The nation’s unemployment rate may have shocked the world by declining in May, but it doesn’t appear to have helped the rate of employment in the trucking sector.
While equity markets soared at the shocking report that the U.S. unemployment rate declined to 13.3% in May, a drop of 1.4 percentage points, total employment declined in the sector that the Bureau of Labor Statistics (BLS) calls Truck Transportation.
The seasonally adjusted numbers are preliminary. But they showed that employment in the sector dropped to 1,431,600 in May, down from 1,432,800, a drop of 1,200 jobs. Given that the April figure was already the lowest level since September 2014, May’s number of workers employed in the sector is now a new recent low.
The drop has been swift. In February, the figure for the sector was 1,527,300 workers. The highest number recorded by the BLS since 2010 was in June 2019, when it was at 1,535,300 workers.
The BLS does break out an unemployment rate for what it calls Transportation & Utilities, so a like:like comparison to the truck transportation sector is difficult. Still, for that sector, it showed an unemployment rate of 14.2%, with 1,023,000 workers unemployed. A year ago, the unemployment rate in the sector was 4.1%, with just under 300,000 unemployed workers.
Average hourly earnings for the sector rise slightly, to $26.17 from $26.11. Although that number is preliminary, it still would be a record high. A history of the hourly wage data going back to 2010 shows that the average hourly wage rarely declines, though there have been minor declines as recently as August 2019.
Rail transportation also saw a decline in the number of workers, but that trend had begun long before the pandemic as the impact of precision railroading took hold in the industry. The preliminary seasonally adjusted numbers for May were down to 153,200, a drop from 155,300 a month earlier. A year ago, that figure stood at 177,300.
What are the conclusions that can be drawn from the numbers? While equity markets jumped on the news, the question circulating online in fast-response analysis was whether the impact of the Paycheck Protection Program (PPP) was a key reason for the drop in unemployment. The fact is, the PPP was supposed to do that – keep people employed.
And for all the complaining about it, about $510 billion of the PPP’s authorized $650 billion has been disbursed. If you assume that 75% of that went for payroll protection – which was the Small Business Administration’s rule, though that is likely to be changed – that would be more than $380 billion to keep people employed who might not be otherwise.
The concern that was immediately raised is what will happen when the PPP money runs out, though there still is as much as $125 billion authorized under the program.
Joseph Bruseulas, the chief economist at RSM, tweeted a succinct analysis: “The PPP loans likely worked.”
Max Farrell, the CEO and founder of WorkHound, which among other things analyzes the driver community and produces feedback from it, saw good news in the numbers.
“A 1,000-job difference is a significant improvement considering the drop was close to 100,000 in the previous months,” Farrell said in an email to FreightWaves. “There is optimism that this could be the worst of it and we continue to hear that companies who furloughed drivers are planning to bring them back and that industries that closed are now reopening.”
He said the impact of PPP on the trucking sector was different than other industries because “the size of their business fell into a gap that didn’t allow them to be eligible for government recovery.” (There are several guidelines on what kind of companies can get PPP money, but exceeding certain standards or being a publicly traded company eliminates eligibility.) As a result of falling into that gap, Farrell said, “some carriers had to make the decision to furlough or lay off employees.”
He echoed a common observation about the program – it’s a “moving target” with “rules (that) continue to change.”
Paul Sheard, a senior fellow at the Harvard Kennedy School and a former chief economist at S&P Global, said the numbers “don’t look too surprising to me, in light of PPP.”
Jason Miller, an associate professor of supply chain management at Michigan State University, wrote on his LinkedIn page about the trucking report: “The good news is that it appears that job losses have bottomed out, so we should start to see an uptick (albeit likely far more slowly than the precipitous drop). Now, spot rates for May were around normal for May (looking back at monthly price data from DAT back to 2014, remembering that 2018 was an outlier), and tender rejection rates are still low per FreightWaves. This suggests to me that the overall decline in demand for trucking we have seen is somewhere in the tune of ~8% pre-COVID through May.”