and hospitality (+280k), public and private education (+76k in local gov, +50k in state gov and +64k in private) and construction (+110k).
    • The national unemployment rate decreased by 0.2 percentage points to 6.0 percent, but the number of unemployed persons is still 4 million higher than in February 2020.
    • The number of individuals on temporary layoff decreased by 203,000 while the number of permanent job losers, the number of long-term unemployed and the number of individuals working part-time for economic reasons experienced nominal changes in March.
    • Labor force participation rate experienced little change, now at 61.5 percent which is 1.8 percentage points lower than February 2020.
    • Local government employment remains 940,000 jobs short of February 2020 levels, after only 7,100 non-education local government jobs were added back to the economy in March.
    • Overall, every major industry except Healthcare and the Information sectors experienced job gains in March as many other labor market indicators experienced marginal changes, falling well short of February levels.

    Many indicators showed little improvement, remaining short of February 2020 levels

    U.S. Unemployment Rate, Jan. 2020 - Mar. 2021

    The March Employment Situation report from the Bureau of Labor Statistics (BLS), released April 2nd, showed a significant jump of 916,000 jobs in total nonfarm employment. At the same time, the unemployment rate fell to 6 percent — 0.2 percentage points below the previous month (February 2021). The labor market gains outperformed expectations; however, significant progress in broader economic recovery still lies ahead as the number of unemployed individuals is over 4 million higher than pre-pandemic levels.

    Along with stark job gains, the March employment situation report also reveals marginal changes in many labor market indicators. The labor force participation rate, a proxy measure for confidence in the labor market, increased by 0.1 percentage point in March. This measure is 1.8 percentage points lower than February 2020 levels, which equates to over 2 million persons who have been dissuaded by work prospects and have yet to re-enter the workforce since the beginning of the pandemic.

    Those not in the labor force (and thus not accounted for in the unemployment or labor force participation rates) that currently wanted a job also experienced little change; at 6.9 million persons this measure is 1.8 million higher than February 2020.

    The number of individuals on temporary layoff, or those who expect to return to work in the next six months, decreased by 203,000 in March. In the same vein, the number of permanent job losers (people whose employment ended involuntarily), the number of long-term unemployed (those unemployed for 27 weeks or more) and the number of individuals working part-time for economic reasons experienced nominal changes in March.

    Compared to highs of around 25 percent in the summer of 2020, about 21 percent of employed persons teleworked in March due to the pandemic. March’s levels are the lowest reported to date, signaling a return to traditional work routines for many individuals.

    Finally, the number of individuals prevented from looking for work due to the pandemic decreased by about 500,000 in March as recovery begins to pick back up. As the pandemic continues to wane, COVID-19's grip on the labor market will continue to become less pronounced; thus allowing for a quicker and more robust recovery.

    Local government sector remains 940,000 jobs short of pre-pandemic levels, despite slight gain in March

    Local Government Employment Levels, 2006 – Mar. 2021

    Local government employment rose to 13.7 million jobs, but still remains 940,000 jobs short of February 2020 levels. March's increase of 83,000 local government jobs was the highest total local government job gain since August 2020, but only 7,100 of these jobs were non-education jobs, leaving non-education local government employment largely unchanged from the previous month at just over 6 million jobs. Education-related local government employment rose by 76,000 jobs, now reaching 7.4 million jobs in March. Although jobs have been on the rise this month, the local government employment sector accounts for 11 percent of all jobs needed to recover to February 2020 levels.

    Most major industries experience job gains in March, though unemployment rates reveal little change across demographic groups

    In March, job gains were widespread across several industries with notable job gains occurring in leisure and hospitality, public and private education and construction. Less jobs growth occurred in social assistance, wholesale trade, mining, retail trade and financial activities.

