What to watch on jobs day: An unfortunate continued slowing recovery due to the Senate’s inaction
While the U.S. labor market remains 10 million jobs below pre-pandemic levels, job growth has slowed significantly over the last several months. Job deficits remain sharpest in leisure and hospitality, with a 3.5 million job shortfall, followed by education and health services (1.3 million), government employment (1.2 million), and professional and business services (1.1 million). The initial rebound from the 22.2 million jobs lost in March and April began strong when important relief, including vital unemployment insurance (UI) expansions were put in place. By late summer/early fall, job growth slowed significantly, and some forecasters expect it will be even slower in November. The recovery continues to wane because of the removal of important relief measures as well as the fact that the “easy” gains from workers on temporary layoffs continue to dwindle. Without further relief, millions of workers and their families will continue to endure economic hardship as the virus continues to spread in the winter months.
It didn’t have to be this way. If the suite of UI programs were reinstated and extended through 2021, workers would not lose that valuable safety net and it would spur the creation of 5.1 million more jobs in 2021. As of now, the additional UI benefits will expire on December 26, leaving 12 million workers without a safety net, and over 4 million others will have already exhausted their benefits by this cutoff. Relief and recovery efforts need to also include aid to state and local governments, which unfortunately have seen outright losses in jobs over the last couple of months due to revenue shortfalls and costly forced austerity without federal assistance.
On jobs day, I will pay close attention to employment growth, examining what a continued slowdown will mean for the length of the recovery. I will also be looking across sectors as well as state and local governments to assess meaningful and continued shortfalls. I fear that without additional aid and continued virus transmission, we may be looking at a reversal in the recovery early next year.
Another important indicator in tomorrow’s report is long-term unemployment—those unemployed for 27 weeks or more. Over the last several months, workers are experiencing longer and longer periods of unemployment. In October, nearly one-third of all unemployed workers were unemployed at least 27 weeks. I expect long-term unemployment to rise in the November data as recovery continues to slow. Long-term unemployment peaked at 45.1% in the aftermath of the Great Recession and was above 40% for three straight years. I hope I’m wrong, but, at the current rate of growth, I expect we will see those kinds of levels very soon in the labor market data.
The pandemic recession magnified many of the disparities which underlay the U.S. economy, particularly for Black and Latinx workers. And, the recovery as we’ve experienced so far has already been uneven. The figure below illustrates the change in the employment-to-population ratio from February to October of this year for select demographic groups of workers. All intersectional groups shown are still experiencing large shortfalls in employment, but they are sharpest for Black men, Black women, and Latina workers. Hopefully, over time, we will experience more broad-based job growth. At the same time, it’s important to remember that even returning to the pre-pandemic February 2020 levels is a low bar. One case in point is the fact that white men and white women had unemployment rates at least as low in October as Black men experienced back in February before the pandemic recession hit. With the latest data coming out tomorrow, it’s important to continue to track economic progress in the recovery for all demographic groups.
Disparities in economic recovery mean larger job shortfalls for Black and Latinx workers: Change in employment-to-population ratios for select workers by race/ethnicity and gender, February–October 2020
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