In an unexpectedly weak employment report, employment rose by just 266,000 in April as the U.S. unemployment rate dropped to 6.1 percent, according to the most recent U.S. Bureau of Labor Statistics report released this morning. Economists had predicted job gains of nearly a million during the month. The setback is all the more surprising because today’s report comes on the heels of recent data showing U.S. economic output in the first quarter has just about fully recovered.
In April, notable job gains in leisure and hospitality, other services, and local government education were partially offset by losses in temporary help services and in couriers and messengers. “April’s job numbers offer optimism that the sectors most devastated by the pandemic are on the rebound,” said Michael Smith, global CEO of Randstad Sourceright. “Given expanded vaccine availability and the steady loosening of business and travel restrictions, it is encouraging to see the number of jobs added in the hard-hit hospitality and leisure sectors ahead of what is expected to be a busy summer travel season. Businesses in all sectors, and especially in the leisure and hospitality space, should look to utilize contingent and flexible talent during this transitional period to stay nimble while building a pool of flexible talent that can be converted to full-time, permanent staffers as business activity ramps up.”
Where Job Growth Occurred
In April, employment in leisure and hospitality increased by 331,000, as pandemic-related restrictions continued to ease in many parts of the country. More than half of the increase was in food services and drinking places (+187,000). Job gains also occurred in amusements, gambling, and recreation (+73,000) and in accommodation (+54,000). Although leisure and hospitality has added 5.4 million jobs over the year, employment in the industry is down by 2.8 million, or 16.8 percent, since February 2020.
In April, employment increased by 44,000 in the other services industry, with gains in repair and maintenance (+14,000) and personal and laundry services (+14,000). Employment in other services is 352,000 below its February 2020 level.
Employment in local government education increased by 31,000 in April but is 611,000 lower than in February 2020. Federal government employment increased by 9,000 over the month.
In April, employment in social assistance rose by 23,000, with about half of the increase in child day care services (+12,000). Employment in social assistance is 286,000 lower than in February 2020.
Employment in financial activities rose by 19,000 over the month, with most of the gain occurring in real estate and rental and leasing (+17,000). Employment in financial activities is down by 63,000 since February 2020.
Within professional and business services, employment in temporary help services declined by 111,000 in April and is 296,000 lower than in February 2020. Business support services lost jobs in April (-15,000), while architectural and engineering services and scientific research and development services added jobs (+12,000 and +7,000, respectively).
Within transportation and warehousing, employment in couriers and messengers fell by 77,000 in April but is up by 126,000 since February 2020. Air transportation added 7,000 jobs over the month.
Manufacturing employment edged down in April (-18,000), following gains in the previous two months (+54,000 in March and +35,000 in February). In April, job losses in motor vehicles and parts (-27,000) and in wood products (-7,000) more than offset job gains in miscellaneous durable goods manufacturing (+13,000) and chemicals (+4,000). Employment in manufacturing is 515,000 lower than in February 2020.
Retail trade employment changed little in April (-15,000), following a gain in the prior month (+33,000). In April, employment declined in food and beverage stores (-49,000), general merchandise stores (-10,000), and gasoline stations (-9,000). These losses were partially offset by employment increases in sporting goods, hobby, book, and music stores (+20,000); clothing and clothing accessories stores (+10,000); and health and personal care stores (+9,000). Employment in retail trade overall is 400,000 lower than in February 2020.
Employment in healthcare changed little in April (-4,000), as a job gain in ambulatory healthcare services (+21,000) was largely offset by a job loss in nursing care facilities (-19,000). Healthcare employment is down by 542,000 since February 2020.
Employment in construction was unchanged over the month. Employment in the industry is up by 917,000 over the year but is 196,000 below its February 2020 level.
In April, employment changed little in other major industries, including mining, wholesale trade, and information.
Zoom Effect and the Human Connection
“Many of our clients are in aviation and aerospace, so we are watching those industries closely for signs of recovery,” said Gary Krauthamer, founder of Krauthamer & Associates. “People are stir-crazy and eager to travel once they’re vaccinated, and the airlines will be ready to greet them with attractive deals. So I expect a deluge of personal travel in the coming months.”
“Business travel will be slower to bounce back, mainly due to the Zoom effect,” Mr. Krauthamer said. “However, you can’t really develop new business relationships over Zoom. According to a recent industry survey, almost 80 percent of corporate travelers will be ready to fly once they are fully vaccinated. Still, with business travel down almost 85 percent from the same time in 2019, no one knows exactly when those scales will tip.”
