Another 2.4 million workers joined the nation’s unemployment rolls last week, and there is growing concern among economists that many of the lost jobs are gone for good. With over 38 million U.S. unemployment claims in nine weeks, one economist says the situation is “grimmer than we thought.” The Labor Department’s report of new jobless claims, released yesterday, brought the total to 38.6 million since mid-March, when the coronavirus outbreak forced widespread shutdowns. As reported by The New York Times
“While workers and their employers have expressed optimism that most of the joblessness will be temporary, many who are studying the pandemic’s impact are increasingly worried about the employment situation. ‘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 of the path to recovery.
Mr. Bloom is a co-author of an analysis that estimates 42 percent of recent layoffs will result in permanent job loss.
“Firms intend to hire these people back,” he said, referring to a recent survey of businesses by the Federal Reserve Bank of Atlanta. “But we know from the past that these aspirations often don’t turn out to be true.”
The economy that does come 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, then 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 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 are being created, mostly at low wages — for delivery drivers, warehouse workers and cleaners. But many more jobs will vanish.
“I think we’re in for a very long haul,” Mr. Bloom at Stanford said.
Torsten Slok, chief economist for Deutsche Bank Securities, agreed that the government’s latest report pointed to lasting job losses. Even with states reopening, “the hemorrhaging has continued,” he said.
“I fear that maybe there is something more fundamental going on,” particularly in occupations most affected by social distancing rules, Mr. Slok added. 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 horrible situation for our country and its workers!