As we have recently shared, the housing market is poised to help our economic recovery take a strong step forward with most economists predicting this to occur as early as the second half of 2020. With this said, there is still however, considerable risks across states with economies heavily reliant on leisure, entertainment, and personal services being most vulnerable.
Many analysts tend to agree and note that entertainment (including accommodation and restaurants), retail (except grocery and building materials), personal services and transportation (air, train, water and sightseeing tours) are among the hardest hit sectors and will most likely experience lingering elevated levels of unemployment. If this premise is correct, states with economies heavily reliant on leisure, entertainment, retail, and personal services are particularly vulnerable. Nearly one-quarter (23.5%) of the U.S. labor force (including self-employed) work in these high unemployment risk sectors as of 2018. The share of households with at least one member working in the high unemployment risk industries is even higher, with a national average of 28%.
While the labor force in most states have similar shares of vulnerable jobs, the workforce in Nevada, Florida, and Hawaii face much higher, prolonged unemployment risks. As of 2018, a staggering 41% of Nevada’s labor force was in high unemployment risk industries, including over 23% in entertainment. Hawaii and Florida had 30% and 28% respectively. At the other end the District of Columbia, North Dakota and Wisconsin rated 17%, 19% and 20%. Similarly, Virginia Nebraska, Vermont, Connecticut, Maryland, Massachusetts and Iowa have shares under 21%.
Across the U.S. renters are more exposed to unemployment risks. 31% of all renter households have at least one member working in the vulnerable sectors. Among homeowners, the share is 26%. Once again, Nevada and Hawaii have the highest shares of both. In Nevada 44% of renters and 38% of homeowners had at least one household member working in high unemployment risk industry. For Hawaii, these shares were slightly above 39% and 35% respectively. In addition to Nevada and Hawaii, the rental markets in Utah, Arizona, Florida, and Colorado are more vulnerable to high unemployment risks with a share of renter households with at least one member at risk of prolonged unemployment at 35%. Populous California, known for lower homeownership rates, stand out for registering the highest number of high-unemployment risk renters – close to 2 million – or one out of three renter households.
Homeowners share similar risks due to specific industry sectors in states such as Utah (31%), Alaska, Rhode Island, Montana, Delaware and Texas with 28% homeowners at risk of prolonged unemployment.
While renters are more vulnerable to unemployment woes, the majority of households with at least one member in high-unemployment risk industries (60%) are owners – simply because close to two-thirds of U.S. households are owners.
The ACS data also suggest that young adults under the age of 35 are at a higher risk of prolonged unemployment. Forty-three percent of the youngest workers under the age of 25 and almost a quarter of 25- to 35-year old workers were in the high-unemployment risk sectors. Together they account for almost half (49%) of all workers in the most vulnerable industries. Long-term job losses experienced by young adults will undoubtedly suppress their household formation rates that had just started to rise before the coronavirus pandemic struck.
Note: The statistics shown are based on the 2018 American Community Survey (ACS), the largest household survey in the U.S.
Bottom Line to Relocation
For corporations, whose primary industry is related to those discussed above, furloughs, lay-offs, and reduced staffing will continue to cause stress to the bottom-line and their potential relocation activity. Even companies whose products and services touch on these business sectors will, unfortunately, feel the same pinch. The good news is, as economists are predicting, this pain should be short-lived. Economic indicators continue to suggest that real estate and construction will go through a relatively fast V-shaped rebound once the shutdown orders are lifted. Why is this important? Because both business sectors are two of the top leading indicators the economy is turning, and life is returning to a somewhat normal existence.
Have questions or want to learn more about Lawrence Relocation Services, please contact Ginny Taylor, Director of Relocation Services, by email or by phone at 540.966.4550.