Lehigh Valley’s unemployment rate in August dropped to 10.3%. (Graphic/Liz Martin)

Six months into the COVID-related recession, Lehigh Valley is seeing signs that segments of the local economy are improving even as the pandemic continues to threaten jobs.

The August unemployment rate for Lehigh Valley dropped by 2.3 percentage points to 10.3%, two-thirds what it was in April but still twice the rate since COVID launched an otherwise strong economy into a recession, according to preliminary data reported by the Pennsylvania Department of Labor and Industry.

The state also revised July’s unemployment rate downward by 1.2 percentage points, from 13.8% to 12.6%, underscoring the limitations the metric has on providing quick economic insights during such a volatile recovery. Layering other data on top of the unemployment rate provides a more nuanced portrait as to how Lehigh Valley is rebounding.

The Lehigh Valley added jobs for the fourth straight month in August, bringing total employment to 355,100, according new data released by the U.S. Bureau of Labor Statistics, which includes Carbon and Warren counties in its definition of Lehigh Valley. That means the Lehigh Valley has added back more than half the number of jobs lost since unemployment peaked in April. Lehigh Valley had 7% fewer jobs in August 2020 compared with August 2019, compared with 8.2% fewer jobs across Pennsylvania.

Meanwhile, during the week that ended Sept. 19, residents in Lehigh and Northampton counties filed 877 new unemployment claims – a fraction of 21,654 during the peak in early April but still about double the number of new claims in a typical week before the pandemic.

The number of residents collecting unemployment benefits also dropped for the fifth straight week but remains nearly five times what they were in February, according to the Pennsylvania Department of Labor and Industry.

“It is important to understand the job market as completely as possible to know how the regional economy is recovering, and where we still have work to do,” said George Lewis, Lehigh Valley Economic Development Vice President of Marketing and Communications.  “Some sectors of the economy continue to struggle, and we have observed that younger workers have been hit the hardest by unemployment.”

Lehigh Valley’s employment situation illustrates the complicated economic challenges brought on by the pandemic. Like communities across the nation, Lehigh Valley lost more jobs in less than two months than what was lost during the entire Great Recession of 2007 to 2010. While not all industries are recovering at an equal pace, the job situation has improved as testing, social distancing protocols and government policies paved the way for businesses to slowly reopen.

In fact, the employment rates for high wage workers has nearly recovered to pre-pandemic levels but remain “significantly lower” for low-wage workers, according to data tracked by Opportunity Insights, a Harvard University-based team of researchers studying the economic consequences of the pandemic.

That national observation echoes the disparity Opportunity Insights found in Lehigh Valley. Among high wage workers who earn more than $60,000, employment was down 3.7% since January in Northampton County and up 2.1% in Lehigh County. Yet, employment among low-wage workers who make less than $27,000 was down by 16% in Northampton and 6.7% in Lehigh counties.

Continuing unemployment claims shed light on who is still sitting on the sidelines as local employers slowly regain jobs.

In the week that ended Sept. 19,  27,389 Lehigh Valley residents were receiving unemployment benefits. That’s about 40% of the peak number from early May.

The continuing claims for unemployment insurance have dropped since early May. (Graphic/Liz Martin)

Among the hardest hit sectors is the hospitality industry, which comprises 8% of employment in Lehigh Valley. Yet, residents who work in that sector make up 19% of those receiving unemployment benefits in the week ending Sept. 19.

Health care and social services, a big Lehigh Valley employment sector, comprises 18.2% of the regional work force and its share of the unemployment claims filed by residents is 14.2%.

Yet health care and social services sector, which includes employers from hospitals to day cares, have added a significant number of jobs in the Lehigh Valley metropolitan region. That sector gained 1,400 jobs from July to August and now exceeds the number of jobs in August 2019, according to Bureau of Labor Statistics data that was not seasonally adjusted.

Meanwhile, manufacturers and distribution companies, which collectively employ 20% of Lehigh Valley’s work force during the first quarter, have a more proportionate share of the unemployment claims at 8.5% and 9.4% respectively.

Unemployment claims for the week ending Sept. 19, 2020 are broken down by selected industrial sectors in Lehigh Valley.

The recession also hasn’t impacted all generations in the same proportion, with the Millennials and Generation Z among the hardest hit. They comprise 38.7% of Lehigh Valley’s continuing claims – up by about 8% over the portion they made up last year at that time.

The Lehigh Valley’s demographics echo what’s going on at the national level. Brookings Institution, a Washington, D.C., based think tank, found that 16 to 29-year-olds comprise less than a quarter of the labor force but account for a about a third in of the rise in the unemployment rate between February and April.

The continuing claims for unemployment insurance in Lehigh Valley are broken down by age for week ending Sept. 19, 2020. (Graphic/Liz Martin)

Among the employers adding jobs is in the manufacturing sector, which contributes $7.3 billion to Lehigh Valley’s $41.2 billion GDP. Manufacturers in the region added 3,000 jobs since April, though it has not been a steady recovery. The number of jobs is about 4.5% below what they were last year, according to the Bureau of Labor Statistics’ data that is not seasonally adjusted.

But Federal Reserve-Philadelphia, which counts Lehigh Valley in its territory, released a Manufacturing Business Outlook Survey this month that shows manufacturing activity was positive for the fourth straight month, employment improved in September, and firms expect to expand production in the Fourth Quarter. Moreover, the respondents are optimistic about growth over the next six months.