The Two Halves of 2021: The Good, the Bad, and Everything in Between
The beginning of 2021 will include a new presidential administration and a focus on vaccine availability and the timing of additional federal aid. The second half of the year, we will all be busy rebuilding our battered economy and creating a new normal.
If we rebound as anticipated, a hiring bonanza in the labor market is likely. LaborIQ by ThinkWhy estimates approximately 76 million hires will occur in 2021, with more than 200 million hires over the next three years.
Pandemic Continues to Slow Economic Progress
The Institute for Health Metrics and Evaluation at the University of Washington School of Medicine predicts roughly 460,000 deaths by Feb. 1, 2021 — a spike of more than 100 percent from October 2020. Hospitals may not have enough medical staff to treat the influx of COVID-19 patients.
COVID-19’s Impact on Businesses
Surging infections in early 2021 will continue to strain travel. The accommodation industry still has 40-50 percent fewer employees than it had a year ago in some of the nation’s largest markets, such as Boston, Los Angeles, Miami, and Orlando. LaborIQ estimates the overall leisure and hospitality industry, which includes restaurants and entertainment venues, will not fully recover until 2025.
Many who have been able to work from home will struggle with loneliness and stress. Some of this stress will be due to a lack of childcare options, which has already led to more than 2.2 million women leaving the workforce. Some will worry about their health and the health of loved ones. Employers will spend more time and energy on employee engagement and may have to offer more flexibility to attract and retain talent as employees juggle work with the impact of the pandemic on their personal lives.
The Vaccine’s Impact on Businesses
In December 2020, vaccines began to be administered to healthcare workers following approval by the US Food and Drug Administration. Federal government officials expect the vaccine to be available to the general public in either Q2 2021 or early Q3 2021.
Once enough vaccines are given, in-person K-12 classes can resume, and establishments related to travel, hospitality, entertainment, and recreation can reopen. As a result, employment levels and consumer spending will begin to rise quickly.
As infections decrease, restaurants can increase occupancy levels, and travel and tourism can resume. Businesses reliant on in-person workers can feel confident enough to increase staffing levels, and white-collar workers will feel more comfortable spending disposable income on personal-care services and consumer goods.
Once economic progress becomes more visible, likely in Q2 2021, look for companies to focus on restarting their revenue engines. Roles in sales and marketing will be in high demand.
Many occupations are already short on talent. For example, the legal, technology, architecture, and engineering fields all have unemployment rates of 3.5 percent or less. In many cases, the only way to fill these roles is to entice already employed talent to leave for a new opportunity. However, professionals are often hesitant to make that type of career move during uncertain economic times. As the US begins to return to pre-pandemic levels of economic activity, however, talent may become more willing to make a change. Indeed, to achieve the projected 76 million hires for 2021, it is necessary.
A New Beginning for the US Economy
Positive economic signs should be more visible at the start of Q3 2021. With the passing of the latest federal stimulus package in December 2020, the recovery will likely be stronger and quicker than it would have been otherwise. The extension of Pandemic Unemployment Assistance and the eviction moratorium should either reduce or prevent a massive wave of homelessness and millions of people falling behind on their bills.
President-Elect Joe Biden has pledged “at least 100 million COVID vaccine shots into the arms of the American people in the first 100 days.” By summer 2021, enough people will have taken the vaccine to enable local and state governments to relax the harshest coronavirus restrictions. Both the general public and employers will be ready for a new start.
Lasting Impacts of the Pandemic
LaborIQ by ThinkWhy predicts most industries to fully rebound in 2023. In the second half of 2021, many businesses will begin to ramp up production and hiring. This will be especially true of companies in the professional and business services, retail, construction, financial activities, and certain healthcare sectors. With memories of the stagnant economy still fresh, most businesses will continue to save money, often by using tactics adopted during the pandemic, until margins return to their pre-pandemic levels.
Some of these cost-saving measures, like virtual training and remote work, are expected to continue. The urge to reduce expenses will also extend to business travel and large conferences. These two sectors will continue to lag over the next 3-4 years, as many businesses trying to reach their pre-pandemic revenue levels may not see these as justifiable expenses.
While business travel and conferences will not disappear, plenty of the small businesses started in reaction to COVID-19 — such as hair stylists who began working out of their homes or those who started apparel businesses specializing in face masks — will go away. With an opportunity to return to their previous roles, some may find the risk outweighs the financial reward, especially for sole proprietors.
Workers in the industries hit especially hard by the pandemic may have permanently left those industries for office work or online or home-delivery retail roles, which withstood the pandemic impact much better. Think bartenders, hotel housekeepers, and airline front-desk personnel.
Stability in 2021
While 2021 is expected to bring relief from the economic pressures and uncertainties of 2020, the year’s start will be a bumpy one. That said, a noticeable lift in employment levels and consumer spending during the second half of 2021 should offer new hope for a return to growth.
Jay Denton is senior vice president of business intelligence and chief innovation officer at ThinkWhy.