    • As states continue to ease pandemic-related restrictions and re-opening efforts ensue, the leisure and hospitality sector increased by 280,000 jobs in March, accounting for the majority of the job gains in the labor market over the month. Most of the gain in the industry occurred in food services and drinking places (+36,000). Accommodation (+36,000) and amusements, gambling, and recreation (+33,000) each added jobs over the month. The leisure and hospitality industry is down by 3.5 million since February 2020.
    • In March, public and private education increased over the month following the reopening of in-person learning and other school-related activities across the country. Employment increased in local government education (+76,000), state government education (+50,000) and private education (+64,000). Employment is down from February 2020 in local government education (-594,000), state government education (-270,000) and private education (-310,000).
    • Construction employment increased (+110,000), following job losses in the previous month (-56,000). Gains occurred in specialty trade contractors (+65,000), heavy and civil engineering construction (+27,000) and construction of buildings (+18,000). Despite growth, the industry is down by 182,000 since February 2020.
    • Employment levels in professional and business services rose by 66,000, with employment in administrative and support services accounting for most of the gain (+37,000). Job growth also occurred in management and technical consulting services (+8,000) and in computer systems design and related services (+6,000). Since February 2020, employment in professional and business services is down by 685,000.
    • The retail trade industry increased by 23,000 jobs in March. Over the month, growth occurred in clothing and clothing accessories stores (+16,000), motor vehicle and parts dealers (+13,000) and furniture and home furnishing stores (+6,000). These gains were partially offset by losses in building material and garden supply stores (-9,000) and general merchandise stores (-7,000). Employment in retail trade is 381,000 jobs lower than its February 2020 levels.
    • Employment in transportation and warehousing added 48,000 in March and is 66,000 below its February 2020 levels. In March, couriers and messengers (+17,000), and transit and ground passenger transportation (+13,000), accounted for majority of the gain in the industry. However, employment levels in these industries remain below their February 2020 levels by 206,000 and 112,000, respectively. Notable gains also occurred in support activities for transportation (+6,000) and air transportation (+6,000).
    • Other major industries that experienced notable job gains in March including manufacturing (+53,000), mining (+21,000), wholesale trade (+24,000), social assistance (+25,000), financial activities (16,000) and other services (+42,000). The healthcare and information sectors changed little over the month.

    Among major working groups, the unemployment rate rose for Asian workers (6.0 percent), despite a decline in the previous month, but declined for Hispanic workers (7.9 percent). In contrast, the unemployment rates changed little for other major demographic groups, including teenagers (13.0 percent), adult men (5.8 percent), adult women (5.7 percent), Black workers (9.6 percent) and white workers (5.4 percent). The impacts of the COVID-19 pandemic on the labor market hit People of Color hardest and exacerbated the economic inequality among race/ethnic groups. At the beginning of 2020, the unemployment rate among Black workers was the lowest ever recorded despite being still double that of white workers. The unemployment rates for Black and Hispanic workers peaked in May 2020 at 16.8 percent and 17.6 percent respectively and have since declined by 7.2 percentage points and 9.7 percentage points.

    The pandemic also highlighted gender disparities in labor market outcomes, with female workers bearing the brunt compared to their male counterparts. Between February and April 2020, the labor force participation rates for women and men over the age of 16 dropped by 3.2 and 3.0 percentage points, respectively. In March, the labor force participation rate for women over the age of 16 is now 1.7 percentage points lower than February. For men over the age of sixteen, the labor force participation rate decreased by 1.9 percentage points since February.

    The economic outlook is optimistic, as counties prepare to bolster local economic recovery

    Labor market recovery appears to be on the rise again after experiencing one of the largest gains in non-farm payroll since the pandemic began. The 916,000 job increase outperformed expectations with nearly every major industry experiencing job gains. Even as the gains in March signal recovery, future labor market prospects are even more optimistic. Due to the statistical timing of data collection for the March employment situation, job gains reflected in the March report were not driven by the newly enacted American Rescue Plan (ARP), which provides over $65.1 billion directly to counties to continue combatting the pandemic and bolster recovery. As such, the impact of the ARP on the labor market will only further build upon the growth in March. Moody’s Analytics suggests the labor market will experience full recovery – a return to pre-pandemic employment levels, or better – by the end of 2022.

    As recovery continues in the labor market, so too will the broader economy. Gross domestic product (GDP), or the measure of output for an economy, is expected to grow by 7.9 percent in 2021 and 6.1 percent in 2022 according to Moody’s.

    Counties are on the front lines in supporting this economic recovery. Though counties have not yet received their allocations from the American Rescue Plan, county leaders are already planning for how to best leverage the funding to invest in local communities. The consolidated County and City of Denver, Colo. plans to first move to reduce the number of furlough days for employees and fill vacancies that have remained empty due to hiring freezes. King County, Wash. plans to use about $40 million of funding to support a county jobs program, creating over 400 new jobs within the county. Finally, New Hanover County, N.C. has approved a framework for spending ARP funding to include investments in broadband connectivity, business and employment assistance, mortgage assistance, physical and mental health resources and other areas that will help boost economic growth and development in the county.

    Investments at the local level in individuals and communities will be important drivers of successful recovery in the coming months. With support from the American Rescue Plan, counties are uniquely positioned to contribute to recovery and sustain economic growth for years to come.

    Key Takeaways
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