‘Jobless recovery’
Filings for benefits dip, layoffs continue
Another 860,000 Americans filed for unemployment insurance last week as the nation’s economic recovery continued to strain against the challenges of the coronavirus.
That number is down slightly from the previous week, the Department of Labor said Thursday, revising that figure to 893,000 people claiming benefits.
Workers in California have particularly struggled in the pandemicinduced recession. In the state, 230,225 workers filed new claims for assistance while 204,690 more selfemployed and contract workers filed for help under the federal Pandemic Unemployment Assistance program. Across the country, 658,737 made claims under the selfemployment aid program.
Claims filed since the onset of the pandemic in midMarch now top 61 million, underscoring the blow suffered by the labor market even as some firms have begun hiring again.
The California Employment Development Department said Thursday that it has processed 13.1 million claims during the pandemic and paid out $86.2 billion in claims both for regular unemployment claims and the program for selfemployed people.
About 1.4 million nonfarm payroll jobs were added by employers in August, a recent government report showed, as reopenings brought some workers back.
Even with that hiring, the labor market has not made up for the widespread job losses since March.
Still, there were signs of improvement for many. The report found that in August, more than 24 million people reported they had not worked at all or worked fewer hours at some point last month because of the pandemic, down from 31 million in July.
“It’s honestly been better than expected,” Alex Lin, a U.S. economist at Bank of America Global Research, said of the recovery since the virus and lockdown orders knocked more than 6 million people onto unemployment rolls in a single week in March.
Lin said his group originally predicted that unemployment would settle around 10% nationwide by year’s end. That number stood at 8.4% in August, according to a government report.
While layoffs continue at a pace far above any modern recession, there are a significant number of job openings, according to Laurence Ales, a professor of economics at Carnegie Mellon University.
“We still have a high number of vacancies, which speaks well to reabsorbing those unemployed workers more quickly than previous recessions,” Ales said. “A question is always how many of those are real vacancies,” he added. Some companies may be listing jobs they do not plan to fill anymore, he explained, which is common during recessions.
Lin said many of the jobs lost have been in lowerpaying, lowerskilled positions, which could significantly shape the recovery in the longer term.
“Ultimately, those (jobs) are the ones that could see more permanent damage,” he said. “If the higherpaying, higherskilled industries win out, there is going to be a shift toward jobs that require higher skills,” which could lead to more income inequality and a “jobless recovery,” where the economy stabilizes but many people continue to struggle, Lin said.
Despite loosened restrictions for gyms and hair salons in some parts of the Bay Area and an explosion in outdoor dining, many workers in industries hit hardest by the pandemic, like restaurants. are still struggling to make ends meet.
Mona Leena Michael was working as the head chef at Oakland’s Dyafa restaurant before taking some time off to attend her brother’s wedding in March. When she came back, the restaurant was already struggling and was forced to close, at least for the time being.
“Three days into shelterinplace, I found myself jobless and applying for unemployment,” Michael said.
An extra $600 a week in added federal benefits, part of a federal coronavirus relief package passed in late March, helped her and her husband pay for essentials.
When that ran out at the end of July, she began selling Palestinian food like mana’eesh flatbread at a popup in Emeryville until the Alameda County Public Health Department shut it down for not having the proper permits, she said.
“I didn’t really have a choice,” Michael, who is in the process of obtaining permits for her popup, said of her decision to go forward without the permits. She said the minimumwage jobs available pay so little that the salary would scarcely cover the high cost of living in the Bay Area; she has been referring former coworkers more desperate than she is for those positions.
“I have so many undocumented exemployees reaching out to me for work,” Michael said, including one former coworker who had been living out of their car.
Michael said she has also been without insurance since she had to stop working.
When a blow to her face required medical attention, she opted instead to have a friend who is a nurse patch her up with stitches and superglue.
“Had I not, I would either have had a split open face or I would be $2,000 in debt at the ER,” she said.
Despite the betterthanexpected unemployment rate, some economists said the job market is still historically bad, even compared with the 200709 recession and its aftermath.
“We’re over the hump, I guess, but over the hump means it’s still pretty darn bad out there,” said Chris Rupkey, chief financial economist at MUFG Union Bank.
“The number of new people still applying each week for unemployment because they were let go is almost double what it was at the worst point of the Great Recession of 20072009,” Rupkey said.
He agreed a “jobless recovery” is possible, noting that companies are likely to be slow in rehiring because of continuing uncertainty about the virus and the timing of a potential vaccine.
“Fewer people are regaining their jobs or getting a job then you would have hoped for,” Rupkey said. “In a recession, when sales turn down, (companies) realize they didn’t need as many people as they thought,” and slow or freeze hiring.
“I think that’s what’s going to happen here,” he added. “This may be the slowest, most jobless recovery in the economy we’ve ever seen.”