Leading Indicators

Greater Philadelphia’s Employment: Two Years of COVID

The Bureau of Labor Statistics’ January 2022 jobs report noted major gains in national employment levels. While many policymakers and economists lauded the improvement, there are growing signs that these gains show a return to pre-pandemic employment trends – namely, lower-wage service sector employment that was swiftly wiped away at the beginning of the COVID-19 pandemic. While local level employment estimates have not been updated to reflect January’s national gains, we take a closer look at regional employment trends since the start of the pandemic to examine how our local economy is building back.

 

The Need to Know

  • Hiring is on the rise in Greater Philadelphia, but total employment is still slightly below pre-pandemic levels. By December 2021, regional Indeed job posts were almost 53 percent higher than in February 2020, but total employment remained two percent lower.
  • Disaggregating by industry sectors reveals that the region’s largest employment growth came from the Transportation, Warehousing, and Utilities sector. While this sector only accounts for 5 percent of the region’s total employment, it grew by 16.8 percent between August and December 2021.
  • The region’s Retail Trade sector finally surpassed pre-pandemic employment levels by November 2021. Job growth in the region’s retail sector spells large gains for the region’s total employment. In fact, the preliminary December 2021 estimates show an increase of roughly 11,500 jobs from the previous year.
  • The region’s Professional, Scientific, and Technical Services, Administrative, Support and Waste Services, and Financial Activities sectors all ended 2021 with employment levels slightly above their respective February 2020 levels. Together they accounted for roughly 22 percent of the region’s total employment by December 2021.
  • Disaggregating the region’s recent new hires by lower-level industries shows that the largest portion of recent hires in the region are coming from low-wage industries that lost much of their employment in the initial months of the COVID-19 pandemic.
  • At 15.5 percent for the third quarter of 2021, the Food Services and Drinking Places industry accounted for the largest share of Southeastern Pennsylvania’s new hires. This industry’s average hourly wage in 2020 was just over $10.00 - almost $24.00 less than the region’s average hourly wage.
  • Some brighter hiring trends are found in Greater Philadelphia’s Educational Services industry, the Professional, Scientific, and Technical Services industry, Specialty Trade Contractors, and the Management of Companies and Enterprises. Together they account for over 20 percent of all Southeastern Pennsylvania’s new hires in the third quarter of 2021, and average hourly wages exceed the region’s average.

 

Recent Job Posting and Hiring in Greater Philadelphia

Hiring is on the rise in Greater Philadelphia. Using Indeed job posts as well as the region’s total employment estimates (both indexed to February 2020), figure 1 details how major employment losses and hiring freezes in the initial months of the COVID-19 pandemic were quickly followed with a surge in new job posts but sluggish employment recovery.

 

FIGURE 1 

SOURCE: Data obtained from the FRED Research Division of the Federal Reserve Bank of St. Louis and the Bureau of Labor Statistics’ Current Employment Statistics program.

NOTE: December 2021 estimates are preliminary at the time of writing.

 

While hiring continues to climb, the region’s total employment remains below pre-pandemic levels. Figure 1 shows that Indeed job posts in the region reached pre-pandemic levels by March 2021, but total employment remained below its original February 2020 estimate well into December 2021. By the end of 2021, regional job posts were almost 53 percent higher than in February 2020, but total employment remained two percent lower. This begs two underlying questions: (1) What are the region’s industry-level employment trends, and (2) which industries account for the largest portion of new hires?

 

Industry Employment Gains

Figure 2 disaggregates the region’s total employment by major industry sectors to determine where recent employment is growing. At first glance, only a few regional industries have reached pre-pandemic employment levels.

Instructions for using graphs

 

 

FIGURE 2

SOURCE: Data obtained from the Bureau of Labor Statistics’ Current Employment Statistics program.

NOTE: December 2021 estimates are preliminary at the time of writing.

 

The largest regional employment growth came from the Transportation, Warehousing, and Utilities sector. Between August and December 2021, this sector’s employment grew by 16.8 percent. By December 2021, it was 19.6 percent larger than it had been in February 2020. Much of this growth reflects the increasing demand for goods transportation and storage as more individuals took advantage of e-commerce for groceries, products, and deliveries amidst work-from-home mandates and COVID variant surges [1]. It should be noted, however, that this industry’s estimated December 2021 employment accounts for only five percent of the region’s total employment. Thus, while it is growing fast to meet new demand, it remains a small sector of the overall regional labor market.

