A growing side effect of the pandemic: Permanent job loss
The rise in permanent job loss is the latest signal that the economic damage from the coronavirus is likely to be long-lasting, and that the Trump administration’s dream of a quick, V-shaped recovery is at odds with what workers are seeing across the country. That could create the need for even more government spending and long-term solutions beyond the temporary fixes that Congress has been debating.
“This recession has been really confused, because what we had was really a suppression where we told everybody to stay home — and that wasn’t really job loss,” said Betsey Stevenson, a former chief economist at the Labor Department and a member of the Council of Economic Advisers during the Obama administration. “The real question is, when you end the suppression, how many jobs are left? And boy, it sure looks like we lost a whole lot of jobs.”
Permanent layoffs have already begun spreading beyond industries directly affected by the pandemic. Nick Bunker, the director of economic research with the Indeed Hiring Lab, found that while permanent losses were concentrated in April in service-sector occupations that have been the hardest hit — waiters and retail salespersons, for example — they had spread by June throughout the labor market.
The trend appears poised to get worse. The number of Americans applying for unemployment aid has risen in recent weeks after months of steady decline, as the coronavirus surges across much of the country and a majority of states have either paused or reversed reopening plans. Another 1.2 million workers filed a new unemployment claim last week, the Labor Department reported on Thursday, marking the 20th consecutive week that applications have risen above 1 million. More than 32 million people are receiving either state or federal unemployment benefits, according to the most recent data.
Layoffs taking place now are more likely to be permanent rather than a temporary furlough. A Goldman Sachs analysis from July 31 found that 83 percent of job losses since February had been deemed temporary. But of all new layoffs in July in California, which it used as an example, only 35 percent were temporary.