Popular Economics Weekly
It wasn’t as much improvement as expected, and more layoffs are coming with the end of the CARES Act benefits that kept workers on payrolls, or temporarily furloughed.
The Labor Department (BLS) reported the August unemployment rate declined by 1.8 percentage points to 8.4 percent, and the number of unemployed persons fell by 2.8 million to 13.6 million. Both measures have declined for 4 consecutive months but are higher than in February, by 4.9 percentage points and 7.8 million, respectively.
One pundit opined that it could take another 8 months to return to the unemployment rate that prevailed before the pandemic. But that was a record unemployment rate of 3.5 percent in February, which is probably not attainable in the near future since many of the larger businesses and sectors are beginning to let go of their employees with expiration of the benefits from the CARES Act.
Some 29 million were reportedly receiving jobless benefits as of the middle of last month. Also, 238,000 of the new jobs were for temporary Census Workers whose jobs will disappear once the census count is completed.
While millions of these lower-paid employees are now being brought back a whole new wave of layoffs has been building momentum, says the Wolf Street report. “Now it’s well-paid jobs with decent benefits at big companies, including tech companies that are being shed. We got a dose of those big-company layoffs over the past few days.”
Wolf Street also reported that October 1 is the day when airlines are free under the bailout package to lay off people involuntarily. Between American Airlines, United Airlines, and Delta, the additional cuts announced so far could amount to more than 55,000 employees.
And difficulties of the airlines business are translating into layoffs at many other industries, including manufacturers of aircraft, engines, and components. Boeing said at the end of July that it is preparing a second round of buyouts this year. The 10 percent cut of its workforce unveiled in April wasn’t enough, amid a flood of cancellations of its key product, the misbegotten 737 MAX.
“So this is now a mix of new job cuts, and temporary furloughs becoming permanent layoffs. Goldman Sachs estimated that nearly a quarter of US workers that were temporarily furloughed probably won’t be called back. That’s millions of people,” says Wolf Street.
Over the past four weeks, nearly 7 million people filed initial unemployment claims under state and federal unemployment insurance programs. This means that over the past four weeks, nearly 7 million people, who were eligible for state or federal unemployment insurance, got newly laid off. That’s a huge and catastrophic number.
And we still have no agreement on another congressional rescue package. The Fed’s so-called Beige Book, a regular survey of the economy, reported “Continued uncertainty and volatility related to the pandemic, and its negative effect on consumer and business activity, was a theme echoed across the country.”
The pickup in activity seen in May and June has slowed over the past couple of months Cleveland Federal Reserve President Loretta Mester said in a separate speech on Wednesday. She and other senior Fed officials are urging Congress to provide more help to the economy, indicating urgency on the part of a the central bank that historically has shied away from offering advice to lawmakers.
USA Today reports House Speaker Pelosi and Treasury Secretary Steven Mnuchin came to the agreement Tuesday during a phone call about the two sides' stalled efforts to pass another COVID-19 relief package, a source familiar with the call said. The deal would extend government funding at the same levels they are currently operating at and will likely allow both sides of the aisle to avoid a high-stakes series of negotiations before voters cast their ballots in November.
Let us hope so. I said in a recent blog that before the pandemic the U.S. counted 30 million workers in the categories we now consider essential: grocery clerks, nurses, cleaners, line cooks, warehouse workers, bus drivers and more. But according to data from the Kaiser Family Foundation published in early May, 1 in 4 essential workers report having difficulties affording basic household expenses, and 1 in 7 are uninsured.
Harlan Green © 2020
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