COVID-19 Report Series: Employment Risk

In late March of 2020, Governor Tom Wolf issued a mandatory shutdown order of all businesses that were not deemed "life sustaining" accompanied by a list of industry groups that may or may not continue physical operations [Appendix 1].

The following report uses data from the Bureau of Labor Statistics (BLS) Quarterly Census of Employment and Wages (QCEW) to enumerate the potential number of establishments and employees affected by the COVID-19 shutdown order, as well as unemployment claims from the Department of Labor & Industry's Center for Workforce Information & Analysis (CWIA) to illuminate the current impact of the pandemic.

Governor's Wolf's order created three industry group classifications:

1. Permitted to continue physical operations, hereafter "essential"
2. Not permitted to continue unless an exception for physical operations is granted, hereafter "exception"
3. Not permitted to continue physical operations, hereafter "non-essential"

Over 300 industry groups were listed in Governor Wolf's order, among which over half (57.3%) were given essential status (i.e., allowed to continue physical operations). Just under a third (31.2%) were given exception status (i.e., not allowed to continue physical operations with exceptions), and the remainder (11.5%) were not allowed to continue any physical operations.

Of the industry groups listed in Governor Wolf's order, four sectors were made up of entirely essential industry groups including:

• Agriculture, Forestry, Fishing, and Hunting (NAICS 11)
• Mining, Quarrying, and Oil and Gas Extraction (NAICS 21)
• Utilities (NAICS 22)
• Public Administration (NAICS 92)

Another four sectors had no essential industry groups including:

• Construction (NAICS 23)
• Management of Companies and Enterprises (NAICS 55)
• Educational Services (NAICS 61)
• Arts, Entertainment, and Recreation (NAICS 71)

Pennsylvania had over 360,000 establishments during the third quarter of 2019 according the BLS QCEW data. The distribution of establishments by essential status is presented below [Figure 1].

Approximately half of establishments across the state were given essential status by Governor Wolf's order. The remainder were near evenly divided among industry groups with exceptions and non-essential industry groups. Thus, at least a quarter of all Pennsylvania establishments, and possibly half, could have impacted.

While the most populated areas of the Commonwealth (i.e., SEPA, SCPA, and Allegheny) had the largest number of essential establishments, they also had the smallest percentage of establishments in essential industry groups.

Pennsylvania's workforce numbered over 5.9 million individuals during the third quarter of 2019 according to the BLS QCEW data. The distribution of employment by essential status is presented below [Figure 3].

Overall, a higher percentage of employment was considered essential (58.7%) than establishments (50.2%). Similar to establishments, the rest of the state's workforce was near evenly divided among industry groups with exceptions and non-essential industry groups.

At least one-fifth of all employees in Pennsylvania were considered non-essential, over 1.2 million employees. When considering those for whom exceptions were made, that ratio grows to just over two-fifths, potentially impacting 2.4 million workers in Pennsylvania.

As with establishments, the most populated areas of the Commonwealth (i.e., SEPA, SCPA, and Allegheny) had the largest number of essential employees, they also had the smallest percentage of establishments in essential industry groups.

As mentioned above, establishments and employment across four different sectors were considered completely essential. Nearly all establishments and employment in the Transportation and Warehousing (NAICS 48-49) sector were considered essential as well.

The full breakdown of essential status of establishments and employment by sector for Pennsylvania and all counties is listed below [Figure 5]. This analysis will focus on state-level trends, but click the drop-down to change the area to a county of interest.

Statewide, a majority of the Information (NAICS 51), Finance and Insurance (NAICS 52), Health Care and Social Assistance (NAICS 62), and Accommodations and Food Services (NAICS72) sectors were classified as essential, ranging from 71.5% to 92.7%.

Meanwhile, approximately half of establishments and employment in the Manufacturing (NAICS 31-33), Retail Trade (NAICS 44-45), and Other Services (NAICS 81) sectors were in industry groups classified essential.

The Real Estate and Rental and Leasing (NAICS 53) and Professional and Technical Services (NAICS 54) sectors had a minor percentage of establishments and employment considered essential.