 

The region’s Retail Trade sector finally surpassed pre-pandemic employment levels in November 2021. In the initial months of the pandemic, this sector’s employment saw some of the steepest declines. By April 2020, Retail Trade employment in the region was almost 25 percent lower than it had been in February 2020. Only the Mining, Logging, and Construction, Other Services, and Leisure and Hospitality sectors saw steeper declines. The employment gains reflect the cautious return to in-person consumer shopping habits [1]. The December 2021 estimates may also indicate a peak, since the winter holiday season generally coincides with increased demand for retail employment. Retail Trade constitutes the second largest segment of the regional labor market, behind the Health Care and Social Assistance sector. Thus, job growth in the region’s retail sector equates to large gains for the region’s employment. The preliminary December 2021 estimates show an increase of roughly 11,500 jobs from the previous year. Yet many retail occupations only offer low compensation and few career-building opportunities to sustain long-term employment [2].

The region’s Mining, Logging, and Construction sector saw modest employment growth since February 2020. Driven largely by booming construction trends in the region [3], this sector’s employment surpassed pre-pandemic levels by May 2021 and continued to slowly climb through the end of the year. By December 2021, employment in the sector was 3.1 percent larger than in February 2020, which roughly equates to 119,000 jobs in Greater Philadelphia.

 

Finally, Federal Government employment as well as employment in the Professional, Scientific, and Technical Services sector, Administrative, Support and Waste Services sector, and Financial Activities sector all ended 2021 with employment levels slightly above their respective February 2020 levels. The large growth in Federal Government employment in the summer of 2020 reflected the need for more census data collectors [4]. This sector declined in employment since 2020 but not to the point of remaining consistently below pre-pandemic levels. It does, however, represent the lowest employment count of any industry sector in Greater Philadelphia as of December 2021. The remaining sectors largely offer office-based employment and accounted for roughly 22 percent of the region’s total employment in December 2021. Initial employment declines in these sectors at the beginning of the pandemic were minor in comparison with other industries. Their recent growth beyond their pre-pandemic levels largely illustrates greater demand for office technological services, technological and administrative support, as well as a growing need for virtual marketing and communications in the wake of the pandemic [5,6,7].

 

Regional Hiring

Disaggregated industry-level employment can show burgeoning employment growth, but it does not account for the size of each industry. Calculating shares of new hires by lower-level industries sheds light on where raw employment is growing. Figure 3 details the largest shares of new hires in the five-county region of Southeastern Pennsylvania by lower-level industry. It also details each lower-level industry’s average hourly wage. Overall, figure 3 demonstrates how the largest portion of recent hires in our region are coming from low-wage industries that lost much of their employment in the initial months of the pandemic.

 

FIGURE 3 

SOURCE: Data obtained from the PA Center for Workforce Information & Analysis’ New Hire Report and the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.

NOTE: Average hourly wages represent were calculated from average weekly wages. All average wages are from 2020 except the Professional, Scientific, and Technical Services and Management of Companies and Enterprises industries which required 2019 estimates.

 

Figure 3 shows a variety of lower-level industries grouped within some of the region’s largest employment sectors. For example, the Food Services and Drinking Places industry is a part of the Leisure and Hospitality sector, while the Social Assistance industry, Ambulatory Health Care Services, and the Nursing and Residential Care industry are all in the Health Care and Social Assistance sector. Many of these larger employment sectors were devastated in the initial months of the COVID-19 pandemic. Their showing within the top hiring industries represents a trend to rebuild lost positions.

 

Many of these lost positions originally offered lower than average wages and few career building opportunities or benefits. At 15.5 percent for the third quarter of 2021, the Food Services and Drinking Places industry accounted for the largest share of Southeastern Pennsylvania’s new hires. Occupations in this industry largely include servers, short-order cooks, and other restaurant and food preparation positions. As part of the region's Leisure and Hospitality sector, it saw the steepest employment declines in the initial months of the pandemic (see figure 2). Yet even with recent social movements pushing for higher wages and other incentives to refill lost low-wage positions in this industry [8], the average hourly wage in 2020 was just over $10.00 - almost $24.00 less than the region’s average hourly wage. Many other lower-level industries, like Social Assistance, Administrative and Support Services, Nursing and Residential Care Facilities, and Amusement, Gambling, and Recreation Industries all represent a similar trend of hiring to refill positions lost in the initial months of the pandemic. There is high demand to refill positions in this industry as these sectors cautiously reopen, as figure 3 demonstrates, but job security and small wage gains may be all for naught if another economic tremor, like another COVID-19 variant, upends employment gains.

