Long-term jobless caught in limbo that imperils recovery
WASHINGTON — This spring, Magdalena Valiente was expecting her best year as a Florida-based concert promoter. Now, she wonders if the career she built over three decades is over.
In March, Valiente had been busy planning three tours and 42 live events. Earning well into six figures during good years, Valiente was hoping to help her youngest son, a high school junior, pay his way through college.
But with live events canceled, things have turned bleak. She is relying on unemployment benefits and Medicaid and has applied for food stamps. She has lost hope that the crisis will end soon.
“I worked up from the very bottom when I started in this business in my 20s,” said Valiente. “There weren’t many other women, and it was hard. It’s not easy to let it go.”
Millions of Americans in the industries hit hardest by the coronavirus pandemic face a similar plight. Their unemployment has stretched from weeks into months, and it’s become painfully unclear when, if ever, their jobs will come back. In the field where Valiente worked and in other sectors that absorbed heavy job losses — from restaurants and hotels to energy and higher education — employment remains far below prepandemic levels.
These trends have raised the specter of a period of widespread long-term unemployment that could turn the viral recession into a more painful, extended downturn. People who have been jobless for six months or longer — one definition of long-term unemployment — typically suffer an erosion of skills and professional
networks that makes it harder to find a new job.
On Friday, the government reported that employers added 661,000 jobs in September. Yet it marked the third straight monthly slowdown in hiring. The nation has regained barely half the 22 million jobs that were lost to the pandemic and the widespread business shutdowns it caused in March and April.
In a worrisome trend, a rising proportion of job losses appear to be permanently gone. When the virus erupted in March and paralyzed the economy, nearly 90% of layoffs were considered temporary. In September, the number of Americans classified as permanently laid off rose 12% to 3.8 million. And the number of long-term unemployed rose by 781,000 — the largest increase on record — to 2.4 million.
“We have a real chance of there being massive longterm unemployment,” said Till Von Wachter, an economics professor at UCLA.
The nation now has 7% fewer jobs than in February. Yet the damage is far deeper in some sectors. The performing arts and spectator sports category has lost 47% of its jobs. Hotels are down 35%, restaurants and bars 19%, transportation 18%.
Higher education has
lost 9% of its jobs. Classes have been delayed or moved online, reducing the need for janitors, cafeteria workers and other administrators. Normally during recessions, the education sector adds jobs to accommodate people returning to school to seek marketable skills or education.
Some economists note hopefully that this recovery has progressed faster than many analysts expected and may keep doing s o. Matthew Notowidigdo, an economist at the University of Chicago’s Booth School, and three colleagues predicted in a research paper that the rapid recall of temporary workers will lower unemployment to 4.6% a year from now. That would suggest a much faster recovery than the previous recession.
Still, more than one-third of workers who have been laid off or furloughed now regard their job loss as permanent, according to a survey by Morning Consult.
Some economists, like Sophia Koropeckyj of Moody’s Analytics, see rising cause for concern. Koropeckyj estimates 5 million people will struggle to find work after the virus has been controlled. Jobs likely won’t return to prepandemic levels until late 2023, she said in a research note.