Leisure and hospitality industries among the hardest hit as state finishes 2020 on a sour note
East Lansing, MI–An analysis of new employment data by experts at Anderson Economic Group (AEG) shows that the Michigan economy is moving in the wrong direction for the first time since it began its recovery from the initial shock of COVID-19 last spring. After recording a strong employment rebound during the summer, new data shows the economy is now shedding jobs, rather than adding them. Experts warn that the new employment numbers could indicate future struggles for employers, especially those in the leisure and hospitality industries.
“The new employment numbers are a cause for serious concern,” noted Sarah Mixon, a senior analyst at AEG. “In the past six months, we’ve moved from a promising summer employment rebound to a stagnant level in the fall. Now, the data show a decline in employment to close out the year.”
Employment losses were dominated by the leisure and hospitality industries. Businesses in the leisure and hospitality industries lost a staggering 59,700 jobs across Michigan in the last month. Losses in leisure and hospitality were partially offset by gains in the manufacturing and trade, transportation, and utilities industries, which were able to operate with fewer disruptions caused by social distancing measures.
December’s job losses capped off an already dismal trend of slow job growth since the fall. Michigan and the rest of the country saw unprecedented job losses at the beginning of the pandemic. All but one of the industries AEG economists reviewed had recovered to 90 percent of their pre-pandemic employment levels by September. The recovery since then has stalled, however, and in some cases it has reversed.
Spring restrictions on indoor dining and consumer concerns about social distancing caused employment in the leisure and hospitality industry to plummet to less than half its pre-pandemic peak in April 2020. While the industry recovered quickly over the summer as the state loosened some of its social distancing measures, the pace of recovery began to slow in the fall as cases surged and restrictions tightened. “At this point, leisure and hospitality employment is only at 50% of its pre-pandemic peak and it has been declining steadily since October,” said Mixon.
Loosening restrictions, federal assistance, and increased vaccinations could improve the sluggish employment recovery. Although the employment recovery has ground to a halt and the economy could lose ground in the coming months, Mixon noted that declining case counts, the prospect of another stimulus program, and increased vaccine distribution could help spur job growth later in 2021. “It’s important to recognize that we cannot fix the economy without dealing with the virus first,” she said. “In that regard, there are several reasons to be optimistic about 2021. Daily case counts are trending down in Michigan, people are getting vaccinated, and indoor dining will resume in February, which will be a boon for restaurants. Now that the election is over, policymakers can focus on solutions that help employers add jobs and revive the economy.”