Nearly 1.8 million jobs were added in July and the unemployment rate fell to 10.2%, according to Friday’s U.S. Bureau of Labor Statistics jobs report. Unemployment still uncomfortably remains at a historical high, ranking above the Great Recession levels back in 2009. The increase in jobs was due, in part, to the reopening of businesses and accompanying resumption of economic activity—albeit at a lower rate than pre-Covid-19 levels.
Although it was the third month in a row showing job-growth improvement, the data is disappointing, relative to June’s job report that boasted 4.8 million new jobs. Thursday’s Department of Labor report stated about 1.2 million Americans filed for unemployment benefits for the week ending August 1.
With concerns of the resurgence of Covid-19 within the United States and other countries, there’s reason to believe people will shy away from shopping and other activities that would entail close person-to-person contact. As consumers remain at home and keep their wallets and pocketbooks closed, it will be hard for businesses to keep their doors open and retain workers. Potential mandated shutdowns will worsen the economic situation, stifle job growth and prompt another round of layoffs.
We are still far from climbing out of our economic and job-loss morass. According to a Cornell University study, “Of workers who were placed back on payrolls after being initially laid off/furloughed as a result of the Covid-19 pandemic crisis, 31% report that they have been laid off a second time, and another 26% of those placed back on payrolls report being told by their employer that they may be laid off again. These results were surprisingly higher for workers in states that have not been experiencing recent Covid-19 surges, relative to those in surging states.”
In light of this study, it’s understandable why some people elected to keep collecting unemployment checks, as there isn’t any certainty with holding onto a job. The enhanced $600 per week provided by the federal government—on top of the state’s unemployment benefits—offered a safety net that’s not available in the job market. This program ended in July, which may either push people back into the labor force or leave them in dire financial straits if they’re unable to find work. Congress has not yet agreed to any further stimulus packages, which would address the cessation of the extra $600.
Julia Coronado, an economist at MacroPolicy Perspectives, lamented, “On balance, we’re still in a hole.” Coronado added, “The pace of recovery has really been set back by the resurgence of the virus. Given how far we have to go to re-employ the people who have become unemployed, that’s very discouraging.”
Andrew Hunter, senior economist for Capital Economics, sees the virus outbreak as detrimental to job creation. Hunter said, “The 1.763 million increase in non-farm payrolls in July confirms that the resurgence in new virus cases caused the economic recovery to slow, but also underlines that it has not yet gone into reverse.” Hunter, on an optimistic note, added, “With new infections now trending clearly lower again and high-frequency activity indicators showing tentative signs of a renewed upturn, employment should continue to rebound over the coming months.”
The financial press sometimes focuses too much on the numbers, as opposed to what’s really going on behind the data. The jobs-loss catastrophe has wrought big changes. Many people are fearful of being evicted for not having the emergency funds on hand to make their rent or mortgage payments. Young adults, according to Zillow, have moved back home, as they’re unable to afford their rent without a secure job. People are taking gig-economy offers and accepting jobs far below the roles they’ve previously held, just to make ends meet.
The loss of work or fear of losing your job wreaks havoc on a person’s psyche. According to CBS News, “Rampant unemployment, isolation and an uncertain future could lead to 75,000 deaths from drug or alcohol abuse and suicide, new research suggests.” This is known as “deaths of despair” and is “tied to multiple factors, like unemployment, fear and dread and isolation.”
The numbers of deaths could grow even higher. CBS points to a study that claims “a very slow recovery combined with the greatest impact of unemployment could result in more than 150,000 deaths of despair.”
It’s time that our elected leaders communicate with one another and put together a comprehensive plan to address these issues before more Americans suffer even more than they already are hurting—financially, mentally and emotionally.