The job market has been on a roll recently, and the economic outlook is brightening. It is hard to overstate how exciting it was to see March’s job-growth figures. The U.S. economy added approximately 916,000 jobs for the month, a signal that the labor market gained tremendous momentum to close out the first quarter of 2021.
The prior year ended with a thud — six straight months of slowing job growth — but the course switched direction. The market is now riding a three-month streak of improved job growth. Unemployment claims had a big drop in early April, and it appears people are returning to work faster than previously anticipated.
Additionally, consumer confidence is at its highest level since the pandemic began, and business revenues are poised to rise in the coming months.
To maximize on improving economic conditions, businesses will ramp up their hiring efforts, perhaps even faster than they realized. In other words, talent acquisition professionals will have their hands full finding and placing talent.
How full? We project 73 million hires will occur in 2021. To put that into perspective, the average number of hires per year in the five years before the pandemic was 66 million. This increase will be due to a combination of job recovery and employed people switching jobs. As the labor market stabilizes, more people will become comfortable changing employers due to renewed optimism.
So where will all this hiring occur? The simple answer is everywhere! Some market segments, however, will experience some of the highest demand.
The hardest hit areas of the country during the pandemic will likely see massive hiring volumes as people get back to work. Through the first three months of the year, the New York metropolitan area has already added back 95,500 jobs. While the area still has slightly more than a million jobs to recover to get back to its pre-pandemic employment level, and it still faces challenges related to virus counts, jobs are coming back to the market.
Other cities expected to see robust hiring volumes this year have also added a significant number of jobs in the first three months of 2021 with Los Angeles (58,700), Minneapolis (52,200), Boston (47,700), and Detroit (46,300) rounding out the top five for number of jobs added in the first quarter of 2021.
The restaurant, hotel, and entertainment industries were completely devastated during the pandemic. Even with recent gains, employment for hotels is off almost 30% from where it was before the pandemic. Restaurants have started to open and expand capacity in cities across the U.S., but they still have almost 15% fewer employees.
Of the 8.4 million jobs that remain lost from the pandemic, 2.4 million of those are in the restaurant and hotel industries. If virus counts decelerate, and the vaccine takes hold, expect a sharp jump in these businesses. People are eager to start traveling, dining out, and resuming “normal” life again. This also means certain cities with a large employment base in leisure and hospitality jobs should get a boost — Las Vegas and Orlando to name a couple.
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Also consider the domino effect of getting that part of our economy back on track, whether it be air transportation getting a boost from increased travel or people spending on new clothes again as social life returns.
White-collar jobs in roles such as technology, architecture, and law have remained in very high demand throughout the pandemic. Computer and mathematical occupations, which include roles such as software developers, database architects, and data scientists, had an unemployment rate of just 1.9% in March 2021, even lower than the 2.4% rate from a year earlier. The pandemic created even more difficulty filling open roles in those fields, due to overall economic uncertainty weighing on people’s minds and delaying a job change.
The bigger impact from the pandemic has been on blue-collar roles. Unemployment rates spiked for many types of blue-collar jobs, and occupations such as food preparation and serving (14.4%), building and grounds cleaning and maintenance (9.9%), and personal care and service (9.3%) still have very elevated unemployment rates. The good news is that people in those fields are returning to work quickly, as many local economies have eased restrictions.
A challenge for talent acquisition professionals placing some blue-collar and service roles is the large number of people who left the labor force. There are approximately 3.9 million fewer people in the labor force today than before the pandemic. Additionally, some individuals in the labor force may be less likely to accept a job while they are eligible to receive extra government support from unemployment benefits. The American Rescue Plan approved on March 11, 2021, included the extension of $300 weekly bonus checks for unemployment insurance recipients until Sept. 6. For many of these workers, the extra financial support is comparable to the wages they would earn from a job.
Outlook for Hiring
A strong spring and summer of hiring is ahead of us, assuming another potential virus surge does not derail the momentum. Parts of our economy previously shut down are re-opening, and the ramp up in hiring is underway. Increased confidence could loosen the labor market in the second half of the year as people who have been wavering on taking a new role finally make the switch.
Meanwhile, we’re projecting a return to full employment in 2023 for the U.S., but certain locations, industries, and occupations will recover faster. Still, it will be a challenge sourcing and placing talent if more people do not rejoin the labor force.
Want more insights from Jay about how to prepare for upcoming shifts in the workforce? Join him at ERE Digital, May 25-27, for “Growing Pains: Navigating Trends in the Labor Market.” Register here to receive 10% off your ticket price.