America’s workers likely suffered another devastating blow in May, with millions of more jobs lost to the viral pandemic and an unemployment rate near or even above 20% for the first time since the Great Depression.
Economists have forecast that the government will report Friday that employers shed 8.5 million more jobs last month on top of 21.4 million lost in March and April. A figure that large would raise the total losses since the coronavirus intensified nearly three months ago to almost 30 million — more than triple the number of jobs lost during the 2008-2009 Great Recession.
The economy has sunk into what looks like a deep recession, and most economists foresee unemployment remaining above 10% — its peak during the Great Recession — through the November elections and into next year.
A report Thursday on applications for unemployment benefits reinforced the picture of a bleak job market: The number of people seeking jobless aid last week was double the previous record high that prevailed before the viral outbreak occurred.
Still, that report did offer a few glimmers of hope. As restaurants, movie theaters, gyms, hair salons, and other retail establishments gradually reopen, job cuts are slowing and employers are recalling some of their laid-off workers. The total number of people receiving unemployment aid rose slightly, the government said but stayed below a peak of 25 million reached two weeks earlier. And the number of laid-off workers applying for aid, while historically high, has declined for nine straight weeks.
The economic shock, like the pandemic itself, has widened economic disparities that have disproportionately hurt minorities and lower-educated workers. More than 55% of African-Americans say they or someone in their household has lost income since mid-March, compared with 43% of whites, according to a weekly survey by the Census Bureau. For Hispanics, the figure is 60%. The pandemic has especially eliminated jobs, at least temporarily, at restaurants, hotels, retail chains and other lower-wage industries.
The street protests over George Floyd’s killing that led to some vandalism and looting in dozens of cities won’t affect Friday’s jobs figures, which were compiled in the middle of May. But business closures related to the unrest could cause job losses that would be reflected in the June jobs report to be issued next month.
A few businesses are reporting signs of progress even in hard-hit industries. American Airlines, for example, said this week that it would fly 55% of its U.S. routes in July, up from just 20% in May.
And the Cheesecake Factory said one-quarter of its nearly 300 restaurants have reopened, though with limited capacity. Sales at those restaurants are at nearly 75% of the levels reached a year ago, the company said. Both companies’ share prices rose.
Those limited gains may lead to more rehiring as companies slowly restart shuttered businesses. But economists say the pace of hiring will then likely lag as a severe recession and high unemployment hold back consumer spending, the main driver of the economy.
Erica Groshen, a labor economist at Cornell University and a former commissioner of the Labor Department’s Bureau of Labor Statistics, said hiring could ramp up relatively quickly in the coming months and reduce unemployment to low double-digits by year’s end.
“Then my inclination is that it will be a long, slow slog,” she said.
Overhanging the jobs picture is widespread uncertainty about how long the unemployed will remain out of work. Most of the layoffs in recent months were a direct result of the sudden shutdowns of businesses in response to the coronavirus pandemic.
Though many of the unemployed have said they expect their layoffs to be temporary, many large businesses won’t rehire everyone they laid off. And some small employers might not reopen at all if the recession drags on. Until most Americans are confident they can shop, travel, eat out, and fully return to their other spending habits without fear of contracting the virus, the economy will likely remain sluggish.
Even if just one-third of the U.S. job losses turn out to be permanent, that would leave roughly 10 million people out of work. That is still more than all the jobs lost in the Great Recession. A hole that size would take years to fill. Oxford Economics estimates that the economy will regain 17 million jobs by year’s end, a huge increase by historical standards. But that would make up for barely more than half the losses.
Gwyneth Duesbery, 22, returned this week to her job as a hostess at a steakhouse where she lives in Grand Rapids, Michigan, as the restaurant prepares to reopen. Duesbery said she is grateful for the opportunity, given that she hasn’t received unemployment benefits since the restaurant closed in March and has run through her savings.
She will spend this week helping to clean the restaurant and setting tables 6 feet apart. The restaurant will be able to seat only about one-quarter of its usual capacity.
The restaurant, Bowdie’s Chop House, has reservations for about 20 people for its opening night Monday and said it has drawn plenty of interest from longtime customers. Still, Duesbery worries about her health.
“I am concerned that it will expose me to potential diseases, and expose others, no matter the precautions that we take,” she said. “It’s kind of uncharted waters.”
Factories and stores are reopening, economies are reawakening – but many jobs just aren’t coming back.
That’s the harsh truth facing workers laid off around the U.S. and the world, from restaurants in Thailand to car factories in France, whose livelihoods fell victim to a virus-driven recession that’s accelerating decline in struggling industries and upheaval across the global workforce.
New U.S. jobless figures to be released Friday are expected to show millions more people’s wages are disappearing, which in turn means less money spent in surviving stores, restaurants and travel businesses, with repercussions across economies rich and poor.
“My boss feared that since we come from Kibera (an impoverished slum), we might infect them with COVID-19, and so he let us go,” said Margaret Awino, a cleaning worker in a Nairobi charity. “I don’t know how I can go on.”
