Opinion | The August jobs report shows we’re still deeply in the hole and Congress should act soon

Christel Deskins

The graph shows job changes since the economy fell into recession in February and how they compare to other postwar downturns and recoveries. When I first began making versions of this chart — more than a decade ago, as the country was in the depths of the Great Recession — […]

The graph shows job changes since the economy fell into recession in February and how they compare to other postwar downturns and recoveries. When I first began making versions of this chart — more than a decade ago, as the country was in the depths of the Great Recession — the main point was to illustrate how much worse conditions were then compared to earlier economic downturns.

Little did I know that the very next downturn would be oh so much worse.

At the worst point for employment in the years immediately after the financial crisis, payrolls were down “only” 6.3 percent from their previous peak. Today, after several months of job growth, payrolls are still 7.6 percent below their February peak. Job growth has also slowed the past couple of months; in June, the economy added 4.7 million jobs, which fell to 1.7 million in July and then 1.4 million in August.

If hiring continues at the August pace, it would take eight or nine months before all the jobs lost since this pandemic began are recovered. There are at least five reasons to worry that the pace of hiring will slow down further, though.

First, the August jobs number was boosted by the hiring of 238,000 temporary decennial census workers, most of whom will be laid off when canvassing ends soon.

Second, it’s quite possible the private-sector jobs added back early on were the low-hanging fruit.

That is, the people who could be brought back easily — for scaled-down, socially distanced or remote operations — have already been rehired. But the larger wait-staff needed for when a restaurant opens at full capacity, say, will take longer. As will the people employed by businesses that are still generally considered too risky to operate or patronize much at all. The “performing arts and spectator sports” subsector, for example, employed about half as many people in August as it did in February, and recovery is likely to take a long time absent an effective, widely administered vaccine.

Additionally, a large fraction of businesses appear to have not merely scaled back or suspended operations but closed permanently. Resurrecting those employment opportunities will be challenging and time-consuming.

Another indicator of this issue, in Friday’s report: The number of workers who said they have been permanently laid off — as opposed to just temporarily laid off or furloughed — is rising. It was 3.4 million in August, up from 2.9 million in July.

A recent analysis from Kathryn A. Edwards at Pardee RAND Graduate School found that 20 percent of permanent layoffs in May and June had been characterized by survey respondents as temporary just the month before.

The share of people who have been unemployed long-term has also been rising. Past business cycles suggest this bodes ill; historically, the longer a worker has already been unemployed, the less likely that person is to get rehired or even interviewed anytime soon (partly because of selection issues, partly because skills can decay, partly because employers may assume a longer spell of unemployment signals something bad about the applicant). Hopefully these past patterns won’t hold, given the unusually widespread shock that caused the recession.

Third, closed child-care facilities and in-person schooling represent a persistent impediment to returning to work — particularly for women, who are more likely to be their households’ primary caregivers.

A recent analysis from the Census Bureau of its experimental Household Pulse Survey found that of respondents not working, women ages 25 to 44 were almost three times as likely as men to not be working because of child-care demands.

Those data were from July, but the jobs report released Friday also showed that the participation rate of prime-age women in the labor force fell in August, even as men’s rose.

Fourth, states and cities are in serious fiscal trouble because the pandemic has pulverized their revenue base and created more demand for public services.

State and municipal government payrolls are down 1.1 million jobs on net since their peak employment earlier this year, and more layoffs are likely to come. (By contrast, the maximum net decline in state/local government jobs in the aftermath of the Great Recession was about 750,000, and it took years for them to shed that many workers.) These layoffs will have knock-on effects throughout the private sector. Teachers, cafeteria workers, EMTs, etc., will have less money to spend in their local economy, and public services that residents and businesses depend on will deteriorate.

Unless of course there’s more federal aid coming, which brings me to the fifth worry: that it won’t.

States and cities aren’t the only parties in dire need of further financial relief. So do unemployed workers, whose federal supplement to jobless benefits expired at the end of July; renters and landlords, trying to avoid evictions or foreclosures, respectively, that could still happen; food-insecure families; child-care facilities and schools facing higher costs; and other struggling small businesses.

The Democratic-controlled House passed another (huge) round of coronavirus relief in May, but so far the Republican-controlled Senate has not yet voted on an alternative bill. The longer policymakers wait to provide aid, the worse the scarring from the recession will be.

And the more discouraging that chart up top will start to look.

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