The U.S. Labor Market’s Post-COVID Recovery in Charts

The labor market’s recovery since the pandemic changed the dynamics of the American workforce

At the height of the COVID-19 crisis, the U.S. labor market’s employment losses topped 14% below pre-recession totals—more than eight points higher than the worst month of the Great Recession. Yet despite the unprecedented spike in unemployment, it would only take 29 months to recover the jobs lost, beating the recoveries of both the dot-com bubble and the summer recession of 1990.

2020’s surge in job losses, and subsequent return to “normal,” were the fastest recovery to pre-recession employment levels in over 40 years.

Key Takeaways

• The surge in job losses in 2020 because of COVID-19, and subsequent return to “normal” in just 29 months, were the fastest recovery to pre-recession employment levels in over 40 years.
• The pandemic affected certain labor market sectors, mainly because some could work from home and others couldn’t.
• Leisure and hospitality took some of the largest hits, but have recovered to pre-pandemic levels.
• Local messenger and delivery and private postal service jobs have surged, as have general warehousing and storage jobs.
• Black and Latino workers suffered more job losses than White or Asian workers, but current employment levels now exceed pre-pandemic levels.
• Wage growth has been strong since the spring of 2020, but was no match at first for inflation, which surged to 40-year highs. Wages finally started outpacing inflation in March 2023, and have remained ahead since.

The Shifting U.S. Labor Market

The pandemic leveled certain sectors of the labor market more than others, in no small part thanks to the unequal effect of industries that could work from home and those that couldn’t. Leisure and hospitality took some of the largest hits, as millions of Americans canceled vacation, dining, and entertainment plans for months on end. Conversely, professional and business services, some of the most likely to continue their jobs by working from home, recovered more quickly, and job gains have now surpassed pre-pandemic levels.

As of January 2025, there were slightly more workers on leisure and hospitality payrolls (16.978 million) than there were in February 2020 (16.889 million), just before the pandemic caused payrolls to plummet.

The Warehouse and Messenger Sectors Surge

If you’ve been on the highway lately, you may have noticed a lot more 18-wheelers on the roads. The explosion of ecommerce and home delivery is responsible for that, as well as the growth of jobs in the local messenger and warehousing industries.

There’s been a surge in employment in local messenger and delivery and private postal services, in addition to general warehousing and storage jobs. There are now an estimated 75% more delivery drivers and other related workers and 58% more warehousing and storage workers than there were before the spring of 2020, according to the U.S. Bureau of Labor Statistics (BLS).

On the other hand, some of the biggest outliers in job losses from pre-pandemic until now are convention and trade show organizers and workers in children/infant clothing retail.

Uneven Recovery Across Race and Sex

While the job losses in 2020 impacted Black and Latino workers more than White or Asian workers, the job gains for those groups has been robust, and current employment levels now exceed pre-pandemic levels. Employment levels for Black workers are 10.6% higher in January 2025 compared to their pandemic-level worst in May 2020. Employment is 12.8% higher for Latino workers and 11.1% higher for Asian workers for the same time period.

Strong Wage Gains, but Not Strong Enough at First

While wage growth has been strong since the spring of 2020, it was no match at first for inflation, which surged to 40-year highs.

Nominal compensation, including wages and other earnings and benefits, increased 8.6% from Q1 2020 to Q2 2022. But, as of mid-2021, inflation began rising at a higher rate than overall compensation, contributing to real compensation declines since early 2021.

In a reversal of job loss numbers, higher inflation led to real compensation declines for workers in every industry except for leisure and hospitality, the industry that had the largest declines in employment. Meanwhile, workers in the professional and business services industry experienced the second largest real wage decline at 4.4%, eclipsed only by construction workers.

Wages finally started outpacing inflation in March 2023, and have remained ahead since.

What Was the COVID-19 Pandemic?

The COVID-19 pandemic began with an outbreak in Wuhan, China, in December 2019 that soon spread to other areas of Asia, then worldwide in early 2020. The World Health Organization (WHO) declared a pandemic in March 2020. The WHO and the U.S. Department of Health and Human Services (HHS) both declared an end to the public health emergency in May 2023.

What Is the Labor Market?

The labor market refers to the supply of and demand for labor. Also known as the job market, it’s based on employees providing the supply and employers providing the demand. It’s a major component of any economy and is intricately linked to markets for capital, goods, and services.

What Is the Most Recent U.S. Unemployment Rate?

The unemployment rate is 4.0% as of January 2025, down 0.1% from the previous month, according to the U.S. Bureau of Labor Statistics (BLS). That corresponds to 6.8 million people out of work. The U.S. added 143,000 jobs in January 2025, the BLS reported.

The Bottom Line

As of December 2024, U.S. employers have added 2.2 million jobs for the year. There are now 7.2 million more jobs on U.S. payrolls than there were pre-pandemic. Still, jobs remain in high demand with 7.6 million openings, as of the BLS’s latest Job Openings and Labor Turnover Survey (JOLTS) report. That’s nearly 1.1 jobs for every unemployed person, and yet another sign of how peculiar this employment recovery has been.