Free Report Example on US Labor Market Begins Recovery: 4.8M Jobs Added in June

Introduction

According to the current data, the absolute "nonfarm payroll employment" increased by 4.8 million in June, despite the current regulations on the Covid-19 pandemic hampering the economic growth in the country. The unemployment rate also plummeted to 11 percent. These enhancements in the labor market mirrored the progressive resumption of the financial activity that had been truncated in March, and April due to coronavirus pandemics, and efforts were heightened to contain it (Horwath, 2020). Nevertheless, the leisure and hospitality sector has been particularly adversely impacted by the current COVID-19 situation in some cities and states where the caseload for Coronavirus had peaked. For example, New York, Florida, Hawaii, and Miami had been hard-hit by this pandemic, since they rely on tourism as their main source of economic growth. The paper seeks to analyze the trend of the unemployment situation in the U.S. leisure and hospitality industry since the advent of coronavirus.

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The U.S Economy Before the Coronavirus

Before the coronavirus, the U.S. economy has grown and remained in record-breaking zones for 31.5 years (Horwath, 2020). The yearly rate of real GDP growth had reduced from 3.1% in the first quarter of 2019 to 2.1% across the two other quarters of last year (Horwath, 2020). During the three quarters of 2019, augmented tariffs plummeted globalization was adversely affecting industries, non-manufacturing, and the agricultural sectors. Fast forward to 2020, and the advent of COVID-19 has had an indispensable impact on the hospitality, tourism, and leisure industry. From March, the performance in this sector has been abysmal, and the employment was at 20.75 percent (Horwath, 2020). The reasons that explain the slow performance and the high unemployment rate can be due to the reduction of international tourism that is currently was 21percent in quarter 1, and is envisaged to decline by 50-70 percent over the remaining quarters (Horwath, 2020). The overall demand for hospitality services has also been hard-hit due to an external apprehension, and concerns about individual safety amidst the coronavirus.

Tough Labor Market

The United States is currently facing a tough labor market. The overall labor force has been declining for more than a decade due to slower population growth, and a declining overall labor-force participation rate. Pre-COVID-19, the hospitality, and tourism industry had faced enormous labor problems in numerous ways; such as recruiting illegal aliens, poor wages for immigrant workers in the U.S. Temporary employment agencies help the industry with labor shortage problems (Pearlman & Schaffer, 2013). It further helps to cushion the temporary service workers against the poor paychecks, lack of health care covers, poor working conditions, and discrimination-based hiring process. Current American Staffing Association study demonstrates that hospitality firms in the U.S. benefit from using contract and temporary workers for numerous reasons.

Having a full-time workforce onboard is costlier than having temporary service staff due to the basic pay they command, and most of them are qualified graduates. Another reason is that these firms spend more time and resources in training workers to quickly acclimate with their roles and responsibilities. From the legal perspective, hospitality organizations that use temporary workers have less concern about wrongful termination and harassment lawsuits. It best explains why it is hard for U.S. citizens to secure permanent employment positions and rampant sexual assault cases against the female temporary hotel staffs in the industry. Another explanation of why there is a high unemployment rate in the leisure and hospitality sector is due to top firms over-recruiting expatriate workers, who have the best skill set, such as Sous and Pastry chef.

On the same note, a recent projection implies that there are 12.2 million illegal immigrants in the U.S, a figure that has remained constant and a worrying factor affecting the employment rate of U.S. citizens in the hospitality industry. Shockingly, among the unauthorized immigrants in the labor force, 29 percent are temporary service workers. The Pew Hispanic Center indicated that 16 percent of undocumented immigrants work in the hospitality industry, a worrying factor for recent graduates with any hospitality-related skills (Pearlman & Schaffer, 2013). In terms of proportion, illegal immigrants scoop different positions within the hotelier industry. For instance, 26 percent are dishwashers, 25 percent are housekeepers, and 18 percent are cooks, and head chefs (Pearlman & Schaffer, 2013). These figures post a worrying trend for graduate students with different culinary skills seeking to get positions in the U.S. It also explains why most of these graduates opt to go abroad to look for job opportunities in the hotel and leisure industry (Pearlman & Schaffer, 2013). There is also a growing concern posed by economists that the U.S. population is envisaged to grow 32 percent from 2015 to 2060, while there is a presumption that from 2015 to at least 2021 there will be at least 10.5percent surge in jobs (Pearlman & Schaffer, 2013). Louisiana is anticipating, a 7.2 percent increase in job opportunities in the hotel industry over the same period, and correlating it with the subsequent population growth it is still a worrying pattern that will continue to affect the recent graduates in the hotel industry (Pearlman & Schaffer, 2013).

