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Understanding the Fifth District Labor Market through High-Frequency Data

Regional Matters
November 13, 2020


In the last several months, higher frequency and nontraditional economic indicators have played a large role in helping economists and policymakers understand the labor market. In this post, we revisit data on job postings (discussed in previous Regional Matters and Econ Focus articles), employment levels, and business formation. By providing information on employment, labor demand, and future supply, these three data sources help to paint a picture of past, current, and future labor activity. Given the disproportionate impact of the economic fallout from the pandemic on certain occupations and income groups, it is particularly useful to understand what these data can tell us about employment activity among different groups.

New Job Postings

The chart below shows the change in new job postings by state relative to the week ending March 7, 2020. Fifth District states reached their lowest levels of new job postings around mid-April but then began to see signs of recovery. From mid-July to the end of October, most Fifth District jurisdictions had at least one week where the number of new job postings met or exceeded baseline levels.

As we know, the pandemic and its economic fallout has affected different occupations differently. The eight occupations shown on the chart below made up 73 percent of new job postings during the first week of March. All eight occupations saw job postings decline in the spring, with food preparation and serving occupations, which made up about 7 percent of March’s new postings, experiencing the steepest drop. New food preparation and serving job postings remained depressed for much of the summer but recovered some toward the end of summer and into the fall. This indicates lower demand for occupations that had lost a lot of jobs in the spring and that are, on average, lower-wage jobs. Occupational employment statistics show that food preparation and serving occupations had a much lower mean annual salary ($26,670) than all occupations ($53,490) in 2019. Nonetheless, as the chart below shows, several major occupations experienced large declines in job postings, particularly in the spring and early summer months.

Employment Levels from Opportunity Insights

The differing experiences of low-, middle-, and high-income earners in this pandemic has manifested itself in many ways. Researchers from Opportunity Insights compiled employment data from Paychex, Earnin, Intuit, and Kronos, which are companies that provide payroll tracking and accounting software for businesses. The employees were broken into income quartiles with the lowest income group earning under $27,000 per year, the middle-income group (comprising the middle quartiles) earning between $27,000 and $60,000, and the high-income group earning over $60,000 per year. Nationally, employment among high-income earners reached its low point of approximately 14 percent below January levels in mid-April, but it nearly recovered by early September. Employment for middle-income workers reached a low of 24 percent below baseline level before increasing to about 6 percent below baseline by early September. Low-income workers fared notably worse than high- and middle-income workers, reaching an employment low point of around 38 percent below the baseline level in mid-April. As of mid-September, employment levels for low-income workers remained approximately 19 percent below their baseline level and, according to these data, employment growth for this group has been relatively stagnant since late June.

The employment situation for low-income workers in the Fifth District was similar to that of the nation. Employment fell to its lowest point relative to the baseline in mid-April and ranged from approximately 20 percent below baseline in the District of Columbia to around 41 percent below baseline in Maryland. As of early September, employment among low-income workers remained well below baseline in all Fifth District states.

Business Formation Statistics

Despite continued economic uncertainty during the third quarter, individuals submitted a record number of high propensity business applications, or applications for businesses that are likely to have a payroll. Nationally, there were 537,355 high propensity business applications filed in the third quarter of 2020 – a 66.1 percent increase from the third quarter of 2020 and 36.3 percent higher than the previous high that occurred in the first quarter of 2006. Weekly data indicate that high propensity business applications are beginning to return to more typical levels. The Fifth District also experienced a third quarter surge in applications, with 46,069 applications filed – a 62.4 percent increase from a year ago. South Carolina experienced the largest year-over-year percent change at 80.6 percent, and West Virginia had the lowest at 30.8 percent. Although the surge in filings is an encouraging sign of entrepreneurship, the extent to which these applications will result in new jobs remains uncertain.

DateYoY Change in High Propensity Business Applications
2019 - Q3-0.7% -0.3%1.8%6.2%5.4%0.5%2.2%
2019 - Q41.1%-5.3%2.4%3.2%2.8%-0.6%-1.2%
2020 - Q1-3.4%-9.9%-6.0%-8.3%-3.7%-8.8%2.9%
2020 - Q2-8.3%-14.8%-6.7%-2.8%6.8%-6.5%-7.0%
2020 - Q366.1%62.7%71.1%61.6%80.6%49.8%30.8%

Note: Business applications are classified as high propensity if any of the following characteristics are identified on the IRS Form SS-4: 1) They are from a corporate entity, 2) they indicate hiring employees, purchasing a business, or changing organization type, 3) they provide a date they will first pay wages, or 4) they have a NAICS industry code in manufacturing, retail stores, health care, or restaurants/food service.


Not all industries, occupations, or income groups experienced the employment downturn equally, nor are they recovering equally. Employment levels for lower-wage workers remain far below what might be considered “normal” relative to employment among middle- and high-income earners. Additionally, job posting data show that job postings have come back stronger for some occupations than for others. And remember, some occupations have further to go than others: Job postings for food preparation and serving related occupations are slowly recovering, but given the decline in the spring, demand will probably need to exceed its pre-COVID level for some time to make up for the losses. Business formation statistics provide a preliminary, promising sign that despite the pandemic, Americans continue to start new business ventures.

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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.