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Jobs Friday: The Four Labor Markets

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Jobs Friday: The Four Labor Markets

Jobs Friday: The Four Labor Markets

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CARDIFF GARCIA, HOST:

Hey, everyone. Before we start today's show, we want to ask you to please tell us what you think of the show by filling out a short, anonymous survey at npr.org/indicatorsurvey. That's all one word. It takes less than 10 minutes, and you get to use words like awesome, superlative, outstanding, love it.

STACEY VANEK SMITH, HOST:

Or terrible.

GARCIA: If you must, yeah - words that mean the opposite of those.

SMITH: (Laughter).

GARCIA: Again, that is npr.org/indicatorsurvey. And now on with the show.

UNIDENTIFIED PERSON, BYLINE: NPR.

(SOUNDBITE OF MUSIC)

GARCIA: Hey, everyone. Stacey and Cardiff here. This is THE INDICATOR FROM PLANET MONEY. Today is the last Jobs Friday of 2020, but frankly, the news is not good. So we are going to save the traditional blasting of the Jobs Friday airhorn until the new year, hopefully.

SMITH: Yeah. This morning, the Bureau of Labor Statistics released the jobs report for the month of November. The economy only created 245,000 jobs last month, and that is the fifth straight month that the number of jobs created has fallen. And it means there are still 9.8 million fewer jobs in the economy than there were before the pandemic. Or to put it another way, if every month from now on is like November, it would take more than three years to get back all the jobs that were lost in the pandemic.

GARCIA: And hopefully, it won't take that long with a vaccine on the way. But for now, there's still just a lot of suffering from job loss out there. And since it is the last jobs report of 2020, we are also in the mood to reflect on more than just the past month. How should we regard the astonishing - frankly, terrible - events in the labor market for the year as a result of the pandemic?

SMITH: To answer this, we called up Jed Kolko. He is the chief economist at Indeed, a job search website.

JED KOLKO: I think the biggest surprise this year is actually a relief - a relief that the labor market is not in worse shape than it is right now. Lots of people really expected that unemployment would be higher, job losses would be steeper, incomes would be lower at this point in the year than they actually are.

SMITH: In other words, things are bad, but they could have been even worse. In fact, a survey of economic forecasters back in May predicted that the unemployment rate would be around 11% at the end of this year. And right now, it's at about 6.7% - so still really high, but better than they thought.

GARCIA: But Jed also says that the hit to the labor market this year has fallen unevenly on the population and on the U.S. economy, and so he has broken down the economy into four different labor markets - the sectors of the labor market that have actually won this year, the sectors that are in recovery, the sectors that are damaged and the sectors that are on pause. And he's going to guide us through each of those four different parts of the labor market right after a quick break.

(SOUNDBITE OF MUSIC)

GARCIA: OK, so the U.S. labor market divided by four - or rather, the four different labor markets that make up the overall labor market - whatever. First up, the sectors that have actually benefited from the events of this year. According to Indeed chief economist Jed Kolko, these are the sectors where employment has actually gone up since February, right before the pandemic.

KOLKO: For the most part, these are sectors that have supported the stay-at-home economy - warehouse jobs, driving jobs. These are jobs that get goods to people in their homes.

SMITH: With more people ordering goods online, Jed says it makes sense that jobs would increase for people who work in the warehouses that stock those goods. There's more demand for that work - same thing for the drivers who deliver those goods to people.

GARCIA: Other winning sectors - jobs in grocery stores and big merchandise stores like Costco and Walmart, where people go to buy those goods that they bring home. Plus, the construction sector, partly because a lot of people have moved into new, bigger houses that needed to be built, and partly because other people have spent a lot of money renovating their homes to make them nicer places to spend a lot of time in.

SMITH: Jed says it's not surprising that these sectors have been stronger this year than other sectors. But...

KOLKO: I think the bigger surprise is not which sectors have done best but that they've actually grown during this period.

SMITH: Remember, the COVID recession earlier this year was brutal. It hit most of the economy. But enough people were still willing and able to spend money that these winning sectors didn't just keep the business they had - they got more business. They got bigger.

GARCIA: That's right. And next up, the sectors that did lose a ton of jobs earlier in the year but have now regained a lot of those jobs.

KOLKO: So the rebounding sectors are the ones that are really driving the biggest swings that we've seen in the data this year.

SMITH: Jed says these are the sectors that shut down at the start of the pandemic, but now they have at least partially reopened.

KOLKO: Restaurants, clothing stores and also services that didn't operate for a long period of time - like hair salons, dental offices - but have reopened and have actually bounced back as people are getting those services that they had deferred earlier in the year.

GARCIA: Jed says these are also the sectors that are the most sensitive to actually getting the virus itself under control because in places where the virus is surging again, these sectors are at constant risk of being shut down again. And that's a big deal for the workers because these tend to be low-paying jobs. And these are also the sectors where people are hired and fired very quickly, so the workers are just in a constantly precarious position.

SMITH: Next up, the sectors of the economy that are damaged.

KOLKO: Like air travel, a lot of tourism, the arts, entertainment, sports - but unlike the rebuilding sectors, they haven't bounced back. For the most part, they haven't reopened. And employment remains far below pre-pandemic levels in these damaged sectors.

SMITH: Jed labels these sectors damaged partly because they disproportionately require big crowds of people. Going to live sporting events, watching movies and plays, seeing a popular museum exhibit - these activities often require indoor places with huge crowds, and so it's hard for these sectors to recover and start hiring people until the virus itself is under control.

GARCIA: Plus, unlike hair salons or even restaurants, which can reopen in one city but stay closed in another, some of these damaged sectors require the virus to be under control everywhere.

KOLKO: But the damaged sectors, for the most part, involve travel - people coming from other places. It is larger than just the local labor market. And so opening up the damaged sectors depends not just on the virus being under control in a local area, but at a national or even global level.

SMITH: And finally, the fourth part of the labor market - the paused sectors of the economy.

KOLKO: Jobs like tech and finance and other professional services, where for the most part, people can work pretty productively from home.

SMITH: There have been relatively few layoffs in these sectors of the economy, but there also have not been many new hires. Things have just been stagnant.

KOLKO: These paused sectors tend to hire higher-wage workers who may have very specialized skills or might be highly technical. They - these are sectors where hiring costs a lot more, takes longer. People stay in their roles for longer than in restaurants or in retail, and so these are sectors that are gun-shy. They're going to be more hesitant to hire until they have longer-term confidence in the direction of the economy.

GARCIA: As Jed describes, these sectors - there was less firing initially, and there is also less hiring now. There's just less overall churn.

And there you have it. The story of the U.S. labor market this year has really been at least four different stories - more like a short story collection than a coherent novel - and horror stories at that, if we might add.

SMITH: A dark short story collection.

GARCIA: A very dark short story collection, indeed.

SMITH: Yeah.

GARCIA: This episode of THE INDICATOR was produced by Jamila Huxtable and fact-checked by Sean Saldana. Paddy Hirsch is our editor, and THE INDICATOR is a production of NPR.

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