Job Growth in The United States During COVID-19
The Net Job Growth in The United States:
The United States, the most powerful democracy in the world that focuses deeply on job growth and the unemployment numbers of the country. So much so that presidents judged based on the number of jobs created during their tenure. Hence, in the times of COVID, it makes sense to discuss the growth in the number of jobs in the USA. Its fall during times of crisis, and what will be the effects of COVID 19 on the entire scenario at hand is something to ponder upon.
Another important denominator today is the US-China trade spat that has created a lot of tension in the domestic market. One thing to note is that since the Bureau of Labor Statistics calculates all the job data as anon-farm job data only, that is what we will be referring to wherever we speak of jobs unless mentioned otherwise.
The Net Job Growth:
Job Creation is very important for any nation to thrive. Only when more job creation is constant. More people can contribute to the economy and nation-building. Job data gathering in the United States started way back in 1915 when a handful of manufacturers asked by the government to share the employment and salary data of their employees. In 1919 was the time when we first started seeing monthly data on employment and average earnings of the people of the United States of America.
One of the reasons behind the rapid growth of the USA attributed to the factor that net jobs grew by more than 5 times in almost a decade. The numbers stood at 27.1 million in 1919 whereas in 2016 it was 143.1 million. But if you see the graphs and numbers, this growth has not been very steady. 1932 saw a massive drop in jobs of 11.3% and 1941 saw a record high of 12.9% job growth.
The average growth in the US has been around 2.1%. Most of the private industries have captured a greater part of the pie growing from 50% to 71% by 2015. However, the manufacturing industry has seen its share trimmed from 37% to 14%. With time, the manufacturing industry has seen itself shrinking.
World War II specifically saw massive growth in employment, but it was an unnatural spike which later resulted in the subtraction of jobs. Of the entire gains in the US job-industry, the service sector has taken up more than 90%.
The US-China Trade War:
The bitter US-China trade war has had far-reaching effects across the globe. The dispute has seen more than billions of dollars in tariff imposed on each other’s goods. Negotiations have proven to be difficult and there have been a series of tariffs- July 18, Aug 18, Sep 18, May 19, and June 19, as of now. This has threatened both jobs and the economy of the USA. As per one study conducted by the Port of Los Angeles, as many as 1.5 million jobs threatened by the ongoing spat. It could also end up impacting almost $186 billion of economic activity.
As prices rise, sometimes as much as 25%, consumption could decrease and the demand for the raw goods could fall. This would, in turn, lead to a decrease in the workforce in multiple industries. The damage that this war could cause to the domestic job market, coupled with the Coronavirus Pandemic is monstrous in number.
2008 Financial Crisis vs COVID-19:
As per most reports, the US unemployment rate has jumped to an all-time high of 20%. As many as 39 million Americans rendered jobless by the pandemic. And things have gotten worse in just 3 months of COVID when compared to 2 years of The Great Recession. At the peak of lockdown enforcements, around 6 million people applied for unemployment benefits in a single week.
The graph above shows how unemployment numbers reached a record high in 2020. The number of unemployment claims in a single month was more than 10 times that of the 2008 Financial Crisis. But this graph does not give us the whole picture at a single glance. To calculate the total jobs lost in the 2008 crisis, you need to calculate the area under the graph during the crisis.
Impact Of COVID on The Job Growth:
As for the COVID situation, it is more sudden, and hence the spike. More jobs lost at a single moment this time, and a better comparison made once things stabilize. While the picture is grimmer than 2008, it is not as bad as the graph makes it out to be.
Before COVID hit us, until April, you can see that the weekly average for unemployment claims hit around 350,000. By April, it had hit 6.8 million, but the numbers have been steadily decreasing since then. It took just 3 months for it to drop down to 1.43million and as time passes. The numbers will get back to the previous average. But there lies a great amount of uncertainty.
While some vaccines are already in the final stage of their clinical trials. It is to be noted that from this stage to actual vaccines being given to the public- it can take more than a year. Along with that, cases of re-infection from various parts of the globe has increased fear among the public. Chances of a second wave of infections are still being discussed by experts.
Recovery has been quick, and both the market and jobs have bounced back with some reporting that. June saw a nonfarm employee growth of 4.8million compared to the expected 2.9million. The unemployment rate itself has fallen to 11% from its worst of around 15%. While these figures do look good, the uncertainty of the pandemic and the unknown timelines of the vaccine do bring in some level of doubt.
But if you look at the market, it seems optimistic now, and if the momentum continues, we can expect better figures by the first half of the next year. At the same time, presidential elections are around the block, and we can expect its outcome to have a significant effect on government policies, which in turn shall impact the net job growth of the US.
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