We all know the US economy is hurting. Tens of millions of Americans have already filed for unemployment, and many more will likely follow suit. Still, the results of a new study just released by Drexel University that used real-time data to calculate the impact of COVID-19 on various industries are staggering in their scope.
It’s one thing to hear “a lot of people have lost their job,” but these findings suggest that even the Bureau of Labor Statistics’ official numbers may not be telling the entire story. Researchers estimate that at least 60% of workers in the hospitality, leisure, and retail industries have lost their primary source of income since March.
Between the middle of February and the end of April, 19.8 million jobs in these industries disappeared (from 32.3 million jobs to 12.5 million jobs). All in all, those numbers account for a 60% drop in employment. Most of those layoffs occurred in mid-March, around when lockdown orders first came into effect all over the country.
Moreover, 6.7 million of those lost jobs (33% of the employment decline) were due to businesses shutting down altogether. According to the researchers’ data, even hospitality workers still employed have seen a 10% drop in their working hours.
The research team used data collected by Homebase, a free scheduling and time-tracking application used by hundreds of thousands of businesses. With those numbers in hand, the study’s authors produced real-time estimates on COVID-19’s effect on US hours worked and employment statistics.
While these percentages and estimates are profoundly unsettling, the numbers also revealed a few reasons to be optimistic. By the end of April, 15% of those shutdown businesses had re-opened their doors (in some limited capacity). Overall weekly hours worked and employment statistics have started to slowly increase as well. Perhaps the worst is over.
As mentioned earlier, these findings are drastically different from the latest figures released by the Bureau of Labor Statistics’ report for March of this year.
“With the COVID-19 crisis unfolding with tremendous speed and affecting labor markets in such an unprecedented way, it’s all the more important to have timely and accurate measures of the actual impact,” comments Andre Kurmann, associate professor in the School of Economics of Drexel University’s LeBow College of Business, in a university release. “The results imply that the employment losses reported by the BLS in its March report, though large by historical standards, show only the tip of the iceberg and we should expect much worse estimates in the April report due to be released this Friday.”
Just like so much these days, employment numbers and statistics are changing at a rapid pace. The study’s authors predict that it will probably take a full calendar year before the BLS, or any other entity for that matter can definitively place a final number or estimate on the damage COVID-19 has done to the U.S. economy and its vital small businesses.
“Our report complements a number of concurrent efforts to measure the real-time impact of the crisis on labor markets,” Kurmann adds. “We provide a direct estimate of establishment inactivity and, going forward, the extent to which the U.S. labor market is starting to recover as restrictions are lifted and the economy opens up again.”
Even these estimates almost certainly only tell a portion of the true story. Homebase mostly tracks hourly employees at small businesses, so this data largely didn’t account for larger hospitality businesses. In all likelihood, an additional 16.5 million jobs, at least, across these industries have been lost since March.
The full report can be found here.