New Data Details How Sharply, Unevenly COVID Recession Hit Lehigh Valley

New Data Details How Sharply, Unevenly COVID Recession Hit Lehigh Valley

By Nicole Radzievich Mertz on December 1, 2020

A new employment report offers the most detailed insights to date on how quickly and deeply the pandemic sent Lehigh Valley’s otherwise robust economy into a recession this spring.

Average employment in Lehigh and Northampton counties dropped from the first to second quarter by 43,344 jobs, hitting a nine-year low of 268,202, according to the Quarterly Census of Employment and Wages.

Total wages fell from a first-quarter record high of $4.3 billion to $3.8 billion by the second quarter, according to the data published in November by the U.S. Bureau of Labor Statistics. However, the average weekly wages rose to $1,082, a $9 increase over the first quarter and an $87 increase over what it was in the second quarter of 2019.

Opportunity Insights, an economic tracker by a Harvard-based team of researchers, concludes the recession hit lower-paid workers harder, and its data on Lehigh Valley is consistent with that narrative.

The regional data echoes what’s going on across the country. Employment decreased in 357 of the largest U.S. counties from June 2019 to June 2020 and all but five had an increase in the average weekly wage, according to to the U.S Bureau of Labor Statistics. The average weekly wages rose over the year by an average of 8.6% nationally and “largely reflect substantial employment loss among lower-paid industries,” according to the bureau.

The National Bureau of Economic Research determined the United States entered the recession in February after 11 years of economic growth.

“The Lehigh Valley Economic Development Corporation is analyzing multiple data sources to get a fuller picture of what the pandemic did to our economy and how we’re recovering. Research is essential to LVEDC’s work,” said George Lewis, LVEDC Vice President of Marketing and Communications. “The knowledge we gain enables us to tell a complete story about the Lehigh Valley economy.”

The quarterly data report covers the months of April, May, and June. The second quarter was marked by schools in lockdown and restrictions on non-essential business in Pennsylvania as leaders wrestled with how to deal with a lethal virus spreading in the community. The workforce in every metropolitan region in Pennsylvania contracted sharply in April and then began a slow recovery in the last two months of the quarter.

The report covers the quarter when the unemployment rate among Lehigh Valley residents peaked at 16.6% in April and fell to 14.2% by June.

Lehigh Valley’s unemployment rate dropped by nearly a percent to 7.1% in October, but the number of people employed or looking for employment also dropped.

Lehigh Valley continues to rebound, though the data offer a complicated message about that recovery. The preliminary unemployment rate among residents in Lehigh and Northampton counties fell by nearly one percentage point to 7.1% in October. The number of residents employed or looking for employment — the number from which the unemployment rate is derived — also shrunk, meaning there are fewer people in the labor force.

The larger metropolitan region, which also includes Carbon and Warren counties, has added jobs for six straight months and recovered 60% of the jobs lost since April, bringing total employment to 359,800.

Here’s a look at how the COVID-induced recession impacted key industries in Lehigh Valley during the second quarter:

Hospitality and Entertainment

Hotels, restaurants, bars, and concert venues were hit hard this spring as “social distancing” was mandated to “flatten the curve.” Businesses suspended or downsized operations as they crafted takeout menus, outdoor dining arrangements, and virtual programming.

While not among Lehigh Valley’s top employers, the hospitality and entertainment industries suffer the brunt of the recession because their business models depend on people gathering.

Every major industrial sector lost employment during the second quarter of 2020 but the Transportation and Distribution sector. (Graphic/Liz Martin)

Health Care and Social Assistance

Employment in hospitals, nursing homes and social services dropped from 60,009 in February to 51,528 in April as people postponed elective procedures, screenings, and appointments during a public health crisis.

The average weekly wage in the second quarter was $48 higher than the second quarter of 2019.

Among the worst hit were childcare centers, with employment of caregivers and other staff dropping by 70% but the average weekly wage increasing by 21% year over year. Employment in home health dropped by 11 percent yet the weekly wage went up by 11%.

Job postings showed, though, a demand for essential health care occupations, such as registered nurses, during the second quarter. Employment in the sector climbed to 55,298 by June.

Here are how some key types sectors in the industry weathered the brunt of the pandemic:

The COVID recession impacted employers in the Health Care and Social Assistance sector to different degrees. (Graphic/Liz Martin)

Manufacturing

Employment in manufacturing fell to 30,669 in the second quarter, a 10.5% drop from the first quarter, as companies grappled with supply chain disruptions, staggered shifts, and revamped factory layouts for social distancing.

Perhaps steeling the industry was that a majority of the manufacturing workforce – 65% in Lehigh County and 64% in Northampton County – worked for employers deemed essential or given exemptions in Pennsylvania, according to a May analysis done by the Institute of State and Regional Affairs at Penn State-Harrisburg.

Employment fell in the manufacturing sector, but the average weekly wages grew from the second quarter of 2019 to the second quarter of 2020. (Graphic/Liz Martin)

Transportation and Distribution

Employment in the logistics industry initially dropped but was somewhat insulated from the downturn thanks in part to the rise in e-commerce as more consumers shopped online.  Employment recovered to pre-pandemic levels by June, and total wages in the industry rose from $373.7 million in the first quarter to $386 million in the second.

The average employment in that three-month period was 32,200, topping the second quarter last year by 6%.

Employment in the Transportation and Distribution sector initially dropped but recovered to pre-pandemic levels by June. (Graphic/Liz Martin)

While spurring e-commerce employment, the pandemic had a negative effect at bricks-and-mortar retail stores as consumers reduced their shopping trips. Not all retailers felt the pain equally. The employment at grocery stores was somewhat steady at 7,625, losing 20 jobs year over year. Beer, wine and liquor stores added a dozen, bringing the total employment to 518. Clothing, shoes and jewelry stores took among the biggest hits with employment falling to 728, a 69% drop.