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What's Behind 140,000 Jobs Lost In December

Published: Friday, January 15, 2021 - 12:20pm
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MARK BRODIE: The Arizona Health Department is reporting more than 9,000 new COVID-19 cases [Jan. 15], along with 185 deaths. The ongoing pandemic has taken its toll not only on human life, but also the economy. The incoming Biden administration has outlined a $1.9 trillion spending package to provide relief. The federal government says the U.S. economy lost 140,000 jobs last month. And an analysis from the National Women's Law Center finds that women accounted for all of those losses. The group says women lost 156,000 jobs in December, while men added 16,000. Joining me to delve into the numbers a bit more is Jerry Nickelsburg, director of the UCLA Anderson Forecast and professor of economics at UCLA's Anderson School of Management. And Jerry, first off, to what do you attribute the 140,000 total lost jobs we saw in December?

JERRY NICKELSBURG: When you look at where the job loss was concentrated, it was concentrated in the same places the earlier job loss that we saw in the March, April, May timeframe — which is in the human contact sectors. So that's going to be leisure and hospitality, restaurants, bars, accommodations. It's also going to be in brick and mortar retail and it's going to be in other services, which are things like salons. And so that's directly related to this very virulent surge in the pandemic.

BRODIE: Yeah, I was going to say, it can't be that much of a surprise that those are the sectors that might be hardest hit right now.

NICKELSBURG: It's not. It is a rather unusual recession and a rather unusual setback in the sense that that's not the way business cycles have gone in the post-World War II period — they've been more concentrated in manufacturing and construction. But this is more concentrated in the service sectors.

BRODIE: So we've seen some headlines since the numbers came out saying that all or the majority of the jobs that were lost were lost by women. Is that the case?

NICKELSBURG: I don't know if it's the majority of the jobs, and it's quite hard to quantify this because the jobs have been lost over a fairly long period of time — since early March of last year. However, in the service sector, you do find a larger proportion of female employees to male employees as opposed to in manufacturing or construction.

BRODIE: There also seems to be some evidence that men who lost their jobs, especially in the numbers that came out in December, that they were more able to find a new job than women were. Is that something that is common, that disparity between the genders?

NICKELSBURG: I would not say it's common. You know, as I said, this is a most unusual recession. Construction and manufacturing have been growing over the last six months, and construction and manufacturing disproportionately hires males over females. And so unemployed males who are able to work in construction or in manufacturing are having an easier time finding employment than females.

BRODIE: Well, given what we're seeing with the service sector and some of the, as you called it, the human contact sector, does that portend a few tough months or maybe more than a few tough months, especially for women who are looking for jobs in those industries?

NICKELSBURG: For those industries, it's going to be more than a few tough months. The experience that we have had in the past, when people have been afraid for their safety to purchase certain services — and you can think of airline travel, domestic airline travel in the wake of the horrific 9/11 attacks. The recovery in those sectors generally takes a fairly long time — about three years. However, one of the growth sectors in this recovery is in — sectors, plural — is in technology that runs across many, many sectors. So there are going to be opportunities for those who have been working in the service sector to update their skillset and move into other kinds of employment. But it's going to be a fairly long period of time before the service sectors that have been hard hit in this recession are back to previous employment, much less back to trend.

BRODIE: So you mentioned that this has been an unusual recession, and I'm wondering how much of that is due to some of the measures that states have taken in terms of closing certain sectors or closing most sectors versus states that have not done that.

NICKELSBURG: So that's a really interesting question. And when we look at the data, and when we look back at the last big pandemic that the U.S. suffered, which was 1918-1919 influenza pandemic, it does not seem that that makes as much of a difference as one might think. And that's because in states that did not close up as much as other states, consumers are still worried about their own safety. And so they've been staying away, maybe not to the same extent but staying away from these human contact activities and purchasing those services.

BRODIE: Now, given the sectors, as you described earlier, that are doing reasonably OK right now and those that are not, does that affect the way that the recession happens or the way that we can come out of it? Like, does it matter which sectors are struggling versus those that are not in terms of how a recession works and how one might get through it?

NICKELSBURG: It does, because the recessions that we've seen since the end of the Second World War have been primarily about overbuilding of durable goods — homes and autos and computers and the like. And those tend to come back in a different way than services. So there the demand for those durable goods is reduced, and then you burn off that inventory and then you start hiring again at the construction site or the automobile factory. Here, demand is reduced because of the COVID-19 pandemic. And it will come back as people feel confident in purchasing the services that they were or at present are not confident purchasing. So it has a real different dynamic.

BRODIE: All right, that is Jerry Nickelsburg, director of the UCLA Anderson Forecast and a professor of economics at UCLA's Anderson School of Management. Jerry, thanks for your time. I appreciate it.

NICKELSBURG: My pleasure.

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