Which parts of Nebraska’s jobs market have recovered from the pandemic?

Nebraska’s economy added 2,600 jobs in June, driving the state closer to a full recovery of payroll jobs from the pandemic recession. If Nebraska’s economy made a similar gain in July, it will be back to its pre-pandemic jobs peak.

Like other states, Nebraska’s jobs recovery has been uneven across industries. And as the recovery continues, Nebraska’s labor market has tightened up even further, to the point where a labor shortage can restrain production.

For example, Nebraska has 5,100 more jobs in Education and Health Services compared to before the pandemic. On the other hand, it has 5,800 fewer jobs in Leisure and Hospitality. These results make sense in the wake of unprecedented demands upon the medical labor force all while bars, restaurants, and other hospitality outlets were temporarily shuttered.

Manufacturing is a bright spot in Nebraska’s recovery story. Manufacturing jobs are 2,600 above pre-pandemic levels, and Trade, Transportation and Utilities jobs are up 2,400. It is a good sign to see a brisk manufacturing jobs recovery. Manufacturing is often slower to recover lost jobs, and sometimes does not make a full jobs recovery at all from an economic downturn. Food and beverage products are a major and growing manufacturing output from Nebraska, and these products are in great global demand amidst fractured supply chains and a war in one of the world’s bread baskets. Machinery and equipment output is another key driver.

The Federal Reserve of Kansas City notes that Nebraska’s economic output has outperformed the national average over the pandemic years. Rising farm incomes is one reason why. Nebraska farm incomes are up as a result of strong commodity prices.

The number of Nebraskans who count themselves as working is at an all-time high with 1,043,175 counting themselves as employed (described in more detail in this previous blog). The state’s unemployment rate is also at an all-time low.

A tight labor market will help boost wages for Nebraska workers. On the other hand, businesses are having a hard time hiring, which restrains production. The Kansas City Fed estimates nearly 80,000 job openings in Nebraska.

One solution is to bring more Nebraska workers off the sidelines, which will result in an increase in Nebraska’s labor force participation rate. However, this option is limited because Nebraska’s participation rate is already quite high at 70.0% compared to a 62.2% national average. Immigration also impacts state labor forces, though immigration policy is outside of state lawmakers’ hands. Nebraska should continue to enhance its competitiveness relative to other states, and loosen up labor restrictions by recognizing workforce licenses from other states.

While a tight labor market is a better problem to have than not having enough jobs for workers, it’s still a problem, and one that policymakers in Nebraska should work to solve.