Because so many employment statistics are reported without context, trying to make sense of employment news in recent weeks can be confusing.
To gain some clarity, here’s a quick summary of the most relevant data collected and published by Raghav Singh, the director of analytics at Korn Ferry.
-The unemployment rate is currently 14.7%. It will likely hit 16% in the third quarter before starting to drop.
-Employment recovery will lag the overall economic recovery—expect an average of 10% unemployment in 2021.
-Some researchers believe 40% of the jobs lost during the pandemic will be permanent—these job losses will be concentrated in the low-end job market.
-Downturns force employers to increase efficiency—this means more automation and eliminating middle-skill occupations, especially those focused on routine tasks.
-Productivity growth in the U.S. has been stagnant in recent years (ex. productivity only increased 0.3% in 2019). The pandemic may shake things up enough to reignite productivity growth.
Bright spots: New business formations are still happening, many companies are moving manufacturing out of China (re-shoring), and technology hiring has remained strong.
What’s this mean for real estate?
There will be much turmoil in the labor market for the next year or more, and this turmoil can mean opportunity.
It will be a massive game of musical chairs—lots of talented individuals scurrying to find the limited number of employment opportunities available.
It’s a good time to set out a chair.
