By: The Working Forest Staff
NAHB — The analysis of the American Community Survey (ACS) suggests that renters and young adults under the age of 34 are likely to face higher prolonged unemployment risks as a result of the coronavirus pandemic hitting the labour market. The labour market risks are also uneven across states, with state economies heavily reliant on leisure, entertainment, retail and personal services being most vulnerable.
While recent job losses due to the coronavirus shutdown are astounding and widespread across industries, the expectations of how fast the return to normalcy will take are quite different for the hardest-hit sectors. The recent economic indicators suggest that construction might go through a relatively fast V-shaped rebound once the shutdown orders are lifted. The destiny of hard-hit manufacturing is less clear. The International Institute for Management Development (IMD) in Lausanne, Switzerland developed a list of potential winners and losers and identified manufacturing as an “in-between” sector.
Analysts tend to agree and note that entertainment (including accommodation and restaurant businesses), retail (except grocery and building material), personal services and transportation (air, train, water and sightseeing transportation) are among hardest-hit sectors that are likely to experience lingering elevated levels of unemployment. If this premise is correct, states with economies heavily reliant on leisure, entertainment, retail and personal services are particularly vulnerable.
Nearly one-quarter – 23.5% — of the U.S. labour force (including self-employed) were working in these high unemployment risk sectors in 2018. The share of households with at least one member working in the high unemployment risk industries is even higher, with the national average approaching 28%.
While the labour force in most states has similar shares of most vulnerable jobs, the workforce in Nevada, Florida and Hawaii face much higher prolonged unemployment risks. As of 2018, a staggering 39% of Nevada’s labour force was in high unemployment risk industries, including over 23% in entertainment. Hawaii and Florida had 30% and 28% of their respective workforces in these industries, including 16% and 12% in entertainment.
At the other end of the spectrum are the District of Columbia and states like North Dakota and Wisconsin with shares of workforce in high unemployment risk industries below the national average – 17%, 19%, and 20%, respectively. Similarly, Virginia, Nebraska, Vermont, Connecticut, Maryland, Massachusetts and Iowa have shares under 21%.
Renters are more exposed to unemployment risks. Thirty-one percent of all renter households have at least one member working in the most vulnerable sectors. Among homeowners, this share is 26%. Once again, Nevada and Hawaii recorded the highest shares of owners and renters exposed to high unemployment risks. In Nevada, 44% of renter households and 38% of homeowners had at least one household member working in a high unemployment risk industry. For Hawaii, these shares were slightly above 39% and 35%, respectively.
In addition to Nevada and Hawaii, the rental markets in Utah, Arizona, Florida and Colorado are more vulnerable to high unemployment risks with a share of renter households with at least one member at risk of prolonged unemployment at 35%. Populous California, known for lower homeownership rates, stands out for registering the highest number of high-unemployment risk renters — close to 2 million — or one out of three renter households.
Utah recorded the third-highest concentration of homeowners with at least one member in the prolonged-unemployment risk industry – 31%. Alaska, Rhode Island, Montana, Delaware and Texas had 28% of homeowners at risk of prolonged unemployment.
While renter households are more vulnerable to prolonged unemployment risks, the majority of households with at least one member in high-unemployment risk industries (60%) are owners – simply because close to two-thirds of U.S. households are homeowners.
The ACS data analysis also suggests that young adults under the age of 35 are at a higher risk of prolonged unemployment. Forty-three percent of the youngest workers under the age of 25 and almost a quarter of 25- to 34-year-olds were in the high-unemployment risk sectors. Together, they accounted for almost half (49%) of all workers in the most vulnerable industries. Long-term job losses experienced by young adults will undoubtedly suppress their household formation rates that had just started to rise before the coronavirus pandemic.
The estimates generated in this analysis are based on the 2018 American Community Survey, the largest household survey in the US. The ACS estimates reflect a more complete composition of the labour force by including payroll workers covered by unemployment insurance as well as self-employed workers.