Economic Rebound from COVID-19 Will Take Time

The fallout from COVID-19 has Idaho’s seasonally adjusted unemployment rate soaring from a record low of 2.5 percent in March to a record high of 11.8 percent in April. With the lockdown phasing out in late May and early June in most of the state, many jobs are being restored. But the Idaho economy, as well as economies around the globe, may not rebound completely for some time.

 More than one in four young Idahoans lost jobs

Teens and young adults experienced the most job losses during the first 10 weeks of the crisis. More than one in four (25.6 percent) Idaho workers under 35 years old filed new unemployment insurance claims between March 15 and May 23, while 15.7 of workers 35 years and older filed new claims.

Why did young people encounter especially large unemployment spikes? Youth make up a large proportion of the workforce of the two sectors with the most layoffs – leisure & hospitality and retail – which together accounted for 28 percent of all new unemployment claims. People under age 35 held 60 percent of leisure and hospitality jobs and 43 percent of retail jobs in 2019, according to the Census Bureau’s Quarterly Workforce Indicators. Youth are less likely to hold the managerial and professional jobs that could be done at home. In addition, employers typically lay off less experienced workers, while keeping those with greater seniority.

In the Urban Institute’s March and April 2020 Health Reform Monitoring Survey, 57.4 percent of Gen Z adults (18- to 22-year-olds) reported their families experienced job-related losses, compared with 35.4 percent of working-age baby boomers (55- to 64-year-olds), 41.1 percent of Gen Xers (39- to 54-year-olds) and 41.4 percent of millennials (23- to 38-year-olds).

Compared with older adults, young adults tend to be less financially prepared to endure periods of unemployment. They typically have fewer resources to weather economic downturns. Few own houses or have significant savings or other investments, while some are struggling with record levels of student debt. In the Urban Institute survey, many young adults reported they already had depleted their savings because of the coronavirus crisis. Even before the pandemic, one-third of Gen Zers worried about covering everyday expenses, including transportation and food.

Some of Idaho’s young workers may confront lasting effects from the coronavirus downturn. Those entering the job market in an economic downturn may never catch up in pay or opportunities, according to a large body of research. Those persistent problems affect people graduating from college during downturns but are especially deep for those without degrees. While unemployed, they may lose opportunities to learn skills on the job. When the economy rebounds, they will be competing for jobs with people who have more experience and are more likely to accept jobs that don’t offer opportunities to develop skills and move up career ladders. Till von Wachter at the University of California, Los Angeles, and Hannes Schwandt of Northwestern University tracked Americans who entered the labor market during a severe recession in 1981 and 1982. This group earned less even 15 years later.

The pandemic also may upend plans for postsecondary education. Job losses make it more difficult for youth to earn money to pay for school and affect their parents’ ability to provide funds for college or professional-technical training. In a survey conducted by Civis Analytics and the Bill & Melinda Gates Foundation, half of the parents of high school students said their children’s postsecondary plans had changed, with many opting for cheaper or closer options, or postponing enrollment.

Small businesses struggle as revenues fall

Small businesses entered this economic downturn more fragile than larger businesses. Before the crisis hit, a study by the JPMorgan Chase Institute in early March found that half of U.S. small businesses had less than two weeks’ worth of cash on hand, making it difficult to cover rent, insurance, utilities and payroll through any kind of sustained downturn.

Roughly 36,000 Idaho businesses owned by proprietors, partnerships and S-corporations (a legal form of organization for the self-employed) had fewer than 100 employees in 2017, according to the Census Bureau’s County Business Patterns. Of those, 10.8 percent were leisure and hospitality businesses and 11.3 percent were retailers.