The travel and leisure industry cannot develop without requisite talent and skills. Labor gaps are relevant due to the U.S. citizens lacking the requisite skills and competencies in the industry. In 2009, the US Bureau of Labor Statistics projected 355, 000 job positions, but 65 percent of the permanent positions were taken by expatriates, 20 percent of temporary service workers mostly aliens, and 15 percent U.S. graduates who are temporary service workers (Pearlman & Schaffer, 2013). With reverberations of probable financial downturn gaining some momentum due to coronavirus, travel firms should keep their eyes on consumer spending and sentiment. Generally, consumer spending remained strong for the majority of last year, and over the past few years, the family sector offered a steady foundation for U.S. economic growth.

How the Great Recession Augmented U.S. Structural Unemployment?

The economic recession that hit the U.S. labor market profoundly created large regional differences and unequally impacting different sections of the society (Estevão & Tsounta, 2011). Aggregate employment dropped by approximately 8.5 million from the start of the recession in 2007, before beginning to gradually recover in 2010 (Estevão & Tsounta, 2011). The unemployment rate increased to a 26-year high of 10.2 percent in 2009 (Estevão & Tsounta, 2011). This section assembles the previous discourses by examining more systematically the association between unemployment, skill mismatches, and housing market situations. The projected model compares the annual percentage-point alterations in the state-level unemployment rate to the annual percent development rate in the state-level output. The findings of the study postulate that surges in skill mismatches and deterioration in housing markets are one of the main factors that increase the unemployment rates. Higher state-level unemployment tendencies are linked with higher skill differences, and worse market conditions, even after rectifying for the clear cyclical association between all these variables (Estevão & Tsounta, 2011).

The impact of housing market situations on the unemployment rate is even complex, and the basic assumption that most economists indicate is that the share of subprime mortgages mirror a structural housing market condition, and is therefore compared to foreclosures within different U.S. states (Estevão & Tsounta, 2011). This projection implies an effect emanating from variations in house market conditions to alterations in unemployment rates. It could also be explained that unfavorable housing market situations alone barely explain the upsurge in the structural rate of unemployment (Estevão & Tsounta, 2011).

The overall increase in structural unemployment may pose great social costs to the economic growth of the U.S. In specific, rises in long-term unemployment and the proportion of job losers have been shown to pose critical financial costs. This is not limited to obstructing labor market adjustment, and also the long term impacts on welfare and probable output levels (Estevão & Tsounta, 2011). Therefore, public policy should purpose at shortening the period of unemployment patterns, and more extensively, decreasing structuring unemployment rates (Estevão & Tsounta, 2011). The most difficult part from the policymakers' perspective is to separate cyclical from structural factors of the unemployment rate. If the confirmation of the output recovery does not significantly eradicate the mismatches between skill demand and supply, and housing markets. The basic factors behind the higher balance of unemployment would restrict the extent to which unemployment could drop without creating inflation.

The Flows Into Unemployment

Unemployed individuals are not the only workforce in the market for job opportunities. In the manufacturing sector alone, the employment rate stands at about 4 to 5 percent, and yet it is one of the fabrics of economic growth within the United States (Perry et al., 1972). The outcomes on the scope of unemployment indicated are consistent with current notions of the labor market that emphasize the difference in the value of jobs available to a different group of employees. The "dual theory" of the labor market suggests that the high unemployment rate among some groups of workers stems from their inability to get jobs that reflect with the careers they undertook while in the university (Perry et al., 1972). Most of the U.S. citizens are not able to get jobs, since they only rely on white-collar jobs, and lack practical skills that the manufacturing, technology, and logistics sector seeks to fill.

Conclusion

The coronavirus pandemic has impacted several industries and sectors, but the most hard-hit is the leisure and hotel sector. In March and April alone, the unemployment index from the sector was at 21% and 22.6 percent subsequently. As President Trump puts on feasible measures to slowly revitalize the economy, the situation is yet to improve with the rates growing with a margin of 4.6 percent since April to 27.2 percent as of June 2020. Most industries have been forced to sack their workforce and close for some while, and this has been at the detriment of many families hailing from low and middle-income zones. Other than unemployment, most hotel firms are seeking to employ service workers to pay them fewer wages, and even most of them lack health covers, unionization that could shield them from any form of harassment by their bosses. Finally, the essay has related the situation to the previous financial recession of 2007-2008 that hampered the economy. The rate of structural unemployment grew due to two main reasons; increase in skill incongruities and decline in housing markets. But also, the "dual theory" of the labor market suggests that the high unemployment rate among some groups of workers stems from their inability to get jobs that reflect with the careers they undertook while in the university.

References

Estevão, M. M., & Tsounta, E. (2011). Has the Great Recession raised US structural unemployment?. IMF Working Papers, 1-46. https://www.researchgate.net/profile/Marcello_Estevao/publication/228267760_Has_the_Great_Recession_Raised_US_Structural_Unemployment/links/55c1ff7f08aed9dff2a6282d.pdf