Concerns grow about U.S. jobs lost for good
Even as restrictions on businesses began lifting across the U.S., an additional 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 Labor 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 about the path to recovery.
Bloom, a co-author of an analysis of the coronavirus epidemic’s effects on the labor market, estimates that 42 percent 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, theaters and stores, at sports arenas and on airplanes, 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.
“I think we’re in for a very long haul,” Bloom said.
The Labor Department’s latest data on unemployment claims, for new filings last week, reflects the shutdown’s continuing damage to the labor force.
“The hemorrhaging has continued,” Torsten Slok, chief economist for Deutsche Bank Securities, said of the mounting job losses.
He expects the official jobless rate for May to approach 20 percent, up from the 14.7 percent reported by the Labor Department for April.
A household survey from the Census Bureau released Wednesday suggested that the pain was widespread: 47 percent of adults said they or a member of their household had lost employment income since mid-March. Nearly 40 percent expected the loss to continue over the next four weeks.
In testimony before the Senate on Tuesday, Federal Reserve Chairman Jerome Powell emphasized how devastating prolonged joblessness can be for individual households and for the economy.
“There is clear evidence that when you have a situation where people are unemployed for long periods of time, that can permanently weigh on their careers and their ability to go back to work,” he said.
Emergency relief and expanded unemployment benefits that Congress approved in late March have helped households. Roughly three-quarters of people who are eligible for a $1,200 stimulus payment from the federal government have received it, according to the Treasury Department.
Workers who have successfully applied for unemployment benefits are getting the extra $600 weekly supplement from the federal government, and most states have begun to carry out the Pandemic Unemployment Assistance program, which extends benefits to freelancers, self-employed workers and others who don’t routinely qualify. But the total number of new pandemic insurance claims reported was inflated by nearly 1 million because of a data entry mistake from Massachusetts, according to that state.
Mistakes, lags in reporting and processing, and weeding out duplicate claims and reports have clouded the unemployment picture in some places.
What is clear, though, is that many states are still struggling to keep up with the overwhelming demand, drawing desperate complaints from jobless workers who have been waiting two months or more to receive their first benefit check. Indiana, Wyoming, Hawaii and Missouri are among the states with large backlogs of incompletely processed claims. Another is Kentucky, where nearly 1 in 3 workers are unemployed.
The $600 supplement has become a point of contention, drawing criticism from Republican politicians who object to the notion that some workers — particularly low-wage ones — are getting more money in unemployment benefits than they would on the job. But many have also lost their employer-provided health insurance and other benefits.
Nearly half the states have yet to provide the additional 13 weeks of unemployment insurance that the federal government has promised to those who exhausted their state benefits. Workers in Florida — which provides just 12 weeks of benefits, the fewest anywhere — are particularly feeling this pinch. And while several states, including those that pay the average of 26 weeks, have offered additional weeks of coverage during the pandemic, Florida has not.
Small-business owners who were hoping the Paycheck Protection Program would enable them to keep their workers on the payroll contend that the program is not operating as intended.
Roy Surdej, who owns Peaches Boutique in Chicago, applied for a loan after he was forced to close and the pandemic eliminated the season’s wave of proms, quinceañeras and graduation celebrations.
Under the program, the loan turns into a grant if he rehires the 100-person staff he had built up in February in anticipation of selling thousands ofdresses during the spring rush. But he said that would be impossible, given the income he had lost and the restrictions that continue to pre-empt social gatherings.
“No way can I qualify for full forgiveness,” said Surdej, who said revenue had dried up.
At the same time, the Congressional Budget Office warned that businesses able to use the Paycheck Protection Program might end up laying off workers when the program expires at the end of June.