Idaho Commerce, working with the Idaho State Department of Agriculture, conducted a survey from April 14-23 to learn about the pandemic’s impact on Idaho businesses. About 69 percent of the 1,255 respondents reported suspending some or all operations due to COVID-19, and 83 percent of businesses reported a decrease in revenue due to COVID-19. At the time of the survey, 30 percent of businesses expected to recover and be back to normal operations within six to 12 months, while 21 percent expected the recovery would take longer than 12 months. The full survey is available at

Source: Idaho Commerce

The coronavirus crisis already has squelched or delayed the plans of Idahoans to start new enterprises. An analysis of business formation statistics from the U.S. Census Bureau shows the number of new businesses in Idaho applying for tax identification numbers from March 8 through May 23 was 17.8 percent lower than in the same weeks the year before.

More women lost jobs

So far, women have seen greater job losses than men, primarily because women make up larger portions of the hard-hit leisure and hospitality, retail, personal care and non-essential health care and social assistance industries. Before the crisis, women held 55 percent of Idaho’s leisure and hospitality jobs and 57.9 percent of its non-essential retail jobs, according to the Census Bureau’s Quarterly Workforce Indicators for 2019. In contrast, the Great Recession that began in late 2007 hit male-dominated sectors such as construction and manufacturing especially hard and therefore resulted in bigger unemployment increases for men.

Early in the coronavirus crisis, when the job losses were concentrated in leisure and hospitality, women were especially vulnerable to layoffs. In the first week of the crisis (March 15 through – 21), women made up 60.9 percent of Idaho workers filing unemployment insurance, even though they made up only 48.5 percent of Idaho workers covered by unemployment insurance. By the week ending May 23, they made up 47.1 percent of those filing. In total over the first 10 weeks of the coronavirus (March 14 through May 23), 55.3 percent of initial claims came from women.

Latinos see steep job losses

At the national level, the coronavirus crisis hit Latinos harder than any other racial or ethnic group. The unemployment rate for Latinos rose from 4.4 percent in February to 18.9 percent in April. Only 16 percent of Latinos were in jobs that allowed them to work from home, compared with 31.4 percent of non-Latinos, a March study by the Economic Policy Institute found. From March 14 through May 23, 12,446 Latinos who live and work in Idaho filed new unemployment claims. They represent slightly more than 14 percent of Idaho’s Latino workers. Latinos made up 18.2 percent of the workforce in the four sectors that lost the most jobs in Idaho, while non-Latinos made up 16 percent of their workforce. Preliminary evidence from the April Current Population Survey suggests that the unemployment rate for Idaho Hispanics rose above 16 percent and women had most of the job losses for Hispanics.

Still employed, but taking home much less pay

Income losses also were experienced by some workers who remained employed, as their hours of work were cut and bonuses, tips, commissions and overtime fell. In a few reported cases, workers accepted pay cuts in hopes of avoiding layoffs. The average hours worked per week in Idaho fell 2.1 percent from 33.9 hours in February to 33.2 in April, according to the Current Employment Statistics program. Increased hours of work for many health care, grocery store and other essential workers were offset by reduced hours for tourism-related and non-essential retail workers. In Idaho’s leisure and hospitality sector, average weekly hours fell 8.6 percent from 23.3 hours in February to 21.3 two months later.

Nationwide, the number of “involuntary part-time” workers — people who would prefer full-time employment, but worked part time because their hours had been reduced or they were unable to find full-time jobs — more than doubled from 4.3 million in February to 10.8 million two months later. Current Population Survey data, which is subject to significant sampling errors, showed that 38,100 more Idaho workers who usually worked full time, worked fewer hours in April than in March for economic reasons. Roughly 7 percent of Idaho workers who usually worked full time experienced reductions in work hours during the crisis.

Veterans hard hit by the crisis

While the U.S. unemployment rate rose to its highest level since the Great Depression, the unemployment rate for veterans jumped from 3.5 in March percent to 11.7 percent in April. More than one million veterans across the U.S. applied for jobless benefits in April alone, according to the U.S. Bureau of Labor Statistics. In 2019, about 53,500 veterans were employed in Idaho. Veteran representatives at the Idaho Department of Labor have seen a surge in veterans needing assistance during this period.

