Research Brief

Research Brief: Employment

Lifted Lockdowns and Fiscal Stimulus Support Employment Growth

June 2020


Labor market rebounds as restrictions begin to ease. Employers added 2.5 million jobs in May to bring the unemployment rate down to 13.3 percent, indicating the worst of the economic fallout may be behind us. Economic shutdowns resulted in job losses of 22.1 million in March and April, pushing the unemployment rate to 14.7 percent, the highest since 1948. While the employment gains are very encouraging, uncertainties and a long road to recovery for America’s labor market remain, broadly impacting commercial real estate over the coming months.

Employment Chart

Gradual reopening favors some of the most impacted sectors. The leisure and hospitality sector, and others that were some of the quickest to shed jobs in March, brought many of those workers back onto payrolls in May. Restaurants and bars, a subsector of leisure and hospitality, led the jobs recovery by adding 1.4 million staffers in May, although continued losses in other parts of the leisure employment sector offset a portion of these additions. PPP loans and individual stimulus payments have helped to keep retailers and the service industry running, which could backstop property metrics as more firms will be able to meet rent and mortgage obligations. President Trump signed more support on June 5 through the Paycheck Protection Program Flexibility Act, which reduces the amount of the loan required to be spent on payroll from 75 percent to 60 percent. The changes allow for higher allocation of funds toward other business expenses, including rent, mortgage payment, utilities, and loan interest, benefiting property owners that have experienced a decline in collections.

Positive development outlook as workers return to the job site. The construction sector recorded some of the most robust gains last month, increasing payrolls by 464,000 to recover nearly half of April’s losses. The inclusion of construction activity in phase one of reopening plans supported the rehiring and will help to keep more projects on track this year, though some deliveries will still be pushed into next year. Much of the job gains were in residential building, supporting a broader economic recovery.

Developing Trends

Plans in the works to move millions of unemployed back onto payrolls. If the effects of the pandemic continue to weigh on the U.S. labor market, Congress is considering several approaches to speed the transition from the unemployment ranks back onto payrolls through cash incentives. Proposals include a $450 bonus for those who return to work and an expanded wage subsidy for employers, which would cover up to 80 percent of wages and benefits. Additional fiscal stimulus is also under consideration.

Rapid rehiring can build momentum for a strong recovery. The potential for a second wave of the virus lingers on the horizon, which could further impact employment and postpone the economic recovery. Should last month’s job gains endure, though, the downturn would be the shortest since the 1930s. With the underpinnings of the economy robust heading into the natural disaster, the potential for a strong recovery from the crisis has a higher likelihood, bolstering commercial real estate.

2.5 Million


Jobs Added in May 2020 

Unemployment Rate as of May 2020


Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics

MM Texture Background