U.S. Labor Market Nears Pre-Covid Levels, But Recovery Is Uneven

(Bloomberg) -- By many measures, the U.S. labor market is nearing a comeback to its pre-pandemic levels, two years after the Covid-19 virus plunged the economy into a steep downturn.

The jobless rate, at 3.8% in February, is close to its 2019 average. Transportation firms and utilities have more employees than before the pandemic, and nationwide manufacturing hours are slightly above what they were in February 2020.

But the recovery, remarkable as it was after more than 20 million people lost their jobs in just a few weeks at the onset of the crisis, has been uneven. U.S. companies remain 1.4 million jobs short of their early 2020 levels, according an analysis of Bureau of Labor Statistics data, many of them in hotels, restaurants or hospitals.

The two-year data show how the pandemic has changed the fabric of the labor market.

The professional services, trade, transportation and utilities sectors have added a combined 1.2 million workers as more people worked remotely and consumers ordered online. The gains almost made up for the 1.5 million shortfall in the leisure and hospitality industry, the hardest-hit by the virus.

Health care, services such as laundry and dry cleaning and social organizations are also well short of recovering lost jobs.

The rebound has also been uneven in the public sector, which is still 681,000 payrolls below its pre-Covid numbers. In response to social-distancing restrictions -- including virtual learning -- and concerns over future budgetary challenges, state and local governments have cut payrolls. Many teachers and other workers also retired early.

By contrast, federal jobs are essentially back and postal-service payrolls are at a record.

By firm size, data from ADP Research Institute released Wednesday show that the largest companies haven't recovered. Firms with more than 1,000 employees remain 239,000 below pre-Covid levels, while firms with fewer than 50 workers have increased employment by 358,000 jobs in aggregate.

But the outcome splits by sector. In good-producing industries, larger firms have exceeded their February 2020 payrolls, while smaller producers have not. The reverse is true for service employers, according to ADP, whose payroll data represent firms employing nearly 26 million workers in the country.

Another major change during the pandemic era: More Americans have become their own employer. The number of startups has surged nationwide, according to U.S. Census Bureau data.