The COVID Recession Wreaks Havoc with Hours and Earnings

by David Cooke

May 13, 2021

The Coronavirus recession wreaked havoc on Oregon’s economy in many ways. Total hours worked were drastically reduced in restaurants and other industries within leisure and hospitality, in addition to most industries.

The Current Employment Statistics program tracks average weekly hours for broad industries in Oregon. Manufacturing average weekly hours is looked to as a leading indicator for recessions. This time was different in that the recession was not caused by financial conditions as in many past recessions; but rather, by an external shock: a global pandemic.

Nonetheless, Oregon’s average manufacturing hours worked had already dropped substantially during 2019, leading up to the actual recession that started in early 2020. The monthly data is often volatile, but the trend was a clear downturn, reaching the low point of 36.3 hours per week in September 2020. By March 2021, the average had rebounded to 38.6 hours, which was still about an hour below the average of 39.7 hours per week seen during 2013 through 2018.
Overall, in recent months employment is still down from pre-recession levels, despite substantial recovery in many industries. The average length of the workweek in Oregon also remains weak. The average workweek for private nonfarm payrolls was 33.4 hours in March 2021. This was similar to 33.5 hours for the most recent near-normal March in 2019. However, the trend recently is for a shorter workweek, with the most recent 12-month average at 33.5 hours per week, versus 34.2 hours for the 12 months preceding the recession. Clearly, nonfarm employment is still down since prior to the recession, and private-sector average weekly hours also remain below the pre-recession average.

The COVID recession hit leisure and hospitality harder than most other industries. Its employment peaked at 216,300 in February 2020, then dropped by more than half to 105,400 jobs two months later. Since then, it recovered more than half of its lost jobs but still employed only 166,500 by March 2021.
Despite the cataclysmic employment patterns, average hourly earnings in leisure and hospitality stayed pretty close to $18 per hour throughout the past year and a half. The average hourly earnings did temporarily spike up to $18.36 by April 2020, but this was likely due to a combination of factors including more lower-paid workers being let go and a shift in industry composition within the larger industry.

Looking at the total private sector in Oregon, CES average hourly earnings of all employees spiked up dramatically at the outset of the pandemic recession to $29.39 in April 2020. This upward spike came despite the plunge in private-sector employment that same month. What happened? The answer mostly derives from a shift in industry composition. Many more jobs were cut in the lower paying leisure and hospitality industry than in higher paying industries, resulting in an increase in the overall average wage. Also boosting overall wages was a bump upward in hourly wages in trade, transportation, and utilities, where hourly wages rose to near $26 per hour, from close to $23 per hour during much of 2019.

The pandemic recession and ongoing recovery resulted in some unusual patterns of how many hours employed workers logged, as well as how much they were paid per hour on average. Overall, the average workweek is a little lower than before, while hourly wages within most industries are following fairly close to their patterns seen prior to the pandemic.

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