The Tale of 2 Economies: Why some Labor Markets had Fast and Slow Recoveries
AILSA CHANG, HOST:
There are some contradictory things happening in the job market. Thousands of workers have been getting laid off at tech companies in recent months. And just last week, hundreds more were laid off in media, at major players like CNN, The Washington Post and Gannett. But overall, job numbers are strong. So what is going on here? Well, to help us answer that question is Betsey Stevenson. She's a labor economist at the University of Michigan and served in the Obama administration. Welcome.
BETSEY STEVENSON: It's great to talk with you.
CHANG: Great to have you.
OK, so I want to start with the layoffs in the tech sector. Do you think those are indicative of a sector that is struggling right now, or is there something else going on here?
STEVENSON: I do not think it's indicative of a sector that's struggling. I think it's indicative of a sector that had gangbuster growth over the last couple years and maybe got a bit ahead of its skis, thinking that that growth was going to go on at that rate - a sort of unstoppable rate - and maybe overhired in some areas. We've got sectors that have been slower to recover, like leisure and hospitality or education and health services. So I think you want to think of this as a story of two parts of the economy - one part that recovered very fast out of the pandemic and maybe got a little bit ahead of itself, and it's time to pause, and then we've got - and other parts of the economy that were very slow to recover, and we saw real stagnation in any kind of sectors that involved human-to-human contact.
CHANG: Well, when it comes to sectors that are still adding jobs at a pretty healthy pace, what specific sectors are we talking about - that are still trying to fill positions?
STEVENSON: The two big buckets. It's leisure and hospitality and education and health.
STEVENSON: That's what made up two-thirds of the job growth that we saw last month, that we saw the previous month. These - it's not surprising for those sectors to have such strong growth. That's what they were doing prior to the pandemic, but they were very slow to come out. Now, we're still missing nearly a million workers in leisure and hospitality. And you want to drill down into occupations - we all know about the nurse shortage. So it's interesting to me that, at the same time we're seeing a lot of news stories about, oh, look at these layoffs at, you know, at CNN, or let's look at these layoffs in the tech sector, this is happening in the same few weeks that we've got a nurse calling 911 in an emergency room because she can't handle the patients.
CHANG: Yeah. OK, well, since we always love asking economists crystal ball questions, how do you see this all playing out as you look ahead into 2023?
STEVENSON: You know, I'm an optimist. And I think that what we are learning is everything the government did to support workers during the pandemic - even conceding that that might have contributed somewhat to the inflation we're experiencing - I think still ultimately left us with a stronger economy because people have gone back to work. And I think we're going to continue to see very high rates of employment. I think we're still going to continue to see very low rates of unemployment, even if they go up a little bit. And I think we're going to see some continued adjustment, probably away from the goods-producing sector and towards the service sector as we bring back health care workers, restaurant workers, hotel workers.
CHANG: Well, listening to you is actually mildly reassuring. That is Betsey Stevenson. She's a labor economist at the University of Michigan and served in the Obama administration. Thank you very much.
STEVENSON: Oh, thank you. It was nice talking with you.
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