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Will Engineers Escape Job Losses from the Coronavirus?

Will Engineers Escape Job Losses from the Coronavirus?
First quarter 2020 job report paints a grim picture for manufacturing workers among others.

Before we start, take a deep breath and repeat this mantra: “This, too, shall pass.”

The latest news is grim. A quickly constricting job market has resulted in a massive rise in unemployment. At the moment, the service industries and gig economy workers are being hit the hardest with layoffs. Larger companies have begun offering early retirements and furloughs as a precursor to layoffs. Technical professionals are also being to feel the pain. To understand why, let’s do the numbers.

First, let’s consider the most recent data and predictions from the federal government, the Bureau of Labor Statistics (BLS) and a variety of respected analysts’ firms. Then we’ll focus on what those numbers mean to engineers and other technical professionals in terms of jobs by considering the hardest hit markets and locations within the U.S.

Economists at the Federal Reserve Bank of St. Louis district project that total employment reductions could reach 47 million over the course of the coronavirus, which would translate to a 32.1% unemployment rate. The Federal Reserve Bank of St. Louis is one of 12 regional Reserve Banks that, along with the Board of Governors in Washington, D.C., make up the United States' central bank.

Image Source: U.S. Bureau of Labor Statistics

The U.S. is nowhere near that predicted level of unemployment. But the news from the first quarter of 2020 is not good. According to the latest U.S. Bureau of Labor Statistics report, total nonfarm payroll employment fell by 701,000 in March, and the unemployment rate rose to 4.4 percent. “The changes in these measures reflect the effects of the coronavirus (COVID-19) and efforts to contain it. Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places. Notable declines also occurred in health care and social assistance, professional and business services, retail trade, and construction.”

What to these numbers mean to engineers and other technical professionals? To answer that question, we need to know more about which markets and locations have been hardest hit by the pandemic to date.

Approximately 67 million Americans are working in jobs that are at a high risk of layoffs, notes the Fed’s St. Louis report. These occupations include sales, production, food preparation and services. Other research also identified 27.3 million people working in “high contact-intensive” jobs such as barbers and stylists, airline attendants, and food and beverage service.

For engineers, the key concerns are in areas of production and manufacturing. According to a recent report from, The Institute for Supply Management (ISM), the U.S. manufacturing index fell to 49.1 in March after registering 50.1 in February. Any reading below 50 signals a contraction.

A report from J.P Morgan further confirmed the contraction has spread to the global manufacturing sector. Excluding Chinese manufacturing data from the report – as the Chinese factories began to ramp up again late last month – the global manufacturing dropped to the lowest level in March 2020 since May 2009 of the Great Recession.

Several factors have been responsible for the contraction. First, there have been the COVID-19 related quarantines, travel restrictions and business closings aimed help slow the virus spread. Second, there was already a significant consumer cut-back on spending on goods, especially big-ticket items in the automotive space. Lastly, President Donald Trump's trade war with China has weakened the market since early last year.

In the U.S., states that rely heavily on tourism have taken a big hit, including Florida and Nevada. The IHS Markit analysis sees employment falling by 9.8% and 7.9%, respectively, by the end of this year. States that rely on automotive manufacturing will be hurt most by plant shutdowns, such as those in the Midwest and Northeast. Energy-reliant states like Texas, North Dakota, New Mexico, Oklahoma and Alaska are also especially vulnerable after a steep plunge in oil prices and demand falls from isolation and quarantine.

It’s probably not surprising that global manufacturing orders fell at the steepest rate for 11 years in March as the COVID-19 outbreak continued to cause factory closures, disrupted supply chains and hurt demand, according to Purchasing Managers Index (PMI) survey data. The ISM’s PMI is a well-established tool to help financial traders and investors forecast future economic trends.

As bad as this news is, there is hope. The Federal Reserve Bank of St. Louis district President James Bullard said last week that the initial estimates (for 1Q2020) are grim but the plunge should be short-lived. The challenge for company’s and employee’s will be to hang on until things do start to improve.

Image Source: Institute for Supply Management (ISM)

John Blyler is a Design News senior editor, covering the electronics and advanced manufacturing spaces. With a BS in Engineering Physics and an MS in Electrical Engineering, he has years of hardware-software-network systems experience as an editor and engineer within the advanced manufacturing, IoT and semiconductor industries. John has co-authored books related to system engineering and electronics for IEEE, Wiley, and Elsevier.

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