Hindsight 2020: Jobs and Wages

As the new year gets rolling, it is time to take inventory of the crazy 2020 and its artificial economic shutdown. We start today with a review of jobs and wages.

In November, total private-sector employment stood at 122,071,000. This is almost eight million less than the same month last year, and only about half-a-million more jobs than in November 2015. However, the trend has been steadily upward since the artificial economic shutdown hit with full force in April. Back then, employment dropped from 127 million to just over 108 million. It has been a slow climb back since then, but we are now only 6.1 percent below last year’s employment levels (as opposed to 15 percent below in April).

All in all, in November America’s private industries were at 95.3 percent employment compared to pre-shutdown February.

As for earnings, private-sector employees took home 1.4 percent more in wages in November 2020 than the same month a year earlier. Per-employee weekly paychecks were up eight percent in one year, and hours worked (per week) increased 5.3 percent. A good part of this increase can be blamed on the bonuses that Congress decided to add to unemployment checks.

Mining and logging stood at 628,000 jobs in November. This is 89.7 percent of pre-shutdown February numbers and 14 percent or 61,000 less than in November last year. It is the lowest November number since 2004. Currently, the mining and logging industry is just over 30 percent below its 2004 peak.

Total wages earned have dropped 13.5 percent year over year. Hourly wages, though, are up 1.8 percent, countered by a decline of 1.3 percent in hours worked (and, as mentioned, total employment).

The construction industry had two percent more employees in November than in February. It has seen a sustained rise in jobs over the past decade. Again using November as the statistical “slice” through time, in 2010 in bottomed out at 5,628,000; in 2019 there were 7,609,000 men and women working in construction. That is a 35.2-percent increase. In 2020, the November jobs number stood at 7,430,000, just over 2.3 percent below 2019; only the gains since 2018 have been lost.

In total, construction workers earned a quarter of a percent more in November 2020 than they did in November 2019. Most of this is attributable to a 2.9-percent rise in hourly wages.

Manufacturing is still doing well in America, despite all the media hype to the contrary. In 2019 there were 12,871,000 manufacturing jobs in our economy, the best number since 2008. In November last year there were 12,1257,000. This is a 4.8-percent loss, but given that there were only 11,432,000 jobs in the industry in April, the recovery has been fairly good. Currently, manufacturing jobs run at 95.8 percent of where they were in February. That said, we are still short the entire gain of manufacturing jobs since 2014.

Manufacturing workers took home 1.5 percent less in total wages in November 2020 than they did a year earlier.

Trade, Transportation and Utilities – a clumsy super sector in economic statistics – had 27.4 million employees in November. This is three and a third percent below November 2019 and almost identical to the number from 2015. It is also almost identical to pre-shutdown February.

In terms of earnings, this industry did well in 2020. November paychecks topped the same month from 2019 by a solid 3.3 percent, putting $770 million more per week in trade, transportation and utility workers’ pockets.

The information industry is an interesting case. You would think that this industry, which is overwhelmingly based online, would have been impervious to the 2020 artificial economic shutdown. Not so: by November this industry had only reached 91.2 percent of its pre-shutdown employment level. Of the 2.9 million jobs in the industry in November 2019, 272,000 were still missing.

Last time this industry had as few as 2,628,000 jobs was in 1988. That’s right: the information industry has lost 32 years’ worth of job gains.

The interesting part about this industry is that its paychecks have grown quite a bit. With 4.2 percent more hours worked year over year in November, and with hourly wages being up 6.6 percent, per-employee weekly paychecks were up 11 percent. However, thanks to the drop in employment, total pre-tax weekly wages in the industry rang in at only 0.64 percent above November 2019.

One of the best bellwether industries is Professional and Business Services. This includes everything from human-resources consultants to engineers and architects. In November, it had a total of 20,709,000 employees, a modest 4.7-percent drop compared to the same month 2019. After losing 9.6 percent of its jobs from February to April, this industry now stands at 97.5 percent of its pre-shutdown jobs level.

Once these consultants go to work, they make fairly good money. In November 2020, all in all they took home $898 million more per week than they did a year earlier. This is a 3.4-percent increase. Together with the relatively good recovery in this industry, the rise in earnings tells us that the U.S. economy overall has done a good job of returning from the artificial shutdown.

Leisure and hospitality is by far the worst hit industry. This is where all the tourism, restaurant, hotel and amusement-park jobs are categorized. Only 81.1 percent of the pre-shutdown February jobs remained in November. This 19.9-percent job loss is almost identical to the 19.8-percent loss year-over-year.

Paychecks, in total, are down 18.1 percent in a year. Hours worked are up, though, by 2.5 percent, and hourly wages have gone up 4.6 percent, so the decline in total weekly wages is attributable entirely to the big job loss.

Aside the striking decline in information jobs, the biggest surprise here is government. In November, only 95.2 percent of all the people working in government in February were still on their jobs. A 5.3-percent loss from November 2019 to November 2020 is an interesting course of development, one we are going to examine in greater detail later.

Overall, the Trump economy came back pretty much as the president predicted back in the spring. There is a tendency of stagnation in the recover toward the end of the year, ostensibly driven by mounting concerns over a Biden/Harris administration, a Democrat majority in both Congressional chambers, and what that would entail in terms of higher taxes. We will look at all this in more detail in coming Hindsight 2020 articles.

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