Monthly data are known for their volatility, and the monthly unemployment rate in the plastics and rubber products manufacturing sector is no exception.
Perc Pineda, PhD
Chief Economist
Monthly data are known for their volatility, and the monthly unemployment rate in the plastics and rubber products manufacturing sector is no exception. Analyzing data from 2000 through May 2023, we observe that the unemployment rate reached its lowest point of 0.1% in April 2023 and its highest point of 17.1% in April 2009. On average, the unemployment rate stood at 5.9% over this period.
Interestingly, the unemployment rate in this sector has been declining since October 2020, which goes against the warning signs of a recession in the overall economy this year. Given that the unemployment rate in plastics and rubber products manufacturing soared into double digits during the 2007-2009 recession and the COVID-19 recession in 2020, it is unlikely that we will see a significant increase in unemployment when the economy reaches the trough of the business cycle.
COVID was a multifaceted catalyst
The simplest explanation for this phenomenon is that a potential recession in the near future cannot be solely attributed to a specific end-market within the plastics industry, resulting in a sharp rise in unemployment due to contracting demand, as was the case with the housing market crash in 2008 and 2009. The COVID-19 recession was unique in that, despite the critical role of plastics in healthcare, it initially caused a sharp spike in unemployment, albeit only temporarily.
The uncertainty brought about by the pandemic was the primary driver behind the sudden increase in unemployment in the plastics industry and the subsequent disruptions in its labor market. These aspects are thoroughly explored in the latest PLASTICS White Paper, titled “COVID-19 and Plastics Industry Employment: An Assessment.”
The study conducted by PLASTICS reveals that the surge in uncertainty during March and April 2020, stemming from the pandemic, was associated with a decrease of 17,680 jobs in plastics product manufacturing. The research also investigates factors both within and outside the plastics industry that contributed to this decline, including domestic migration, wage differentials, and regulatory and policy responses to the pandemic.
Eye on the workforce
Despite the current unemployment rate of 1.0% in May, the plastics and rubber products manufacturing sector continues to hire workers. This challenge of workforce shortage is not unique to the plastics industry but is rather a common issue faced by various sectors, particularly manufacturing. As the economy adjusts to its long-term growth rate, reaching the trough of the business cycle may not resemble the recessions experienced in previous years.
If we consider the possibility of a jobless recovery, it is not entirely unlikely that the economic adjustment toward the Federal Reserve’s inflation target will be accompanied by job creation. However, it is improbable that employment in plastics and rubber products manufacturing will persist at unsustainably low levels, such as those witnessed in April and May of this year. The U.S. economy saw a 440,000 increase in the unemployed in May; jobless claims for the last two consecutive weeks ending June 17th stayed at 264,000, thus far.