 

Some brighter hiring trends come from the Educational Services industry, the Professional, Scientific, and Technical Services industry, Specialty Trade Contractors, and the Management of Companies and Enterprises. Together they account for over 20 percent of all Southeastern Pennsylvania’s new hires in the third quarter of 2021. The average hourly wage in these industries matches or exceeds the region’s average. As previously stated, their growth may reflect the greater need for technological, administrative, and communications support in more virtual work settings. Increased hiring among these industries also shows a greater commitment to growing more higher-wage positions in a post-COVID regional economy.

 

Building Back Better?

The recent employment gains in our region and across the country largely represent the slow recovery of industries devastated by the initial economic lockdowns in the spring of 2020. Unfortunately, much of our recent employment gains are replacing a pre-COVID workforce that was characterized by stagnant wage growth in the past decade and held little security as jobs were cut or furloughed during the economic lockdowns of 2020.

 

There are some bright spots in recent hiring trends, as our region adds more professional, technical, and administrative support positions. The addition of these higher-wage occupations shows a commitment to building back a more resilient workforce, but their growth is largely eclipsed by employment recovery in the Leisure and Hospitality and Health Care and Social Assistance sectors. As these major recovering sectors continue to face labor shortages, will their workers be able to leverage greater job security, better benefits, and higher wages? It remains to be seen whether such trends pressure Pennsylvania’s legislators to raise the state’s minimum wage—an outlier in the region at $7.25 an hour—or to focus on other measures to create sustainable, career-focused employment opportunities – like portable benefits.

 

Works Cited

[1] Verdon, Joan. 2021. “Adobe: Pandemic Shift Is Permanent, E-Commerce To Hit $1 Trillion In 2022.” Forbes, 15 March. Retrieved from: (https://www.forbes.com/sites/joanverdon/2021/03/15/adobe-pandemic-shift-is-permanent-e-commerce-to-hit-1-trillion-in-2022/?sh=74465f5b44ce).

 

[2] Shields, Mike. 2020. “COVID-19: The Real Retail Apocalypse?” Economy League of Greater Philadelphia, 28 May. Retrieved from: (https://economyleague.org/providing-insight/leadingindicators/2020/05/28/covidretail).

 

[3] Williams, Stephen. 2021. “Philadelphia has explosion in new housing development.” The Philadelphia Tribune, 13 November. Retrieved from: (https://www.phillytrib.com/news/local_news/philadelphia-has-explosion-in-new-housing-development/article_753a78ce-5caa-5a7b-b9a4-63a547a0d4ee.html#:~:text=According%20to%20a%20Center%20City,Philadelphia%2C%20such%20as%20Northern%20Liberties.).

 

[4] Shields, Mike and Andrew Strohmetz. 2020. “Regional Employment Growth Amidst the Pandemic.” Economy League of Greater Philadelphia, 18 November. Retrieved from: (https://economyleague.org/providing-insight/leadingindicators/2020/11/18/jobgrowthcovid).

 

[5] Smith, Morgan. 2022. “The 10 fastest-growing jobs in the United States—some pay over $100,000 a year.” CNBC, 19 January. Retrieved from: (https://www.cnbc.com/2022/01/19/the-10-fastest-growing-jobs-in-the-united-states-and-how-much-they-pay.html).

 

[6] Kropp, Brian and Emily Rose McRae. 2022. “11 Trends that Will Shape Work in 2022 and Beyond.” Harvard Business Review, 13 January. Retrieved from: (https://hbr.org/2022/01/11-trends-that-will-shape-work-in-2022-and-beyond).

 

[7] Sarnoff, Nancy. 2022. “Economists Expect More Job Growth as Omicron Cases Drop. But the Pandemic Makes Predictions Hard.” MoneyWise, 8 February. Retrieved from: (https://moneywise.com/news/economy/US-jobs-and-unemployment-report).

 

[8] Molla, Rani. 2022. “A new era for the American worker.” Vox, 11 January. Retrieved from: (https://www.vox.com/recode/22841490/work-remote-wages-labor-force-participation-great-resignation-unions-quits).