Economic crisis touches children

The COVID-19 economic downturn already has increased food insecurity for many Idaho families and may result in some of them moving from the middle class into poverty. That means many more Idaho children will be living in poverty. Children already have poverty rates higher than adults, but during periods of economic hardship children suffer the most from increased poverty. When the Great Recession pushed Idaho’s poverty rate from 12.1 percent in 2007 to 16.5 percent in 2011, the poverty rate for children rose from 15.9 percent to 21.3 percent. Children tend to be more affected because their parents often are younger adults, an age group that experiences higher unemployment than other adults, and because many kids live in single-family households. In 2018, the most recent period for which the Census provides data, about 62,400 Idaho children (about 14.2 percent of the state’s population under 18 years old) lived in households with incomes below poverty level.

The Urban Institute nationwide survey conducted in late March and early April found:

  • More than four in 10 parents reported that they or someone in their family lost work or work-related income because of the coronavirus outbreak.
  • Low-income parents were less likely to be able to work from home and more likely to have had difficulty arranging child care than higher-income parents.
  • Parents reported coping with the pandemic’s economic impacts by cutting back spending on food, reducing savings and going into debt.
  • More than one-third of parents reported problems paying for housing, utility, food or medical costs in the past month, including roughly half of low-income parents and Black and Hispanic parents.
  • Nearly one in three of the families who lost work or income because of COVID-19 suffered from food insecurity, defined as limited or uncertain availability of a nutritionally adequate diet,

Thousands lost health insurance coverage

 The Economic Policy Institute estimated that coronavirus-caused layoffs resulted in 12.7 million Americans losing their employer-provided health care insurance by April 30 and about 52,300 Idahoans lost theirs.

The class of 2020 faces challenging job market

More than 8,000 students in Idaho’s Class of 2020 graduated with bachelor’s degrees from Idaho colleges and universities this May. Before March, they expected to launch into the strongest economy in decades and find many great job opportunities. Now the job opportunities have dried up, at least for a few months.

Coronavirus is complicating the efforts of graduating seniors to find work, since it put an end to the job fairs and corporate recruiting that normally occur. Also, most college students have returned to their hometowns and would not be available to meet with corporate recruiters. College placement offices are trying to use more digital means such as videoconferencing and online job fairs to help graduating seniors “meet with” recruiters, but those measures aren’t as effective as in-person events.

Some seniors had their internships cancelled — either before they started or part way though — because of the coronavirus, so they will be coming into the market with less work experience and fewer business contacts than they would have had if they completed their internships. Internships often lead to job offers for professional positions at the company where they interned. They also bolster students’ confidence that they are well-prepared to join the professional world, which tends to help them do better in interviews and therefore be more successful in landing jobs.

The biggest challenge for graduating seniors is fewer jobs are available this year than in the past few years. Employers are uncertain about economic conditions in the next year and have abandoned their previous plans to expand employment and hire many graduating seniors. They do not want to offer jobs that poor economic conditions might cause them to cut.

Not only are college seniors dealing with widespread hiring freezes, they also will be facing increased competition for jobs from more experienced people who have lost their jobs in the current economic crisis. In addition, in this harsher job environment employers are likely to offer lower starting salaries than they did last year.

Today’s graduates may see long-term difficulties just as people who graduated in earlier recessions did. College graduates who entered the job market during the recession of the early 1980s had, 15 years after graduation, wages that were 2.5 percent lower than graduates who didn’t start out in a downturn, according to research by Lisa Kahn, an economist at the University of Rochester. People who graduated during the Great Recession settled for lower-paying jobs at less prestigious companies than people who finished college even a year earlier. Economists have found the impact lingered even 10 years later, resulting in higher unemployment rates and lower salaries., regional economist
Idaho Department of Labor
(208) 799-5000 ext. 3984