Cooke: Cape May County’s labor force rebounds above pre-pandemic levels
By JACK FICHTER/Sentinel staff
This year’s tourist season may be a busy one to satisfy the public’s desire for travel and leisure activities that have been lacking for the past year, but businesses may find themselves shorthanded this summer.
Oliver Cooke, an associate professor of economics at Stockton University, offered his business forecast for the county’s summer season during a webinar from the Cape May County Chamber of Commerce on April 29.
Cooke has 20 years of experience conducting research on metropolitan area and state economies, labor and real estate markets and public policies. He authors the South Jersey Economic Review and consults with a wide variety of public and private sector institutions.
The good news is there has been some very clear evidence over the past two to three months that the national economy is well-positioned for what appears to be a very strong rebound this year, Cooke said.
March’s gain of almost 1 million jobs created was the biggest gain since last August, he said.
However, national employment remains 8.4 million jobs fewer than the February 2020 total, Cooke noted. Initial unemployment benefit claims have trended down during the past several weeks with 547,000 new claims last week.
“That, of course, remains very, very high relative to pre-pandemic levels, but relative to where we were, say even six months ago, that’s a pretty remarkable improvement,” Cooke said.
Retail sales were up 10 percent in March, about the largest monthly gain since last May when an initial bounce back began, he said. Cooke said consumer confidence is now approaching pre-pandemic levels, its highest point in 14 months.
“The savings rate has just skyrocketed. In January it was approaching 20 percent, which is outside of some wartime, going back to World War II, among the highest recorded rate that we’ve actually seen,” he said.
During the second quarter of 2020 in Cape May County, total employment was down about 25 percent from the previous year, he said. In leisure and hospitality, employment in the county was down almost 50 percent with a loss of 11,000 jobs, Cooke said.
He said about 1,100 jobs were regained by the summer of 2020 but overall employment was down about 18 percent. Leisure and hospitality jobs were down about 30 percent, accounting for nearly two-thirds of overall job loss last summer.
Last fall, county employment was up nearly 6 percent from 2019, with leisure and hospitality employment up about 7.1 percent from the previous year, according to Cooke. Averaging all 12 months of 2020, the county had a 9.2 percent decline in total non-farm jobs, with leisure and hospitality showing a 20 percent decline.
“If you compare last year relative to the Great Recession (2009-2011) and go back and just look at overall job loss, as well as what was going on in leisure and hospitality, you can see that these were two very different recessions,” Cooke said.
He said about 4,000 jobs were lost in the county overall in 2020. During the 2009 recession, job loss was 1.4 percent compared with 9.2 percent in 2020. The fourth quarter showed momentum that has continued into the first quarter of 2021, Cooke said.
Employment this January and February was up 12 percent in the county over 2020.
Early last year, the county’s unemployment rate was 7.3 percent, twice the national rate, which was around 3.5 percent, Cooke said. County unemployment climbed to 27 percent by June 2020.
“The county labor force has actually climbed back above where we were pre-pandemic, which is pretty remarkable in many ways,” he said.
Cooke said Atlantic County’s labor force remains well below pre-pandemic levels.
The unemployment rate in Cape May County is 8.4 percent, still above pre-pandemic levels, he said.
Hotel/motel occupancy was down 24 percent last summer, Cooke said.
“The one real bright spot has been real estate,” he said. “Single-family home prices were up very strongly in February in Cape May, about 18 percent year on year.”
The rise is home prices was above the state and national averages, Cooke said.
Small businesses in the state were surveyed about how much time they believe would pass before business returns to normal, with 46 percent replying a time frame of at least six months and 8.5 percent forecasting business would never return to normal levels.
A total of 2.7 percent of small businesses surveyed stated they have closed permanently, he said.
“For those folks that managed to actually hold onto their jobs and were able to easily transition to a remote world as it relates to their own work environment, lots of accumulated household savings that have been built up over the last 12 months or so are gone,” Cooke said.
He said an unprecedented amount of stimulus money has been poured into the U.S. economy.
While economic indicators show a positive trend, a portion of the public still is afraid of travel and crowds. A fear of flying during a pandemic may linger, particularly on the international level, and may keep travelers closer to home, Cooke said.
He predicted a relatively strong summer season.
“All that said, I do think COVID is obviously not going away anytime soon,” Cooke said.
A somewhat normal fall opening of schools is hugely important for getting workers back into jobs, Cooke said.
News of COVID variants in India is troubling, he said.
While the labor force has increased, it seems every restaurant is displaying a “help wanted” sign, said Doug Burke, chairman of the chamber’s board of directors. Robert Krill commented he had 30 job openings at Cape May Brewing Co. and 20 are still unfilled.
Cooke said extended and enhanced unemployment benefits may keep some out of the workforce.
“I think overall enhanced and extended UI (Unemployment Insurance) benefits have played a hugely stimulative role at a macro level,” he said. “When you think about the collapse in the job market that occurred last spring and over last summer, absent those UI enhancements and extension, you would have seen consumer spending drop significantly more than what already actually happened.”
He said some persons fear taking a “face-to-face” job during a pandemic. Another possibility for a smaller local workforce is “churn,” workers who changed occupations after being laid off last year.
Cooke noted Amazon starts new employees at $15 per hour.