Outlook bright for US hiring to make a quick comeback
WASHINGTON — Hiring has weakened for six consecutive months. Nearly 10 million jobs remain lost since the coronavirus struck. And this week, the Congressional Budget Office forecast that employment won’t regain its pre-pandemic level until 2024.
And yet a hopeful view is gaining steam that as vaccinations reach a critical mass, perhaps around midyear, and the government provides further stimulus, the economy and the job market will strengthen much faster than they did after previous recessions.
“I am not often optimistic,” said Heidi Shierholz, an economist at the liberal Economic Policy Institute. “But I am optimistic now.”
The brighter outlook rests on three premises. The first is that household finances, as a whole, are much healthier now, with less debt and more savings, than after the Great Recession a decade ago. Once the virus is contained, that cushion of cash could drive pent-up consumer spending. That spending, in turn, would support faster hiring.
The second premise is that the pandemic recession has yet to inflict the type of structural damage to higher-paying sectors of the job market that the Great Recession did. In 20082009, 4 million construction and manufacturing jobs — many of them highly skilled, well-paying positions — were lost and never fully recovered. Both those sectors still have fewer jobs than they did in late 2007.
And the third dynamic is that the Federal Reserve and the Treasury Department appear more intent on spurring job growth and less concerned about igniting inflation or increasing budget deficits than they were a decade ago. Most policymakers and economists now believe one reason the last recovery was so slow and prolonged was that the government provided too little stimulus.
For now, the economy’s rebound has been highly unequal. The unemployment rate for the poorest one-quarter of Americans is roughly four times the rate of the richest one-quarter, Lael Brainard, a Fed governor, said in a recent speech. People of color have been disproportionately hurt by the job losses. And in December, the unemployment rate for women rose for the first time since April, even as it fell for men. In addition, many women, especially working mothers, have had to leave the workforce to care for children and aren’t even counted as unemployed.
Yet one consequence of that inequality is that tens of millions of Americans, especially higher-income people, have managed to keep their jobs while working from home.
Having spent less, they have built up savings. Once the virus is controlled, many of them will be poised to spend and boost the economy.
“A lot of people have been hit very hard, but there’s also a huge swath that hasn’t been hit,” said Shierholz of the Economic Policy Institute. “They’ll be able to get right out and engage in normal economic activity. That is very different from the last recession.”