The painful and significant disruption to Houston’s labor economy caused by COVID-19 has been a “shock to the system” but will not effectively change the economy’s fundamental makeup. So says Parker Harvey, principal economist for the Gulf Coast Workforce Board. 

Harvey shared that and other insights into the changing labor market during a virtual UpSkill Works Forum hosted by Greater Houston Partnership Senior Vice President of Regional Workforce Development Peter Beard.

Harvey and Beard discussed some observed unprecedented unemployment figures, employment indicators and ways in which the region’s workforce can set itself up for recovery.

Disruptions to the labor market are unprecedented 
From February to March, the region’s unemployment rate jumped from roughly 3.9 percent to 5.1 percent, an increase on par with that of May of 2009, and one of the biggest one-month jumps ever seen. These figures only account for the first half of March, before the region’s Stay Home – Work Safe orders were made. This roughly 30% growth in the number of unemployed individuals outpaces the national increase of about 20%. Houston, Harvey noted, is experiencing the dual effects of COVID-19 and the downturn in the oil industry.

Between the beginning of March and mid-April, around 314,000 individuals filed initial claims for unemployment insurance, cumulatively; about 10 times the number of claims made during a typical six-week period when the economy functions normally. Using this figure, Harvey projects unemployment rates to be closer to 12%-12.5% in the next couple months. This would reflect record unemployment, Harvey said. 

Unemployment claims data by industry and by county from the Texas Workforce Commission can be found here.

Employment losses have been widespread across industries, though notably large within construction, manufacturing and the leisure and hospitality sector. The leisure and hospitality losses break the long-time trend of unbroken job gains in those areas between the months of February and June.

Moving forward, Harvey expects to see layoffs shift from the service sector to the white-collar workforce.

Job posting data as market indicator and seeing hopeful signs
Specific, localized data around which industries and occupational types are contracting or growing takes time to gather and analyze, and data that exist do not yet reflect the climate of the last several weeks. Analyzing online job postings can provide a proxy.

And although the number of active job postings are down by about one-third from this time last year, there are still about 90,000 active jobs posted across the region.

Based on an analysis of job postings, Harvey has seen a surge in demand for editors, producers and translators (he noted the tremendous amount of news and other media content that has been created around the crisis). Public education systems are also hiring. Selective hiring is occurring within the health care sector. 

Workforce Solutions posts active job openings on its website here.

Harvey has started seeing some good news more generally in these postings: The number of employers removing job postings has started to decrease. The point at which more employers are increasing their number of job postings than are decreasing it can be seen as an indicator of some recovery, but Harvey believes that point is still in the distance.

Sequencing of recovery is unclear
Harvey expressed uncertainty around whether the service sector would recover before the professional sector, or vice versa, but he believes businesses that instill a sense of confidence in consumers around delivery of service and safety and health will recover more quickly as they re-open than those that do not. He predicts the economy in Houston will recover in a sort of “W” shape, with starts and stops before a full recovery begins, especially if there is a second wave of COVID-19 infections, thus rocking consumer confidence. Harvey expects industries that rely on a density of customers, like mass transportation and entertainment, will be slow to recover.

The Greater Houston Partnership has developed 15 principles to help businesses develop plans to protect the health of their employees and customers by reducing the risk of transmission of the COVID-19 virus. Learn more about this Safe Work Program here. 

Reskilling should help workforce recovery
COVID-19 could have long-term effects on the types of skills Houston’s workforce needs. New types of trainings and skill development programs may be needed to manage hygiene protocols to keep workers and customer safe. Digital skills, which were already becoming increasingly important in many industries and sectors, could become even more important if jobs that could have been done in person become a little more remote more often. Preferences for online shopping habits could increase – or decrease - 

Harvey is concerned that young workers who relied upon entry-level jobs as a pathway into higher-level employment and older workers approaching retirement could face challenges returning to the labor market and said the Gulf Coast Workforce Board will explore how to address these needs through reskilling.

Harvey believes individuals who have been acquiring skills over the last several weeks will have an employability advantage over those who have not.

The UpSkill Works Forum Series brings you interviews with business and community leaders, policy makers, and leading thinkers on the key workforce issues our region confronts. This week’s webinar will take place on Wednesday, May 6 and focus on “Understanding Skills to Navigate the Changing Nature of Work.” 

Learn more about UpSkill Houston here.