The Effect of the COVID-19 Pandemic on Boston’s Economy in 2021

covid impact on boston employment

The Effect of the COVID-19 Pandemic on Boston’s Economy in 2021

covid impact on boston employment

by Boston Planning & Development Agency, Research Division.

The COVID-19 pandemic and resulting business closures caused a sudden unprecedented spike in unemployment in Boston as in much of the country. Boston’s unemployment rate peaked in June 2020 at 16.1 percent, a dramatic increase compared to 2.6 percent unemployment in March 2020. Boston’s unemployment rate fell back to 3.3 percent by December 2021.

The unemployment rate does not fully capture the employment impact of the pandemic. The City’s resident labor force fell by approximately 12 percent in April 2020 as people stayed at home and did not seek work. However, the resident labor force has subsequently returned to its pre-pandemic levels, with some workers finding employment and others beginning to seek work.

The industries with the largest share of Boston residents continuing to claim unemployment benefits in October 2020 were the industries broadly categorized as in-person and support services – restaurants, hotels, retail stores, entertainment venues and cultural institutions, personal services such as hair salons, and support services such as janitorial work. These industries were hard hit on several levels. They generally require in-person work, often in close physical proximity or with large groups of people. As such, they were initially closed by government mandate and continue to be limited by customer health concerns. Additionally, in-person and support service jobs in Boston rely on commuters and visitors whose numbers declined due to the pandemic. Cell phone data suggest that the number of commuters to Boston fell by about half during the pandemic. Office space utilization in Boston has been low, below 20 percent for Downtown office towers throughout 2021. Low office occupancy and longer-term office vacancies have hurt these support businesses such as restaurants, coffee shops, convenience stores, and pharmacies. Boston’s office vacancy rate rose from around 6 percent in 2019 to 11 percent by the end of 2021.

The COVID-19 pandemic has taken a toll on the travel and tourism industry. While air travel has been increasing since the near shutdown in spring 2020, the number of passengers at Logan International Airport in December 2021 was still 29 percent below that of December 2019. Hotel occupancy fell to 5 percent in April 2020 but had recovered to a peak of 72.1 percent in October 2021 before falling with the onset of winter and the Omicron wave. Seated restaurant dining was at half of January 2019 levels in the first week of January 2022.

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