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Don Cunningham: The Puzzle of the Lehigh Valley Economy During the Pandemic

By Don Cunningham on September 22, 2020

This column, written by LVEDC President & CEO Don Cunningham, originally appeared in The Morning Call and on the newspaper’s website on September 22, 2020. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

I don’t care for riddles. They always make me feel stupid.

It’s the same with watching Jeopardy or playing Scrabble with my wife.

It must be the realization that no matter how much I read, learn or experience there’s more I don’t know — and that many people are smarter than me. I find no joy in that “ah-ha” moment when you’re given the answer, just self-loathing.

So, riddle me this:

What can run but never walks, has a mouth but never talks, has a head but never weeps, has a bed but never sleeps?

If you’re like me and can’t solve riddles — or just don’t care to — I’m holding back the answer for another dozen paragraphs or so. For this brief, shining moment, I will enjoy the exalted status of Alex Trebek — or Lynn Cunningham playing Scrabble or Words with Friends — and hold secret the answer your brain can’t find.

If you seek clarity more than puzzles, understanding the current Lehigh Valley economy created by the COVID-19 pandemic is a challenge.

The July unemployment rate of 13.8% was the highest it’s been in most of the current workforce’s lifetime yet nearly 20,000 jobs have been advertised during the last 30 days by more than 4,000 Lehigh Valley employers.

Restaurants and hospitality businesses are shuttered while online retailers and manufacturers based here are experiencing record growth and new ones are coming. The stock market keeps rising and residential home sales are on such a torrid pace that basic houses in the Lehigh Valley sell in 2 days at 20% above asking price with dozens of offers.

There’s clearly money and buying power in the economy, lots of it.

Yet, as unemployment benefits recede, unemployed workers struggle to pay bills and worry about eviction notices.

“Our biggest challenge right now is labor,” said Rich Wuerthele, President & CEO of Crayola. “We’ve got capacity to run 24/7 but we don’t have the people.”

Crayola, based in Forks Township, has had tremendous growth in demand for its crayons and other art products since the pandemic began, Wuerthele said.

ULINE, a $6 billion shipping and business supply company headquartered in Pleasant Prairie, Wisconsin, which has a large production and distribution facility in Lower Macungie Township, is advertising starting positions at $23 per hour with a $6,000 signing bonus.

Winston Churchill famously said of Russia in 1939: “It is a riddle, wrapped in a mystery, inside an enigma, but perhaps there is a key.” For Churchill, understanding Russia was to look no further than its national interest.

Individual interest is not a bad place to start in understanding the current Lehigh Valley economy. With the best intentions, federal action (at the start of the pandemic in March) to supplement state weekly unemployment benefits with $600 of federal aid tipped the scale in a market like the Lehigh Valley, where news jobs were being created and available.

According to a Brookings Institution report, the Lehigh Valley’s July job growth rate of 2.4% was in the top ten in the U.S. for regions of 500,000 to 1 million in population.

Nonetheless, workers who liked their jobs, understandably, waited to see when and if they would return before switching employers or careers, particularly if the available jobs paid less or were less desirable.

Much of the new job creation went unfilled in the short term.

A Lehigh Valley Economic Development Corporation analysis of Pennsylvania Department of Labor data further unwraps the mystery of the Lehigh Valley economic dichotomy. As is often the case, the pandemic downturn affected workers and employers disproportionately with the youngest and lower wage earners hit hardest.

The largest unemployment claims in the Lehigh Valley were in four sectors: restaurants and hospitality at 18%, health care and social services at 15% and business support and retail at 11% each.

Yet, registered nurses, retail salespeople and stock clerks are three of the seven top advertised positions in online job postings.

Analyzed by age, the largest group of unemployed is the youngest with 16- to 34-year-olds accounting for 38% of the unemployed. The next largest group is 35- to 44-year-olds with 19%. The Baby Boomer and Generation X workers represent about 17% in each generation.

Despite these temporarily high unemployment numbers, the Lehigh Valley’s July workforce of 354,000 was still 24,000 jobs higher than it was in June 2009 during the last recession. Even more good news, a recent Chmura Economics Jobs EQ analysis of the Lehigh Valley forecasts a full return to pre-pandemic job numbers in every major employment sector by the first quarter of 2022 with an increase in jobs projected in health care and hospitality.

It appears the Lehigh Valley economic engine has merely hit a speed bump.

Of course, forecasts are just that. Only time will tell.

There is a lot of dust yet to settle. The biggest unknown is the remaining length and severity of the pandemic and any future mitigation actions.

Now for the riddle reveal: The answer is a river.

With that, my glorious Alex Trebek moment of knowing the answers ends.

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