Comeback unclear with jobs report

Bill Knight column for 6-11, 12 or 13, 2020

Until this month’s partial re-openings, business districts seemed like something out of an old “Twilight Zone” episode: eerily quiet, with closed shops, few vehicles and fewer pedestrians, all affected by the pandemic and precautions to avoid it.

The resulting economic woes are because of the COVID-19 virus, not government responses, skittish or selfish investors, or aggressive doctors or bankers. The contagion requires public-health safeguards that included closing many businesses, which laid off employees.

            However, the Bureau of Labor Statistics last week reported that the U.S. jobless rate unexpectedly fell 1.2 percentage points in May, to 13.3%. The BLS conceded that the rate doesn’t include another 3% of workers who lost jobs due to the coronavirus pandemic, classified as on “temporary layoff.”

About 42 million Americans have lost their jobs in recent months.

The official number of unemployed fell by 2.09 million as of the week of May 12, BLS said. That still left 20.99 million jobless. (The figure also doesn’t include dropouts from the labor force or people forced to work part-time when they really want full-time jobs – or once had them.)

 “If all the 32.5 million workers who are out of work as a result of the virus had shown up as unemployed, the unemployment rate would have been 19.7% in May instead of 13.3%,” said Economic Policy Institute Policy Director Heidi Shierholz.

Plus, the federal agency’s survey of metro areas showed every one of the nation’s 389 metro areas lost jobs and saw higher unemployment rates due to the pandemic.

Previously, BLS reported that April’s job loss was 10 times the number of jobs as last April: 20,626,000 compared to 2,600,000. In that month alone, the country lost all the job growth that had happened since President Obama’s first term.

That’s obviously felt by many households. A Census Bureau survey released this month said that more than 20% of Americans said they had little or no confidence in being able to pay next month’s rent or mortgage.

As for Illinois, the state’s jobless rate is now a record-high 16.4%, according to the Department of Employment Security, up from 4.4% before the pandemic. IDES’ most recent report shows 823,100 jobs lost since February. Most have been in “leisure and hospitality” (restaurants and taverns, hotels and theaters, concerts and sporting events), which has less than half of its February number (301,000 compared to 623,500).

Elsewhere, a June 3 payroll report from Moody’s Analytics and ADP said U.S. companies in May cut another 2.8 million jobs. That news was mixed since it was a decline, but it wasn’t as bad as the 8.8 million lost jobs economists forecast.

“The good news is … the COVID-19 recession is over – barring another, second wave,” commented Mark Zandl, chief economist at Moody’s Analytics. However, “the recovery will be a slog until there’s a vaccine or therapy that’s distributed and adopted widely.”

            In the meantime, unemployed Americans still have some aid available – for a few more weeks. Jobless benefits are paid by states, but the $2.2 trillion CARES Act (Coronavirus Aid, Relief and Economic Security) that Congress passed in March provides an additional $600 in weekly benefits. However, that expires next month (compared to the Great Recession’s unemployment assistance, which extended benefits to 99 weeks).

In Washington, Republican leaders oppose extending assistance, and Democratic leaders propose subsidies for businesses to cover payrolls.

Federal Reserve chair Jerome Powell, who predicted joblessness could reach 20%, said the country will probably need three to six more months of government financial help for employers and families.

 “We may need to do more, and Congress as well,” he said, adding, “For the economy to fully recover, people will have to be fully confident, and that may have to await the arrival of a vaccine.”

Some in the GOP support more help for the jobless. Republican Sen. Cory Gardner of Colorado said, “It’s unfathomable that the Senate is set to go on recess without considering any additional COVID-19 assistance for the American people.”

In Business Insider, Wall Street analyst Henry Blodgett and business journalist David Plotz echoed cautious tone expressed by Powell and Zandl, stressing, “Even when everything is open, our economy won’t recover until people feel safe resuming their normal lives.”