Prior to the onset of the COVID-19 pandemic, employment was relatively high and unemployment rates were relatively low. Once the pandemic erupted, however, the unemployment rate skyrocketed to levels that compared to the Great Depression, impacting the labor markets in every state and economic sector. The hospitality industry, acutely affected by the pandemic, exhibited some of the highest unemployment rates throughout 2021. The leisure and hospitality sectors remain central contributors to the heightened unemployment rates as full recovery isn’t expected until 2024.
The decreases in the unemployment rate month over month over the course of the past year also can be attributed to job gains in the leisure and hospitality sectors. In October 2021, these sectors led the payroll gains, adding 164,000 jobs. These sectors are gradually recovering in terms of employment level, yet uncertainty remains high.
Every month, the Bureau of Labor Statistics releases the Employment Situation report, which provides calculated estimates of Americans employed and unemployed across domestic economic sectors. The BLS has reported positive improvements in the employment situation, and as of October 2021, the unemployment rate remains barely more than a percentage point higher than it was in February 2020, and the number of employed persons remains approximately 5 million lower during the same period. The labor force participation rate has been relatively stagnant following the expiration of pandemic unemployment benefits in early September. This rate has remained close to current levels since the summer of 2020.
The demand for in-person hospitality services, such as lodging, food, and entertainment, is significantly dampened by public health concerns and travel restrictions. The arrival of the Omicron COVID-19 variant likely will disrupt job gains in these industries as it did amid the Delta variant surge in August 2021. The pace of hiring in 2022 is susceptible to surges in COVID-19 and risk-aversion to the new variants as public health experts and politicians formulate appropriate responses.
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