COVID-19 Brings Employment Losses and Unrealized Seasonal GainsDecember 14, 2020 Historically, March is the second month in a seasonal upswing for Eastern Oregon (Baker, Grant, Harney, Malheur, Morrow, Umatilla, Union, and Wallowa). The region hits a low point for employment in January and then begins to tack on jobs along a five-month hike to a seasonal peak in June. Employment slumps again in July as school lets out for summer recess. Then it climbs again to reach a second peak in October, which is driven by fully realized seasonal summer gains in August and a resurgence of school employment in September and October. This was not the case in 2020.
Initial UI Claims Signaled Substantial Hit in April
The year started well. From January 2020 through the second week of March, initial unemployment insurance claims were down 17% in Eastern Oregon. There were 2,551 claims for this period in 2020 compared with 3,071 claims for the same period in 2019. Then came a dramatic shift. The ides of March ushered in COVID-19 along with public health measures aimed at curtailing the spread of the virus. The third week of March brought 702 initial unemployment insurance claims, a substantial increase over the 166 initial claims for the same week in 2019. This high number of initial claims continued to increase for the next three weeks. In addition, the number of claims filed each week remained well above the number of weekly filings in 2019 and didn’t return to comparable levels until the end of June. From March 21, 2020 to June 27, 2020 there were 10,908 initial unemployment insurance claims filed in Eastern Oregon, more than three times the number of filings for the same period in 2019.
March through April Employment
Current employment estimates (CES) show a corresponding drop in Eastern Oregon’s employment. The abrupt loss took place at the end of March and in April. Total nonfarm employment in the region fell by 7.8% from March through April, a loss of 5,340 jobs. Most losses occurred in the private sector, which saw employment fall by 9.0% or 4,470 jobs. Leisure and hospitality, manufacturing, and education and health services took the largest hit for private-sector employment. The three industries accounted for 79.0% of private-sector losses and 66.3% of all losses that occurred from March through April. Leisure and hospitality dropped by 1,990 jobs in April, a loss of 32.4%. Manufacturing dropped by 920 jobs in April, a loss of 11.2%. Education and health services dropped by 630 jobs in April, a loss of 6.7%.
A look at 2001 to 2019 reveals that Eastern Oregon has a positive expectation of growth from March through April due to seasonal hiring. On average over the last three years, Eastern Oregon’s total nonfarm employment increased by 1.0% in April. This implies that total employment should have gained 690 jobs for the month in 2020. This, in turn, implies that because the gain did not occur (unrealized seasonal gains), the total employment loss felt in the region in April was greater than the 5,340 jobs recorded and closer to 6,030 jobs or 8.8%. By this same comparison, leisure and hospitality had an expected gain of 3.2%, which means the industry lost an extra 195 jobs in April due to unrealized seasonal gains. Manufacturing had a relatively small expected gain of 0.7% for the month (56 jobs) and education and health services was expected to remain virtually unchanged.
Two industries that generally tack on notable seasonal gains in April are professional and business services and construction. Based on past performance, professional and business services had an expected gain of 4.2% while construction had an expected gain of 11.1%. The two industries were expected to add 132 jobs and 114 jobs, respectively, from March through April. Instead, both industries saw a small decrease in April. Professional and business services slipped by 0.9% (-30 jobs) while construction slipped by 2.0% (-20 jobs). While the recorded loss may appear comparatively light for these two industries, unrealized seasonal gains makes the actual April hit roughly 162 jobs for professional and business services and 134 jobs for construction. Unrealized seasonal gains occurred in other industries as well throughout the summer season, therefore the impact COVID-19 had on employment is more pronounced than what is seen in the recorded change since March.
March through August Employment
Most industries with seasonal summer gains generally reach their hiring peak by August. The three-year average comparison shows that total nonfarm employment’s expected net gain was 1,278 jobs or 1.9% from March through August; this comes from an overall gain in private-sector employment and an overall loss in public-sector employment. The private sector drives summer seasonal hiring with an expected gain of 4.5%. The region was expected to add 2,256 private-sector jobs during spring and summer. Instead, private-sector employment added just 130 jobs from March through August.
Although the public sector takes an overall loss, seasonal federal hiring also helps drive up employment during spring and summer months with hiring largely in the Forest Service and the Bureau of Land Management. Federal employment was expected to add 655 seasonal jobs through August, a gain of 43.4%. Federal employment surpassed expectations adding 730 jobs for the period. This came about with a sizeable boost from the Census Bureau, which added a large number of short-term workers this year for work on the Decennial Census.
