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productivity

Job Losses, Like Coronavirus, Could Be Nearing a Second Wave

Of course the first wave never really ended, but let’s move past that.

This is what the official unemployment rate looks like, according to the Bureau of Labor Statistics (PDF), as mapped out over the last two years.

The problem has been exacerbated by the continued resistance of Congressional Republicans to pass another round of economic assistance, meaning smaller businesses in particular aren’t able to rehire or recall workers that may have been furloughed or laid off in the past several months.

Being unwilling to entertain the possibility of including aid to state and local governments, along with continued health-driven school closures is also having a massive impact on public education. Sector employment is already dramatically down and not likely to get better anytime soon given parents are keeping kids out of public schools while those who are wealthier opt for private education. That’s just one way the pandemic has exposed or heightened economic inequality and mobility, and the impact of those disparate educational systems is something we’ll feel as a society for decades.

While the current unemployment rate as of September 2020 stood at 7.9 percent, a fall from its recent high of almost 15 percent, it’s still double what it was at the beginning of the year and what it has been for much of the last four years. And that is not even a real number given people who have either opted out of the job market or who have come to the end of their unemployment benefits and therefore fall off the official roles.

When you add those individuals back into the calculations *and* include those who don’t even make $20,000/year, the total unemployment/underemployment rate becomes 54 percent for White Americans and 60 percent for Black Americans. That’s just one example of how the recession has hit non-white demographics more harshly and a recovery (such as it is) that has also been disproportionally bad for those same groups, widening the already substantial racial wealth gap.

Those who belong to a union, less than 12 percent of the U.S. workforce, are more likely to receive unemployment benefits, in large part because those unions have not only made sure such benefits are part of worker contracts but are also resources helping those filing for aid navigate what can often be a tricky and difficult system. Meanwhile, those who fall into the “long term unemployed” category – meaning they’ve been out of work for over six months – is growing rapidly and, because of their precarious financial status, are feeling more of the economic hurt than others.

As of now nearly 13 million Americans are unemployed. And, just as there’s a new wave of Covid-19 infections across the country that’s threatening school and business reopenings, there’s about to be a massive wave of additional layoffs that’s going to be felt throughout the economy. There are at least a few reasons why that seems likely:

First: As stated earlier, small businesses who have been counting on another Federal relief package are going to be disappointed as those talks remain, for lack of a better word, stalled. Without that assistance, they just can’t keep going. Unlike the biggest companies, which have only gotten bigger as they take advantage of opportunities afforded by everyone’s lifestyle and work life shift, small businesses are 1) stuck in an endless cycle of hope and disappointment when it comes to recovery, and 2) additionally hurt by cuts to Post Office services they rely on.

Meanwhile, those who work on Wall Street would like the recession to be over now, thank you very much, banks record record profits and the most wealthy citizens – those more likely to own individual stocks – have become even wealthier over the course of the pandemic.

If “trickle down economics” were really a thing, which it’s not, that accumulated wealth might be helping some of those in more dire need. Instead the working poor are pushed even closer to the brink of failure because of reduced hours, insufficient support and other problems and an eviction crisis across the country is hitting those most vulnerable harder than others.

Second: The rate of corporate failure is going to get worse. An increasing number of companies are only alive because they’ve gone heavily in debt to continue operating, becoming so-called “zombie companies.” If (or more likely when) government assistance to those companies ends, they’ll at least likely engage in even more significant layoffs or go out of business entirely. The Federal Reserve has slowed its rate of corporate debt purchasing, which may be a bad sign we’re moving in that direction.

Companies that have cut staff over the last several months aren’t adding or refilling positions as quickly as they were eliminated. Over 50% of those who have been laid off because of related closures are still out of work. Even high-wage jobs have stalled out recently as companies seek to do more with the people they have and those people aren’t in any rush to change their situation.

There’s little reason to think that will change if things continue in the current direction, especially if the number of companies that near or experience failure increases.

When the first coronavirus aid bill was being considered by Congress, many lawmakers – even Republicans – came out saying people needed help because they’d lost their jobs through no fault of their own.

The same logic holds true. Putting all of the above together, many of those individuals are still out of work through no fault of their own. They are subject to a system that isn’t hiring, or is only hiring so specifically the requirements are a veritable needle’s eye few will fit through.

What we’ve seen to date is largely a K-shaped recovery, one where the financial health of those at the high end of the economy improves while those at the bottom half see things continue to get worse.

This Isn’t Workers’ Fault

The number of jobs available is already nowhere near the number of people looking for work. If things keep getting worse, that ratio will only become even more disproportionate.

A recent article – one likely intended to be helpful – offered some tips to those seeking work on how to adjust their resume and explain an extended amount of time off, including because of layoffs resulting from pandemic-related business closures. There’s some helpful information there, and in a similar piece on rethinking resumes, around being clear and upfront about why someone was laid off and so on, but the question remains why an individual has to offer this kind of explanation in the first place.

Putting the pressure on the individual to explain why they’ve been out of work for an extended period of time in the current coronavirus-influenced environment seems laughable when you consider how closely the job market resembles the streets of Paris during the French Revolution.

Any gap in employment should be viewed by the company viewing a work history as “Oh…that was during 2020” and gauge accordingly. The individual may have been diligently looking for work and finding none was available.

Despite the “personal responsibility” mindset conservative leaders have imbued society with for the last 50 years, and unlike the public health crisis being faced, the work/jobs situation is one where the individual should have little to no blame. They are not the ones who have put companies in tenuous financial positions. Indeed, companies have justified paying workers so little for decades now in part by saying they needed to build up their savings for a rainy day. Now it’s pouring and we find that capitalism only kept things afloat for about a month and a half.

Workers of all kinds are about to once more feel that pain once more, just as they did 12 years ago as the Great Recession hit, only moreso and with the added worry that comes with living through a global pandemic.