Individuals aged 35 to 44 show the strongest recovery, just 3.8% below pre-pandemic levels.

By Manuel Gutierrez, Consulting Economist to NKBA

The U.S. economy is slowly recovering from the COVID-19 pandemic shutdown, with overall GDP rising by a strong 33% in the third quarter, bringing it to just 3.5% below its level in the fourth quarter of last year. Similarly, total employment has also been rising since the sharp drop in March/April, although it is still 6.5% below peak employment of 152.5 million jobs in February.

A closer look at the national employment scenario, however, reveals that not all age groups are recovering equally. The latest data from the Bureau of Labor Statistics shows that employment among those aged 35 to 44 has recovered faster than other age groups. Currently, 32.1 million people in this age group are employed, still 3.8% below the total number employed in February, but better than the national 6.5% gap.

This is good news for NKBA members since, according to previous research from the Joint Center at Harvard University performed in 2015, households in this age group spend more on remodeling projects than any other group.

The other two high-spending groups for remodeling, those aged 45 to 54 and 55 to 64, have also seen their employment recover better than the national average. The dotted lines across the bar in Fig. 1 show all three groups to be below the 6.5% gap in employment.

Those three middle-aged groups, from 35 to 64-years-old, spend an average of a third more on remodeling projects than younger or older households.

The groups hit hardest with job losses are 20-to-24 year-olds and the 25-to-34 bracket. Each of them has an employment gap above 7%.

Perspective on the Unemployment Rate

The unemployment rate is generally lower for older individuals, as illustrated in Fig. 2. It is significantly higher for those under 25, especially for 16-to-19-year-olds, whose unemployment rate is currently at 14%. The lowest rate is found among individuals who are age 35 and up; It averages under 6%.

No matter the age group, the one constant is that all of them have higher unemployment now than they  did prior to the pandemic, illustrated vividly in Fig. 2.

The data in Fig. 3 more clearly highlights the pandemic’s real impact on various age groups. It shows the percentage change in unemployment rate between February and November of this year.  The higher the percentage, the larger the increase in unemployment rates.

The red bar shows that the current national unemployment rate today is 91% higher than what it was in February (the ratio of 6.7% current to 3.5% in February).

The deterioration in the unemployment rate is worse for older individuals. The November rate for the youngest workers, those aged 16 to 19 years, is 27% higher than it was in February. For those aged 35 or older, it’s at least double.

Labor Participation Rate Slides

Another telling statistic on the current employment situation is the Labor Participation Rate, which is defined as the number of individuals who are in the labor force as a percentage of the total working age population.

Even though the labor participation rate has reached  67% — a high since the year 2000 — it was declining more or less steadily until mid-2015 to a low of 62.4%. It then rose by one percentage point between 2015 and February of this year, only to drop dramatically, by 2.5 points, in April.

Compared to 2019, the overall participation rate is 1.9 percentage points lower this year.

Fig. 4 provides a long-term perspective of the labor participation rate by age group. Most groups turned down in 2020, with the exception of 16-to-19 year-olds, which is flat.