Statewide, most of establishments and employees at establishments that are federally owned are considered essential, each over 95% with the remainder primarily classified as exceptions. The full breakdown of essential status by ownership is presented below [Figure 6].

State government in Pennsylvania had the second highest percentage of essential establishments but its percentage of employment considered essential was surpassed by privately-owned businesses. The difference between essential establishments and employment within state government organizations likely reflects the requirement for certain offices to remain open with fewer staff.

Local government nearly tied with privately-owned establishments for the percentage considered essential, although a much greater percentage of the remaining local government establishments and employment was given exception status.

The remaining half of privately-owned businesses, on the other hand, were split near evenly between non-essential with exceptions and non-essential.

As of the writing of this analysis, new weekly unemployment compensation claims peaked during the first week of April [Figure 7] at over 630,000 claims. For context, the average new weekly unemployment claims from the first week of January 2020 through the end of February 2020 averaged around 80,000 claims.

The week of March 21, coinciding with the Governor's order, began a doubling trend for new weekly claims with over 150,000 new claims during the week of March 21, over 300,000 new claims during the week of March 28, and over 600,000 new claims during the week of April 4.

While the following week of April 11 saw a decrease in new claims from the previous week, there were still close to 550,000 new claims. Overall, the total number of claims for the past four weeks of data shown above totaled nearly 1.7 million claims.

The single highest spike in new weekly unemployment compensation claims occurred during the first week of April for the Accommodation and Food Services sector at over 110,000 new claims [Figure 8]. The Health Care and Social Assistance (NAICS 62) sector had the next highest, also during the first week of April, at just over 90,000 new claims.

During the four-week period from March 21 through April 11, the Accommodation and Food Services (NAICS 72) sector had the highest number of claims at just under 275,000 claims and was followed again by the Health Care and Social Assistance (NAICS 62) sector with over 225,000 claims.

When adjusted by their sector's workforce as of the third quarter of 2019, the Construction (NAICS 23) sector had the largest percentage of employees filing unemployment compensation claims at 78.7% [Figure 9]. The next highest was the Accommodation and Food Services (NAICS 72) sector with 57.0% of its workforce filing for unemployment.

Five industry groups had less than 10.0% of their total workforce file for unemployment compensation claims, with the lowest at 3.1%. They included:

• Utilities (NAICS 22)
• Finance and Insurance (NAICS 52)
• Management of Companies and Enterprises (NAICS 55)
• Educational Services (NAICS 61)
• Public Administration (NAICS 92)

Data from the Center for Workforce Information and Analysis show that new unemployment claims grew at an alarming rate from the week of March 21 through the week of April 11, totaling nearly 1.7 million cases.

Using employment data from the Bureau of Labor Statistics and the Governor's definition of essential businesses, however, shows that the true number of cases may continue to grow past two million.

As the state begins to implement  Governor Wolf’s plan to reopen , the Construction industry, most impacted by the COVID-19 shutdown order,  is the first to reopen . As regions of the state move through the phases of the reopening plan, other highly impacted sectors such as Accommodation and Food Services, Retail Trade and Health Care and Social Assistance will begin to reopen. Employees in these 4 sectors accounted for nearly one million claims for unemployment during the four-week period studied.

Bureau of Labor Statistics. Total establishments and employment by industry, Q3 2019. Quarterly Census of Employment and Wages.

Department of Labor & Industry, Center for Workforce Information & Analysis. Weekly new unemployment claims by industry (as of 04/11/2020). Unemployment Compensation Activity.

QCEW data were aggregated from 4-digit NAICS codes and summarized for total essential employment breakdowns and for 2-digit sectors. Some employment figures for smaller areas and/or industry groups were suppressed, and thus not all figures may total to the number of total employees in a particular area and/or industry. All percentages were calculated using the combined employment for which data were reported to make sure percentages totaled to 100%.

"Sectors" refer to two-digit NAICS sectors. "Industry groups" refer to four-digit NAICS industry groups.

All maps and analyses were produced by the Pennsylvania State Data Center (PASDC) at the Institute of State and Regional Affairs of Penn State Harrisburg.

Questions? Get in touch with us at pasdc@psu.edu or on Twitter  @pasdc_psu !