The American spirit is to thank, in part, for a resurgence in job creation following a historic loss of employment in spring 2020.
The COVID-19 pandemic's shock to the U.S. economy consisted of a historic drop in job openings coupled with skyrocketing unemployment. It was one of the deepest recessions the U.S. has ever recorded—and at two months, the briefest as well.
Like a light switch, the economy flickered off, and millions of jobs were lost through the month of April 2020.
But the economy came roaring back, bringing with it more than 3 million new jobs compared to pre-pandemic levels and returning to historically low unemployment.
To better understand where the economy saw the most growth in the labor force, Next Insurance used preliminary data estimates from the Bureau of Labor Statistics to identify the 25 industries with the highest net job creation from December 2020 to December 2022. Net job creation is a measure of how many jobs are created by new business openings and expansions, factoring in jobs lost by layoffs and closures.
For this analysis, industries are ranked based on the volume of new jobs created over the two-year period, but total employment and net change in jobs from December 2022 to January 2023 are also included. A total of 73 industries were considered for this analysis.
Reflecting the thirst for a return to normal, food service, accommodation, and recreational activities all ranked in the top 25 creators of jobs. The increase is no surprise, as 4 out of every 5 employees in the private sector work in the service industry, according to the Brookings Institution, a nonprofit public policy organization.
In the years leading up to the COVID-19 pandemic, around 2 million jobs were created per year, according to the Census Bureau. Net job creation turned negative from 2008 to 2010 amid the Great Recession, and then jobs grew between 1% to 2.5% until 2020.
The rebound after the steep decline in 2020, spurred in part by widely available vaccines, was swift. Net jobs increased by 3.2%—4.8 million—from 2021 to 2022.
Nearly a decade of low interest rates has been identified as one of the conditions that allowed for such rapid job growth after a recession in certain sectors, including tech—which began shedding many of those positions in 2022 in layoffs that now number in the hundreds of thousands.
And though businesses felt exceptionally uncertain about the future in 2020, government stimulus money flooded the economy. Employers tried to move forward, adapting their business plans and doing their best to navigate an uncertain economic climate.
Many of their adaptations accelerated trends that had been building before the virus began its rapid spread in the U.S. For example, the banking, financial, and food service sectors had been slowly embracing digitalization for roughly a decade before the pandemic made investments in remote and online services essential for business survival.
Meanwhile, thanks to historically low interest rates and a surge in remote working, Americans purchased homes and invested in real estate across the country at record rates—all while they watched the stock market roar.
The S&P 500, an index that includes roughly 500 companies and represents about 80% of the equity in the stock market, delivered above-average returns to investors in 2019, 2020, and 2021. Demand for digital goods spurred further job creation in technical fields like software, IT, and cloud hosting.
But by 2022, the stock market erased almost 20% of its value over the year, ushering in references to The Great Recession—the last time such a steep dropoff was recorded in markets. Over the course of the year, Americans pulled back on spending on goods as prices rose, but continued to shell out for services like leisure travel and the health care they may have put off due to COVID-19.
