Economists argue that the constantly increasing job demands, coupled with the growing number of permanent job losses, are troubling signs for both workers and the economy.
“The main thing we are seeing right now is the scarring of the economy that is happening in real time. We are seeing more and more people becoming permanently unemployed. We see that people continue to be made redundant, ”said Martha Gimbel, senior director of economic research at philanthropic investment firm Schmidt Futures.
Gimbel – with more than 150 other economists – warns that the scars could become deeper and more damaging if the White House and Congress allow a $ 600 weekly increase in unemployment benefits to expire on July 31. The additional insurance was put in place at the end of March with the signing of the CARES law.
“We fear that people will be deported. We fear that people cannot feed their children. It is not about stimuli. It’s all about support, and I think it’s really important to distinguish between those two things, ”she said.
The labor force has regained about 8 million of the more than 20 million jobs lost since March, largely due to the return of workers from temporary layoffs.
But about 30 million Americans – 11.9 percent of the labor force – were receiving some form of unemployment insurance as of the first week of July. And while millions of workers on leave returned to their jobs in May and June, an additional 2.9 million workers were permanently laid off during that time.
The unprecedented ways in which the pandemic has devastated the economy have also made it more difficult to measure the full cost of the coronavirus recession.
The emergence of the pandemic has forced thousands of businesses to shut down and fire more than 20 million workers in two months. When states relaxed those restrictions in May and June, many companies were able to reopen – if they were at reduced capacity – and bring back workers they had laid off earlier.
“We are seeing business closings and more short-term layoffs due to public health orders, which was not the case during the Great Recession or in previous recessions,” said Elizabeth Pancotti, policy advisor at Employ America, a progressive advocacy group.
“Much of what we are seeing is people coming in and out of the unemployment system,” she added.
The unemployment rate in June fell to 11.1% from 13.3% the previous month and a post-depression record of 14.7% in April. Weekly jobless claims fell steadily from a high of 6.8 million in late March to 1.3 million in the second week of July.
But that figure of 1.3 million is still almost double the pre-pandemic peak of 695,000 set in October 1982, and does not include the more than 920,000 claims filed under the Pandemic Unemployment Assistance Program. for on-demand workers and others who are not eligible for the traditional program. system.
An increase in coronavirus cases has led to a new wave of restrictions and lower consumer activity, particularly in the hard-hit states. The steady increase in COVID-19 cases has weakened economic forecasts for the rest of 2020 and beyond, prompting companies to fire thousands of workers as they prepare for a long and uncertain road to recovery.
“We have recently seen signs of some slowdown in activity due to heightened concern about the virus,” former Federal Reserve Chairman Ben Bernanke said in a hearing on Friday before a House subcommittee.
“So I don’t think we will see a rapid decline [in unemployment] as we have seen recently, “he added. “Maybe a little lower than where we are now, but not where we would like to be. “
Successor of Bernanke, former chairman of the Fed Janet YellenJanet Louise YellenOn The Money: Improved Unemployment Insurance Likely To Expire During COVID-19 Aid Negotiations | Trump says he will not issue a national mask warrant | More, added at the same hearing that it might take two or three years to bring “unemployment to levels close to where we were before the pandemic.”
Bernanke and Yellen were both among more than 150 economists who urged Congress in a June letter to continue increasing unemployment benefits by $ 600. Fed Chairman Jerome Powell also warned lawmakers that failure to continue to improve unemployment benefits in one form or another could be ruinous for the most vulnerable households.
Economists attribute increased unemployment benefits and other stimulus measures in the CARES Act to increased consumer spending and retail sales in May and June after sharp declines in March and April. Some unemployment experts have also cited the rise in weekly claims in Texas, California, Florida and other states hard hit by the surge in coronavirus cases as cause for alarm.
“We could see evidence in the July jobs report when there are new layoffs in two weeks due to reopenings, and I would say the August jobs report will likely be worse than that because we’ll see more increases in cases, ”Pancotti says.
Trump and Republicans generally oppose the extension of the $ 600 hike, fearing it will cause workers not to return to their jobs. Advocates of the increase argue that most workers would lose their unemployment benefits if they turned down a job offer. They also fear a wave of foreclosures, evictions and business bankruptcies that could occur if household incomes fall in August, as the surge in virus cases is preventing the unemployed from finding new jobs.
“Two million people claiming unemployment insurance every week is a foolish state of the world,” Gimbel said.
“If we don’t keep people safe during a crisis that is a true act of God, then we will be in real long term suffering.