Transportation and Warehousing are one of the most important employers in the US. After the worldwide air travel restrictions imposed in the wake of the coronavirus pandemic, this sub-sector made headlines with job losses and furloughs. Let’s look broadly at unemployment in transportation and warehousing and the likely trends for the future.
Profile Of Transportation And Warehousing Sector
According to the Bureau of Labor Statistics, this sector employed about 7 million people in 2018. On average, about 3.5% unemployment benefits claimants were from this sector over the previous 2 quarters.
The top occupations in this sector are drivers-truck and freight, sales and freight workers, cab drivers, and postal service mail carriers. Drivers constitute the largest number of employees. Employees earn an average hourly wage of $25. Many gig workers are employed and paid on an hourly basis in this sector.
The best-paid workers in this sector are airline pilots followed by flight attendants.
The working hours’ number a minimum of 38 on average.
Impact Of COVID-19
Pennsylvania reports the highest number of layoffs from this sector. In states like Texas and Rhode Island, this sector has reported significant layoffs.
Unemployment rate estimates are yet to be released reflecting the complete impact of the coronavirus but, it’s likely to be higher than the last time there was such a peak- 15% in June 2010, amidst the GFC-2008.
Air Travel
The US restricted international air travel in March as the pandemic began its global spread. On March 11, the US had banned foreign national entering from China, Iran, and some European countries. Non-essential international travel was banned. The borders with Canada and Mexico closed on March 20-21.
The International Air Transport Association (IATA) states that 8500 passenger aircraft have been grounded due to travel restrictions and dropping demand world over. This has caused most airlines to furlough employees.
The President is now considering some restrictions on domestic air travel since the virus is spreading very quickly and the deaths are spiking. Florida, Maryland, South Carolina and Texas governor have already ordered passengers from New York, New Jersey or Connecticut to self-quarantine for 14 days.
Rail
Amtrak reports very few bookings and record cancelations, forcing it to reduce operation along many routes. The President is also considering restrictions between viral hotspots.
Freight Transportation still sees the operation as essential supplies are being transported in bulk. However, the rail freight volume has shown a huge dip.
Trucking
With the drop in demand, cargo transport is suffering. Truck drivers find themselves without work.
Intra-city Transportation
States like New York with extensive subway networks are seeing a huge drop in ridership. Buses also report the same.
In recent years, cab aggregator services have grown in employment share. The self-quarantine restrictions and city-wide lockdowns have caused an unavoidable reduction in ridership. Drivers are now lucky if they get 3-4 passengers a day.
While Uber and Lyft, the two biggest aggregation apps, pushed for their drivers to be eligible for UI benefits, there are no guidelines yet on how they will avail the compensation. These companies classed drivers as contractors and thus didn’t pay into the unemployment insurance program.
Jobs still available
As you can see in our article on jobs you can get during the lockdown, logistics and e-commerce companies are hiring for their fulfillment centers. They need people with a commercial driving license. Similarly, some pest control or lawn management companies, as well as cleaning companies, have advertised for drivers.
Future Prospects for Transportation and Warehousing
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) has provided $29 million as part of the bailout to support airlines in keeping employees on the payroll. However, this restriction will only last until September 2020.
Second, the act allows airlines to fire up to 10% of its employees. SO, altogether we can expect job losses eventually unless the global economy bounces back very fast.
Fewer riders on public transportation within cities and the economic slowdown will drop revenue for transit agencies. They will have low operating expenses especially if they want to retain employees. The public transportation companies are in talks with the government for some easing measures.
The main reason for this sector being affected is its nature of being an intermediate service between producers and consumers. When consumption is down, there is no requirement for cargo transportation, while inventoried warehouses languish in the hope of better days. Employees are going in to work at warehouses with precautionary measures in place.
The transportation and warehousing sector will likely make the fastest recovery when the lockdown ends. At least the public transportation companies will make revenues again, though the recoupment of air travel will need resumption of international flights. Warehouses are still functional though at reduced capacity, and with the end of the pandemic should be running at full steam again.