Friday’s release of the February employment report by BLS showed that the economy created 379,000 jobs in February, compared with 166,000 jobs in January. While these numbers suggest some improvement, they compare unfavorably with the fact that new claims for unemployment for the week of February 20 alone totaled 736,000. Setting aside potential problems with the current data series on new unemployment claims (see, for example, David Kotok, “Unemployment Claims: Fact, Fiction, or Fraud”, Cumberland Advisors Market Commentary, 3/4/2021), weekly changes in the data can arguably provide important insights as to the current state of the labor market. Fortunately, the CES data on Thursday also provide some key information on unemployment for workers in various industries and demographic groups. We will look first at who is unemployed and then at what industries these people are working in compared with where the jobs are being created.

Overall, there were about 10,486,000 people 16 years and older who were unemployed in February 2021 (CES Table A-1), compared with 6,218,000 for the same month in 2020, before the pandemic really hit. Of these, there were 5,809,000 unemployed men and 4,587,000 unemployed women. In terms of demographics, the next table shows that the pandemic has impacted unemployment rates for African Americans and Hispanics significantly more than for white Americans or Asians, although unemployment rates among all groups are much higher now than before the COVID virus hit the economy.

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In terms of the number of people impacted, there were 7,312,000 unemployed white Americans, 2,052,000 unemployed black or African Americans, 2,619,000 unemployed Hispanic or Latino Americans, and 532,000 unemployed Asian Americans as of February 2021. These data exclude the consideration that there were another 6,902,000 people classified as not being in the labor force but currently wanting a job, so there were about 17,388,000 people in total who were unemployed and/or wanting a job if it were available. In other words, despite the fact that the economy created 379,000 jobs in February, there is a long way to go before pre-pandemic employment levels are reached.

The data also show that there are and have been disproportionate unemployment impacts on different sectors of the economy and that the job recovery has also been uneven. The most recent CES industry summary data also provide some insights as to these impacts, as shown in the next table. The industry data contain much finer detail (not shown in the table), breaking down impacts in more than 150 different employment subcategories that lie behind the more aggregate data shown in the table. The two segments with the highest unemployment rates are Mining and Leisure and Hospitality. Unemployment rates in these two sectors are extremely high, and right behind them are the Construction, Retail and Wholesale Trade, and Transportation sectors. Not surprisingly, almost all subsectors of the Leisure and Hospitality sector were especially hard hit, including the Food Services, Entertainment, and Lodging subsectors. It is also the case that these sectors are ones that tend to employ more minorities than others do.

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Not only are unemployment rates unevenly distributed across job categories, but some have also lagged in job growth. Overall, job losses continued as the economy started to slowly recover in the fourth quarter. December 2020 showed job losses of 306,000, which were still heavily concentrated in Leisure and Hospitality (-498,000), Transportation and Utilities (-43,000), and Education and Health Services (-29,000). By February, as some states began to reopen their economies, job losses continued in Construction, Mining, Information Services, and Government. Other segments which have had extremely high levels of unemployment, such as Wholesale and Retail Trade, Construction, Professional and Business Services, and Leisure and Hospitality, have had, at best, only modest increases in new job creation.

So, while some forecasters are predicting a sharp recovery in 2021 with increases in inflation, attributable to both Fed accommodation and the prospects for a significant stimulus package, the job situation continues to be a huge problem; and recovery will be uneven for many sectors. This prospect highlights the problem for the FOMC as it crafts policy going forward, especially given its focus on jobs and the unemployment situation in low-income, disadvantaged communities. How will the Fed define full employment? Will it be satisfied with hitting pre-pandemic unemployment rates for African Americans and Hispanics? Or will it try to hit the pre-pandemic overall unemployment rate for these communities, in the range of 3.6–3.8%. The answers to these questions should be the focus of the Fed’s forward guidance and would help to significantly signal to the economy the future course of its policies.