April 29, 2024
The Congressional Budget Office projected in the summer of 2020 that employment would be just 2 million (1.3 percent) above its pre-pandemic level in the first quarter of this year. Instead, it is up by more than 3.8 percent, a gain of more than 5.8 million compared to pre-pandemic levels, a level that we were not projected to reach until the fourth quarter of 2029. That is a big deal.
Nearly every major sector of the labor market has more than recovered the jobs lost during the pandemic.1 As of March 2024, overall employment is up by 3.8 percent, while private sector employment is 4.2 percent over its February 2020 level. These translate into increases of 5,824,000 and 5,421,000 jobs, respectively.
FIGURE 1
A number of industries have seen extraordinarily rapid job growth over the period from the start of the pandemic to March of this year.At the top of the list are courier services, like UPS. Employment in this industry has increased by 25.2 percent. All of this growth was at the start of the pandemic as people relied on home delivery as a substitute for in-person shopping. Employment in the industry peaked in April 2022 and has since edged downward. In the same vein, employment at warehouses and supercenters increased by 11.8 percent. There has been a clear movement away from traditional retail stores.
Air transportation has also had extraordinary job growth during the pandemic, with an increase of 10.8 percent. Employment in the industry had plummeted at the start of the pandemic, as air travel was sharply curtailed, but came back rapidly in 2022 and is now well above the pre-pandemic level.
There is a similar story with the category of performing arts and spectator sports. Employment in this category fell by 52.0 percent in the first months of the pandemic. It regained most of the lost jobs in 2021 but has continued to add jobs throughout the recovery. Employment in the industry is now 19.5 percent above the pre-pandemic level. Spectator sports employment, in particular, has seen the strongest rise with an increase of 45.5 percent.
The highest-paying sector—professional, scientific, and technical services—has also had rapid job growth, with employment now 13.1 percent above the pre-pandemic level. It has accounted for 21.9 percent of the net job growth since the pandemic, the largest of any single sector.
Several of the categories in this sector have had substantially more rapid job growth. Software publishers increased employment by 29.1 percent. The number of jobs in scientific research and development services increased by 25.5 percent. The management, scientific, and technical consulting services category had an increase in employment of 20.8 percent since the pandemic. This was led by management consulting services, which had an increase of 22.4 percent.
FIGURE 2
The next largest contributor to job gains is the health care industry, which has accounted for 17.3 percent of job growth since the pandemic. The major sector that encompasses health care, private education, and social services has accounted for 26.2 percent of the job gains since the pandemic. The health care category has added 1,010,000 since February 2020, an increase of 6.1 percent.
The biggest job gainer in health care in percentage terms was mental health practitioners with a 72.3 percent increase. This likely is due to the increased stress people incurred because of the pandemic and the increased use of telemedicine.
Not all areas within health care have added jobs. Employment in nursing homes fell sharply in 2020 and 2021, which was initially due to reduced demand because many residents died during the pandemic. Nursing homes then had trouble increasing employment in 2022 because the low-paying industry could not attract workers, especially during the severe labor shortage. It has been adding jobs for two years, but employment is still 7.8 percent below the pre-pandemic level.
There is a similar story with the child care employment category. It originally lost jobs, as the shutdowns substantially reduced demand. It then had difficulty attracting workers in 2021 but has been consistently adding jobs for the last two and a half years. Employment is now 1.2 percent above the pre-pandemic level. Employment in the larger social assistance category is 10.2 percent above the pre-pandemic level.
Construction has been another major source of job growth in the recovery. Employment is 7.8 percent above the pre-pandemic level, accounting for 10.2 percent of total job gains. Residential construction was driving job gains in the first two years following the pandemic, but growth in this industry slowed sharply after the Fed began raising rates in March of 2022. Nonresidential construction has filled the gap, with infrastructure projects and factory construction creating many jobs.
Manufacturing has had modest job gains since the pandemic, with employment up by 1.4 percent. Employment in the sector had already been dropping for over a year before the pandemic but then took a sharp plunge at the start of the pandemic. It added many of the jobs back in May and June, but then the pace of job growth slowed sharply in the second half of 2020. It surpassed the February 2020 level in July 2022 and has since trended moderately upward. Durable goods manufacturing has fared better than nondurable with an increase in employment of 1.8 percent compared to the pre-pandemic level, compared to 0.7 percent for nondurables.
One manufacturing industry that has fared markedly better than most is motor vehicles. Employment in the industry had been dropping for over a year prior to the pandemic. After plunging during the spring shutdown, employment rebounded in the summer of 2020 and has been growing gradually ever since. It now stands 83,000 (8.4 percent) above its pre-pandemic level.
Restaurant employment was especially hard hit by the pandemic, with jobs 48.6 percent below the pre-pandemic level in April 2020. Employment in the industry bounded back in the next couple of months but then stagnated. It was actually lower in January 2021 than it had been in September 2020. Growth then resumed in 2021 and has continued to the present. It is now 0.3 percent above the pre-pandemic level.
The jobs story in the hotel industry is not as good. It similarly lost jobs in the pandemic but has not regained all of them. Employment is still down by 8.9 percent from the pre-pandemic level. The growth of Airbnb and other vacation rentals has likely reduced demand for hotel rooms.
Government employment, especially education, has lagged job growth in the private sector since the pandemic. At the state level, employment in education is up just 1.7 percent from its pre-pandemic level. At the local level, it has increased by just 0.3 percent. This falloff is likely due to increased pressure on public school teachers over school curriculums and declines in public school enrollment.
The one major sector reporting a decline in employment is mining and logging, where employment is still 5.7 percent below its pre-pandemic level. However, it is worth noting that this sector was shedding jobs for over a year before the pandemic. Jobs in the sector had fallen by 8.4 percent from January 2019 to February 2020. The plunge in gas prices at the start of the pandemic led employment to drop further, bottoming out in February 2021 at a level 21.2 percent below its pre-pandemic level. Since that point, employment has gradually regained ground but still has not recovered to its February 2020 level.
On the whole, this is a remarkably positive employment picture.
It looks like we are on a path of strong job growth, widely spread across sectors, for the foreseeable future. Real wages have been rising as well. Unforeseen events happen, but this is a very good picture.
