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Industries and Metro Areas Hit the Hardest by the COVID-19 Pandemic

by King White, on Mar 23, 2021 2:34:17 PM

The long-term impact of the COVID-19 pandemic on specific industry sectors, labor markets, real estate and site selection continues to unwind as vaccines are rolling out across the U.S. The industrial and e-commerce sectors have been on fire, while office and traditional retail are very mixed. To help you identify what industries and metro areas have been impacted the least and greatest, Site Selection Group has evaluated unemployment trends to help you develop a site selection strategy for the future.

Historic unemployment trends show impact of COVID-19 black swan event

The economy was at full employment prior to COVID-19 which means employers were basically having to poach workers from other employers, an action that drives up wages and employee attrition. The unemployment rate had dropped to 3.4% in February 2020 then peaked at 14.8% in April 2020 due to the COVID-19 black swan event. It then began a fairly rapid descent to 6.2% in February 2021.

It is interesting to compare past recessions to see how long the recovery took. The second highest unemployment rate since World War II happened in the early 1980’s global recession when unemployment peaked at 10.8% in 1982.

As the economy reopens post-COVID-19, we may soon see the longer-term unemployment impact on the economy. The following diagram shows monthly unemployment since 1948.

Historic Monthly Unemployment (1948-2020)

Unemployment Chart-01Source: Bureau of Labor and Statistics

Hospitality sector lost over 1.1 million jobs

This recession has been unlike any others in that it impacted specific industries more severely than others. Residential real estate, financial services and the IT sector were relatively untarnished. Conversely, the hospitality sector was hit the hardest by the COVID-19 recession since business and personal travel was essentially shut down. Airport and hotels were literally empty for the last year. Unemployment in the sector was a staggering 15.9% in January 2021 which has left over 1.1 million workers out of work. The impact on other industries was significantly less. The following table ranks the industries by total change in unemployed persons by industry.  

Unemployment by Industry

Ranked by Total Change in Unemployed Persons

  Total Unemployed
(Thousands)
  Unemployment Rate
(Not Seasonally Adjusted)
Industry Sector Jan-20 Jan-21 Change   Jan-20 Jan-21 Change
Leisure and hospitality 833 1,949 1,116   5.9 15.9 10.0
Education and health services 601 1,059 458   2.4 4.3 1.9
Construction 515 938 423   5.4 9.4 4.0
Professional and business services 724 1,146 422   4.1 6.8 2.7
Wholesale and retail trade 945 1,367 422   4.7 6.9 2.2
Transportation and utilities 220 613 393   3.0 8.2 5.2
Other services 250 544 294   3.7 8.8 5.1
Self-employed workers, unincorporated, and unpaid family workers 351 617 266   3.6 6.2 2.6
Government wage and salary workers 467 641 174   2.1 3.0 0.9
Manufacturing 530 699 169   3.4 4.7 1.3
Information 61 186 125   2.3 7.4 5.1
Financial activities 259 350 91   2.5 3.4 0.9
Mining, quarrying, and oil and gas extraction 16 93 77   1.9 14.2 12.3
Real estate and rental and leasing 98 140 42   3.5 5.3 1.8
Agricultural and related private wage and salary workers 231 153 -78   12.5 9.4 -3.1

Source: Bureau of Labor and Statistics

20 metro areas with most unemployed hospitality industry workers

Due to the significant job losses in the hospitality sector, it is helpful to understand which metro areas have the most displaced workers as it can impact site selection decisions for a variety of project types. These other project types might be able to transition these workers to their industry. Some of the project types include professional service operations such as call centers and shared service centers. Workers who lost jobs in the hospitality sector could also be viable workers for retail establishments and distribution centers. The following list identifies the top 20 metro areas with the largest concentration of hospitality industry workers.

Top 20 Largest Metro Areas for Leisure & Hospitality Workers

Rank Metro Area No. of Leisure & Hospitality Industry Workers No. of Unemployed Leisure & Hospitality Industry Workers
1 New York-Newark-Jersey City, NY-NJ-PA 846,564 133,254
2 Los Angeles-Long Beach-Anaheim, CA 759,679 84,941
3 Chicago-Naperville-Elgin, IL-IN-WI 455,190 58,262
4 Dallas-Fort Worth-Arlington, TX 383,324 28,870
5 Houston-The Woodlands-Sugar Land, TX 327,207 30,897
6 Miami-Fort Lauderdale-Pompano Beach, FL 316,636 32,210
7 Washington-Arlington-Alexandria, DC-VA-MD-WV 309,284 33,274
8 Atlanta-Sandy Springs-Alpharetta, GA 289,277 45,230
9 San Francisco-Oakland-Berkeley, CA 269,330 21,202
10 Las Vegas-Henderson-Paradise, NV 264,193 50,118
11 Boston-Cambridge-Newton, MA-NH 257,920 34,998
12 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 254,661 36,714
13 Orlando-Kissimmee-Sanford, FL 252,237 22,130
14 Phoenix-Mesa-Chandler, AZ 227,276 24,153
15 Seattle-Tacoma-Bellevue, WA 199,126 30,857
16 San Diego-Chula Vista-Carlsbad, CA 189,864 19,401
17 Detroit-Warren-Dearborn, MI 182,058 59,372
18 Minneapolis-St. Paul-Bloomington, MN-WI 175,930 20,541
19 Riverside-San Bernardino-Ontario, CA 171,693 24,024
20 Denver-Aurora-Lakewood, CO 164,128 36,111

Source: Bureau of Labor and Statistics

Conclusions

The long-term impact of the COVID-19 pandemic on the economy and labor markets is still unknown. It is evident that certain industries and metro areas have been hit harder than others. Unemployment is only one of the many factors that measures the impact and just one of the things to consider during the site selection process. As a result, it is important to carefully evaluate all site selection factors before making your next location decision.

 

Topics:Call CenterDistribution CentersSite Selection GroupSite Selectionshared service centerunemploymentcovid 19industrialHospitalitye-commerce

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