Pa. unemployment rate drops to 10.3%, hospitality and leisure still suffering

A ‘Now Hiring’ sign hangs in front of a Sheetz convenience store and gas station under construction on Tuesday, August 18, 2020 in Wexford, Pennsylvania. (AP Photo/Ted Shaffrey)

A ‘Now Hiring’ sign hangs in front of a Sheetz convenience store and gas station under construction on Tuesday, August 18, 2020 in Wexford, Pennsylvania. (AP Photo/Ted Shaffrey)

Pennsylvania’s economic outlook improved in August, as the statewide unemployment rate dropped to 10.3%, after hovering above 13% earlier in the summer.

“We’re digging out of a hole but there’s still pretty far to go,” said Mark Zandi, chief economist with Moody’s Analytics in West Chester.

In 2019, Pennsylvania’s unemployment rate hit a record low at 4.1%. In April, it hit a record high of 16.1% due to COVID-19 and business restrictions to mitigate its spread, a rate worse than it was during the Great Recession and any other time on record.

After widespread job shedding in March and April, just over half of those who lost work in the commonwealth had been rehired by August, new numbers from the Pennsylvania Department of Labor and Industry show. But job gains are spread unevenly across different fields.

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The largest increase was in the area of trade, transportation and utilities, which added 19,600 jobs since July. The largest gains were in the retail portion of that group, followed by job growth in health and education.

Hospitality and leisure – which largely represents tourism, lodging and restaurants – continues to suffer the most job losses since the same period of time in 2019 — a drop of nearly 30% of jobs.

Some parts of the unemployment rate also betray other trends.

“The drop in unemployment was greater than the people getting employment, so that could be a sign of people leaving the labor force,” said Scott Meckley, manager with the Center for Workforce Labor and Analysis in the Department of Labor and Industry.

Retirement-age workers who are laid off may not keep looking for work, for example.

In some cases, temporary job loss is also becoming permanent, as business models shift.

“Up ‘til now, a lot of people unemployed were on temporary layoff,” Zandi said. “Increasingly that’s not the case.”

The current recovery could be short lived if the effects of the initial economic crisis of the pandemic undermine larger structural issues.

“We had a massive shock from the pandemic, and the shutdown… and to a large extent we’re recovering from the shock,” said Paul Flora, with the Federal Reserve Bank of Philadelphia, who predicts more layoffs and foreclosures on the horizon.

“It may be that we’re not in recovery yet from a recession,” he said, “because we haven’t seen the end of it.”

Correction: This story was updated to reflect the most up-to-date estimate of unemployment rates for 2019 and April 2020.

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