“Our firm has experienced setbacks before,” he said. “After 9/11, when the entire industry came to a standstill, I personally visited each of our clients to reaffirm our partnership face to face. By November 2001, we were having the best year we’d ever had. In times like these, there really is no substitute for the human connection. From our firm’s perspective, the pandemic has reaffirmed the advantage of having a long-standing and carefully cultivated network, based on thousands of hours of personal relationship-building. These partnerships with our clients are built to weather the worst storms. It takes a lot of time and effort to cultivate a network. Someone who doesn’t have a solid network behind them will be at a significant disadvantage when it comes to recovering post-pandemic.”
‘Hockey Stick’ Hiring Demand
“Many clients continue to go through transformations and restructuring that is also impacting the demand for talent,” said Jacob Zabkowicz, vice president and general manager for RPO at Korn Ferry. “Very few expected this quick of a recovery, and the need for talent has skyrocketed very quickly. A majority of our recruitment process outsourcing (RPO) clients are seeing a ‘hockey stick’ demand to hiring right now with the demand level for talent, across the board being unprecedented based on their historical forecasts and previous demand plans.”
“Different types of skills are often needed and there also has been considerable need for people in different geographic locations,” Mr. Zabkowicz said. “Candidates are receiving multiple offers, and often they’ll take a different job after they’ve accepted yours, so keeping candidates even after offer accept is more of a challenge pre-pandemic. Demand for professional talent is global, no longer just regional, and more and more workers are demanding that they be allowed to work remotely, including not wanting to move for a new role.”
Reorganize, Reorient, and Restructure
“From a recruiting and hiring perspective, we’re already seeing an economic recovery,” said Lisa Walker, managing partner of DHR International‘s global industrial practice. “There are a couple of things driving this. First, the lull that followed the beginning of the pandemic was a pause, not a stop. Some of the needs went away, of course, but a lot of the needs didn’t and had to be addressed.”
The pandemic also gave rise to fundamental changes in the economy, she said. “Some most obvious changes have been in real estate usage, technology, transportation, entertainment, retail, and supply chains. These changes, together, have forced companies to reorganize, reorient, and restructure how they do what they do, and how they get their products and services to market. And these changes, in turn, necessitate new roles and new org charts.”
A full recovery is a mirage – “expecting the economy to go in the way back machine and that is not happening,” Ms. Walker said. “Some sectors will never recover and must redefine. Office real estate and brick & mortar retail need to re-imagine their futures. Industries derivative of these models must reshape (there simply may never be as many central-business-district office workers nor as many Starbucks in a four-block radius). Other industries have enjoyed a year of Christmas (how much hand sanitizer do consumers really expect to purchase in 2022? Likewise, disposable PPE and ventilators). The key question is what does the new economic equilibrium look like and when will it reach steady state? My hypothesis: 2023.”
“We, like most, have moved to video meetings and 12-hour workdays from home,” Ms. Walker said. “I expect a hybrid model will take root in the coming years. Yet, households will go back to a more structured pattern once schools and after school activities reassert their place in the American way. Once this happens, businesses will have to adjust and the businesses and teams that transition most seamlessly (and compassionately) will have a competitive advantage.”
“In the higher education sector, we have found that the ability to get vaccinated has allowed for some travel to occur by candidates as well as members of our consulting team at the request of partner institutions,” said Shawn M. Hartman, vice president and chief operating officer of Washington, D.C.-based Academic Search.
“It remains a regional challenge and issue. Many campuses are anticipating in-person instruction this fall as vaccinations continue and may even be required. These factors give promise to an economic recovery and stabilization of campus finances. There is still caution and some university leaders have been careful to not make too many predictions about fall enrollment,” he said.
“For many institutions, fall enrollment will determine recovery on campus. For many of our public institutions, there could be up to a two-year lag between cuts or increases in funding. States are treating campuses very differently with the resources they have been provided by the federal government. There may have been a thaw and desire to return to normal, but there is no new normal or recovery yet.”
It is still too early to say when a full recovery is expected and what a full recovery will truly look like, Mr. Hartman said. “The effects of the pandemic will be felt for years to come and COVID-19 has surely had a long-term impact on higher education. Stabilization will begin in the fall, but recovery for many campuses in terms of enrollment and financial resources will be years in the making. The current federal dollars will have provided a soft landing for some institutions, but a reconciliation will be coming shortly for many campuses that did not change their operating model or recover enrollment.”
Mr. Hartman said he and his colleagues have adjusted primarily by going completely online in working with the firm’s partner institutions. “In a post-pandemic world it will be interesting to see how much we revert back to the way things were once done. We suspect that although institutions will want to return to more in-person interaction, much of what has worked virtually can continue to work for certain phases of the search process. For instance, we anticipate that initial virtual interviews will remain a new standard, even as travel begins to pick up with more and more people getting vaccinated, since the virtual environment has added convenience and cost-savings measures for both institutions and candidates.”
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