As the virus and now protests across the U.S. have shed new light on economic inequalities, some experts say it’s time to rethink work, wages, and health benefits altogether, especially as automation escalates and traditional trades vanish.
THAI CHEF
When Wannapa Kotabin got a job as an assistant chef in the kitchen of one of Bangkok’s longest-established Italian restaurants, she thought her career was set.
But five years on, she’s in line with more than 100 other jobless Thais outside an unemployment office.
The government ordered all restaurants closed in March to combat the coronavirus, and 38-year-old Wannapa has been spending her savings on food and shelter.
When restaurants were allowed to re-open in May, Wannapa’s restaurant told staff its closure was permanent.
“I never thought this would happen,” she said. “It’s like my heart got broken twice.”
Around the world, new virus safety rules mean restaurants and stores can’t hold as many people as they used to, so they can’t afford as much staff. Many can’t afford to reopen at all.
Bangkok’s restaurants are firing, not hiring, she said.
“I will have to go on and keep fighting,” she declared. “If there is any job that I can do, I will do it.”
Wannapa’s unemployment benefit can only tide her over for so long. She said if she can’t find work, she’ll have to return to her family’s rubber plantation to start life all over again.
ISRAELI PROGRAMMER
When the coronavirus first broke out, Israeli software developer Itamar Lev was told to work from home. Then the online advertising company he worked for slashed his salary 20%. Finally, just as restrictions started to ease, he was fired.
Lev, 44, is among hundreds of thousands of Israelis out of a job as a result of the pandemic, more than 25% of the workforce.
“It was sudden. I wasn’t ready for it,” he said.
Tied to the American market, Lev’s company’s advertising revenue dried up and they had to make cutbacks. Lev said he was treated respectfully, and sees himself as simply a victim of the times.
He is already preparing for interviews and confident he will find a new position soon. In a country versed in disruptions from wars and security threats, he said Israelis have built up a certain resilience to upheaval.
Still, he said this time feels different. His wife, a self-employed dance instructor, has also seen her income temporarily evaporate, forcing the couple to dig into their savings.
“The ‘comeback’ is going to take longer,” said Lev, father of a 5-year-old girl. “It’s a difficult period. We’re just going to have to take a deep breath and get through it.”
KENYAN CLEANER
Perhaps hardest-hit by virus job losses is low-paid service workers like 54-year-old Awino, who lost her job after 15 years as a cleaner at one of Mother Teresa’s charities in Nairobi.
Awino shares a shack with her four daughters, including one who has epilepsy and requires costly medical care, and they share a communal toilet nearby. She hasn’t seen her husband in nine years.
Without her regular $150 monthly salary, she now buys raw chicken and fries it on the streets for sale.
“Ever since I was fired because of COVID-19, I put all my efforts into my business,” she said.
Some days she earns more than what she was making at her old job, but it’s hard work, and unpredictable. City council and health inspectors are known to raid informal street vendors, who are often arrested and have their goods confiscated.
Awino has no choice but to take the risk, and she’s not alone: Hundreds of thousands of Kenyans have also lost their jobs because of the pandemic.
CLOUDY SKIES
On a global scale, the industry perhaps most vulnerable is aviation.
Germany’s Lufthansa is losing a million euros an hour, and its CEO estimates that when the pandemic is over it will need 10,000 fewer workers than it does now. Emirates President Tim Clark signaled it could take the Dubai-based airline four years to return to its full network of routes.
The ripple effect on jobs in the tourism and hospitality sectors is massive.
Countries like the United Arab Emirates are home to millions of foreigners who far outnumber the local population – many of whom have lost their jobs. Their families in countries like India, Pakistan, Nepal, and the Philippines rely on their monthly remittances for survival.
Egyptian hotel chef Ramadan el-Sayed is among thousands sent home in March as the pandemic began to decimate Dubai’s tourism industry. He returned to his wife and three kids in the city of Sohag, about 500 kilometers (310 miles) south of Cairo. He has not been paid since April.
“There’s no work here at all,” he said. “Even tourism here is operating at 25% so who’s going to hire here?”
He sits idle, relying on his brother and father for support. He is hopeful the Marriott hotel where he worked will bring him back at the end of the summer when they plan to re-open.
“We are waiting, God willing,” el-Sayed said.
LONG ROAD AHEAD
So why are jobs still disappearing, if economies are reopening?
Some companies that came into the recession in bad shape can no longer put off tough decisions. Meanwhile, even though reopened cities are filling anew with shoppers and commuters, many consumers remain wary about returning to old habits for fear of the virus.
“Some firms that were healthy before governments imposed shutdowns will go bankrupt, and it could take a long time for them to be replaced by new businesses,” Capital Economics said in a research note. “Other firms will delay or cancel investment.”
It estimates that a third of U.S. workers made jobless by the pandemic won’t find work within six months. And some European workers on generous government-subsidized furlough programs could get laid off when they expire, as companies like French carmaker Renault and planemaker Airbus face up to a bleaker future.
Holger Schmieding Holger at Berenberg Economics warned: “The COVID-19 pandemic and the ensuing mega-recession may shape political debates and choices for a long time.”