Virus-related layoffs in US hit nearly 39m
MANY JOBS MAY DISAPPEAR FOREVER AS RETRENCHMENTS MOUNT IN US
Claims for jobless aid continue to rise despite states reopening
Even as restrictions on businesses began lifting across the United States, another 2.4 million workers filed for jobless benefits last week, the government reported Thursday, bringing the total to 38.6 million in nine weeks.
And while the Labour Department has found that a large majority of laid-off workers expect their joblessness to be temporary, there is growing concern among economists that many jobs will never come back.
“I hate to say it, but this is going to take longer and look grimmer than we thought,” Nicholas Bloom, an economist at Stanford University, said of the path to recovery.
Social distancing rules
Bloom, a co-author of an analysis of the coronavirus epidemic’s effects on the labour market, estimates that 42 per cent of recent layoffs will result in permanent job loss.
“Firms intend to hire these people back,” Bloom said, referring to a recent survey of businesses done by the Federal Reserve Bank of Atlanta. “But we know from the past that these aspirations often don’t turn out to be true.”
In this case, the economy that comes back is likely to look quite different from the one that closed. If social distancing rules become the new normal, causing thinner crowds in restaurants, theatres and stores, at sports arenas, and on aeroplanes, then fewer workers will be required.
Large companies already expect more of their workers to continue to work remotely and say they plan to reduce their real estate footprint, which will, in turn, reduce the foot traffic that feeds nearby restaurants, shops, nail salons and other businesses.
Concerns about working in close quarters and too much social interaction could also accelerate the trend toward automation, some economists say.
New jobs, mostly at low wages — as delivery drivers, warehouse workers and cleaners — are being created. But many more jobs will vanish.In the meantime, the Labour Department’s latest data on unemployment claims, for new filings last week, reflects the shutdown’s continuing damage to the labour force.
“The haemorrhaging has continued,” Torsten Slok, chief economist for Deutsche Bank Securities, said.
He expects the official jobless rate for May to approach 20 per cent, up from the 14.7 per cent reported by the Labor Department for April.
A household survey from the Census Bureau suggested that the pain was widespread: 47 per cent of adults said they or a member of their household had lost employment income since mid-March.