The ugly truth about millions of American jobs: They are not coming back

“It’s clear that the pandemic is doing some fundamental damage to the job market,” said Mark Zandi, chief economist for Moody’s Analytics. “A lot of the jobs lost aren’t coming back any time soon. The idea that the economy is going to snap back to where it was before the pandemic is clearly not going to happen.”
The June jobs report last week showed a net gain 4.8 million jobs, accurate documentation one-month jump, according to Labor Department data. Virtually all of individuals returning to work were on temporary layoffs, such as workers in factories, stores, hotels, bars and restaurants that are reopening.

But at precisely the same time, 759,000 people were let go from jobs that won’t be coming back. That marks the second-largest monthly boost the United States has ever seen, topped only by an 805,000 jump in January of 2009, in the depths of the Great Recession.

There’s now a complete of 3.7 million unemployed Americans whose previous jobs are gone once and for all. And millions more are at risk.

Temporary becomes permanent

More than 10 million Americans are currently categorized as temporarily out of work. But historically, nearly 30% of individuals who tell the Labor Department that they are temporarily unemployed never obtain job back, said Heidi Shierholz, senior economist at the Economic Policy Institute, a liberal think tank.

“Even though we don’t know if the historical record will hold in this case, it’s an extremely valid concern that not all of those people are going to get called back,” she said.

People who are counting on organizations reopening their doors could be surprised to locate that a temporary loss is now permanent one, said Zandi.

Some of those unemployed were holding temporary jobs that found an end. The end of a temporary job might have been prone to be replaced by a new job in the strong job market that existed just a year ago.

But most of those 3.7 million workers lost long-term jobs.

‘This is just the beginning’

The recent spike in Covid-19 cases in different parts of the united states, and the brand new round of stay-at-home orders and business shutdowns weren’t captured in this latest jobs report, according to both Zandi and Shierholz.

“The intensification of the virus has led to a second round of closure that might be too much for many of these businesses,” said Zandi.

The speed of the task losses is another reason behind concern. The Great Recession was already greater than a year old when it hit those record figures for permanent job losses. As economic problems build, economists say there will be more permanent job cuts ahead.

“This is just the beginning of the increase in permanent job losses,” said Zandi.

The data collection problem

The latest government data available do not account for many workers who are still on the job but are anticipated to be release. For example, Boeing (BA) announced plans to cut 16,000 workers, with 12,300 of those job cuts already being identified through buyouts or involuntary permanent layoffs. But virtually all of those affected workers are still at work as of today.
Similarly, thousands of stores are closing permanently but still have workers in position as retailers hold closing sales.
And deep financial problems at state and local governments, most of which began a new fiscal year the other day, are anticipated to lead to millions of additional permanent job cuts in the coming weeks and months unless Congress agrees to new round of financial assistance.

But Zandi said he is concerned that the good headline number in last week’s jobs report might make it tougher to obtain the needed help passed through Congress.

“People might look at the better than anticipated jobs numbers, they say ‘The coast is clear economically,'” that he said. “That’s the exact wrong message.”