Pandemic Pushes Region’s Jobless Rate Into Uncharted Territory

Chippewa Valley unemployment reaches historic highs, but there are bright spots

Tom Giffey

Unemployment rate by month, 2010-20, not seasonally adjusted. (Source: Wisconsin Department of Workforce Development)
Unemployment rate by month, 2010-20, not seasonally adjusted. (Source: Wisconsin Department of Workforce Development)

Tracking unemployment in the Chippewa Valley – and in much of the rest of the United States – has been pretty ho-hum for most of the past decade. From a nearly double-digit high during the Great Recession, the jobless rate gradually declined, and for years has been close to what economists call “full employment” – nearly everyone who wanted a job had one.

Here in the Eau Claire metro area, the unemployment rate bottomed out at 2.6% as recently as last October. Historically speaking, that’s very, very low.

Things have changed dramatically in just a few months. The coronavirus-driven shutdown caused the unemployment rate to spike to 12.3% in the Eau Claire metro area (Eau Claire and Chippewa counties) in April. That’s the highest it’s been in the 30 years for which data by metro area is available, said Scott Hodek, an Eau Claire-based labor market economist with the state Department of Workforce Development. While the figure slid to 10.6% in May, that’s still higher than at any point in the past decade.

Nationally, experts say unemployment this spring reached levels not seen since the Great Depression, When the nationwide rate hit 14.7% in April, The Washington Post reported, “The Labor Department said 20.5 million people abruptly lost their jobs, wiping out a decade of employment gains in a single month. The speed and magnitude of the loss defies comparison.”

IT COULD BE WORSE

Nonetheless, the Chippewa Valley appears to be doing better than the state and nation as a whole. Jobless numbers for June, which were released July 2, show a national unemployment rate of 11.1% – in other words, the Chippewa Valley was already doing better in May than the nation was doing in June. While we won’t know exactly how well the Chippewa Valley was doing in June until late July, it’s safe to say that the local economic recovery is stronger than the national one, especially considering recent COVID-19 outbreaks have forced some states to tighten public health measures again.

While the upward trajectory locally is encouraging, “Going forward the problem is the virus is the wildcard,” Hodek said. A spike in cases in Wisconsin could force some employers to shut down again, putting workers back on the unemployment rolls.
The Chippewa Valley’s comparatively “low” unemployment figures in recent months have been particularly surprising considering how hard local leisure and hospitality businesses were hit by the COVID-19 shutdown. Leisure and hospitality – a sector that includes hotels, restaurants, and bars – is big business in the Chippewa Valley, yet employment plunged from 8,400 jobs in December to just 2,800 in May. While this number likely will begin to climb, it’s difficult to tell how quickly it will recover, Hodek said, especially because many hospitality businesses such as restaurants are operating at reduced capacity and thus require fewer workers.

Other sectors of the Valley’s economy have suffered less than leisure and hospitality: For comparison, the number of manufacturing jobs in the metro area in December (10,800) was the same as in May, while the number of education and health care jobs dipped from 16,600 in December to 14,500 in May.

LONG-TERM LOOK

So where do we go from here? Prognostications remain elusive. “It’s hard to say whether COVID is going to have a lasting effect down the decades,” Hodek said. “It’s something we can’t really predict.”

What is clear, however, is that the pandemic has accelerated the work-from-home trend. Some businesses that sent workers home in March to work remotely never brought them back to the office, realizing that they can do business just as effectively and collaboratively online. Hodek speculates that this trend could actually be good for a place like the Chippewa Valley, which has made an effort in recent years to emphasize its high quality of life (easy access to nature, short commutes) and relatively low cost of living compared to big metro areas. With remote working, people can get jobs with companies in New York or California but lead more relaxed, less expensive lives in the Chippewa Valley.

In the near term, it’s likely that the unemployment rate could continue to climb upward. Hodek noted that, COVID-19 aside, the economic underpinnings that led to low unemployment are still in place. He said that the Federal Reserve predicts the nationwide jobless rate will hit 6.5% by next year, while the Wisconsin Department of Revenue projects a rate of 6.3% in the state in 2021. “We’re likely to see some drag from this,” Hodek said of COVID-19, “but it’s unlikely to be a five- or 10-year drag.”

Where the Jobs Are is sponsored by:

Chippewa Valley
Technical College

620 W. Clairemont Ave
Eau Claire, WI

Where the Jobs Are is sponsored by:

Chippewa Valley
Technical College

620 W. Clairemont Ave
Eau Claire, WI