Local government, primarily education, is responsible for the majority of downward pressure during the summer season. Local government employment was expected to fall by 13.9% (1,850 jobs) with the start of summer recess in July. The industry dropped by this and then some, showing the second largest industry loss after accounting for expected seasonal trends from March through August. Local government decreased by 2,590 jobs for the period, a loss of 19.5%. While the majority of this drop was an expected seasonal change in education, the gap between expected decrease and actual decrease reveals the industry fell by 670 jobs more than expected for the period.
Leisure and hospitality felt the largest impact over the summer swing. Historically, the industry adds the most jobs during the season. The industry’s expected gain was 13.9% for March through August, which implies 854 seasonal jobs were expected for the period in 2020. After initially losing 1,990 jobs in April, leisure and hospitality partially rebounded, adding back roughly 1,470 jobs by August. However, in August the industry was still 520 jobs below its March employment level: 1,420 jobs below its August expectation due to the combination of lost jobs and unrealized seasonal gains.
Eastern Oregon hit its first seasonal employment peak for the year in June. October should be the second seasonal peak before the downturn through January. The three-year average shows that total nonfarm employment has an expected decrease of 3.9% from October through January. This implies that total employment should fall by just over 2,600 jobs for the short period, based on the current October employment level. Private-sector employment has an expected decrease of 1,570 jobs while public-sector employment has an expected decrease of 1,040 jobs.
The most recent employment estimates put October 2020 employment at 67,830 jobs, which is 2,800 jobs (4.0%) below the seasonal expectation. This is also 2,240 jobs (3.2%) below the 2019 peak and below the October peaks for 2018, 2017, and 2016. Because employment remains well below seasonal expectations for several industries, it’s unlikely that seasonal layoffs will still drop employment by 3.9% from October through January in 2020. The three-year average expected seasonal drop for July was 2.6%, but the actual drop proved to be lighter at 1.8%. Federal employment should still see its normal seasonal reduction through January and in October had already shed roughly 62.0% of temporary Census workers brought on for the big count. Other industries with large seasonal fluctuations, however, will likely not follow a typical trend.
Leisure and hospitality was still 250 jobs below its March 2020 level in October, and 700 jobs below its October 2019 level. The three-year average reduction for the industry is 6.8%, or 403 jobs from October through January based on current October estimates. But the majority of initial layoffs in April for leisure and hospitality came before the summer ramp up and were most likely regular staff, not seasonal hires. Likewise, many of the workers added back to the industry since the initial layoffs may also be regular staff rather than seasonal hires. If this is the case, leisure and hospitality should see far fewer seasonal cuts. This does not imply that the industry won’t see any losses through January though. Leisure and hospitality continues to experience a cycle of temporary openings and closures as COVID-19 lingers and health measures continue to dictate the industry’s state of operation. Following the two-week freeze (November 18 to December 2), restaurants and bars in six of eight Eastern Oregon counties can’t offer indoor dining due to their “extreme risk” level and COVID restrictions: Wallowa and Harney are the two exceptions. Those that can offer indoor dining are constrained to 50% seating capacity and those that can offer outdoor dining are likely constrained by falling temperatures and wintery weather. This state of flux makes the industry’s employment direction difficult to predict.
Local government has a three-year average expected reduction of 2.1% from October to January, a loss of 262 jobs based on current October estimates. Like leisure and hospitality, the industry’s typical reduction may not materialize in 2020. Local government was still 830 jobs below its March level in October, which is 870 jobs below its October 2019 level. The low level of local government employment for this time of year stems largely from reductions in administrative and support staff for education as well as reduced student employment. These jobs typically ramp up at the start of the school year and then show a reduction in employment during the Christmas to New Year’s holiday break. However, the current hybrid (online/in-person) or online only teaching options faced by K-12 school districts and higher education institutions have greatly reduced employment in these areas. The state of flux in this industry makes its employment direction difficult to predict as well.
As the pandemic wears on, firms continue to face unprecedented challenges. While many jobs in April have been recovered, the fate of many others remains uncertain. Leisure and hospitality has taken the brunt of the impact. The industry remains below seasonal expectations and below recovery as it rides an operational roller coaster. Local government education has taken a hard hit as well with a sizeable portion of employment on hold until further notice. These industry level changes come as firms are force to adapt month by month. Employment change at the industry level comes from the underlying battle at the business level.