A Stark Look at the Real Unemployment Figures
Unemployment has been a hot topic lately. Jobless rates rose sharply at the outset of COVID-19 and have dropped slowly ever since. Now, as the $600 weekly stipend for unemployed individuals comes to an end, many believe the number of jobless will turn down sharply. But is that really the case? Economists say no. In fact, they believe there’s a more ominous realization just around the corner. A significant portion of lost jobs might not be coming back.
The raw figures so far
After historic unemployment lows throughout most of 2019, 2020 has been in stark contrast. The first quarter was much the same, recording unemployment rates of 3.5%, 3.6%, and 4.4% for January, February, and March. Then, COVID-19 hit. Unemployment skyrocketed at an unprecedented rate, up to 14.7% in April as cities and states entered quarantine.
But the spike was just that — a spike. The unemployment rate fell from 13.3% in May to 11.1% in June. According to Bureau of Labor Statistics (BLS) reports, 4.8 million more people were employed in June than in May. These numbers suggest a trend in the right direction. Unfortunately, the catalyst for high unemployment is still coronavirus, and those numbers are on the rise. Average daily new cases in May topped 20,000 and rose to well above 30,000 by the end of June — trending in the wrong direction.
The divergent nature of these figures suggests a concerning prospect. We may be entering a period where lost jobs simply cease to exist. July and August reports will be very telling.
What’s happening to jobs?
Jobs are disappearing for several core reasons — all directly or tangentially related to the fallout from COVID-19. Lack of demand and economic contraction are the easiest to point to. Quarantined for weeks and months, American spending collapsed — as did world consumerism as other countries dealt with the pandemic. Interrupted supply chains further stifled economies, causing contraction that cut away the need for laborers.
Another ripple is bankruptcy. While many businesses accepted funding from the Paycheck Protection Program (PPP) to help them get by, not every business qualified and those that did may not have been able to secure funding. As they close, their jobs disappear. Take a company like Milwaukee-based motor manufacturer Briggs & Stratton, for example. The billion-dollar manufacturer recently filed for bankruptcy protection and, in the process, laid off hundreds of employees. Briggs & Stratton is just one example of industry stalwarts succumbing to unprecedented conditions.
Other factors like offshoring and stringent workforce planning have whittled-down many companies’ workforces. In the meantime, these are jobs that aren’t coming back.
The effect of job loss is widespread
Even jobs that haven’t officially been eliminated are as good as gone, according to most furloughed workers who don’t expect to restart full-time employment anytime soon. Full-time positions turn into part-time ones, and part-time positions become fewer and fewer. It’s a cascading prospect that’s quickly reshaping the job market. According to a survey by The Associated Press-NORC Center for Public Affairs Research.
About half of Americans say they or someone in their household has lost some kind of income over the course of the pandemic. That includes 27% who say someone has been laid off, 33% been scheduled for fewer hours, 24% taken unpaid time off, and 29% had wages or salaries reduced.
Manufacturing has been one of the hardest-hit industries for unemployment and faces ongoing risk due to volatile markets and fluctuating demand. In an industry that’s faced difficulty staffing over the last decade, manufacturers need to identify and retain top talent where it’s available, before the pool of qualified, available candidates becomes even more scarce.