Unemployment and job growth show strong improvement, but coronavirus darkens the outlook

From today’s Los Angeles Times:

The U.S. economy added a larger-than-expected 4.8 million jobs in June despite the worsening COVID-19 pandemic, registering solid gains for the second straight month after suffering near-Great Depression losses in the spring, the government reported Thursday.

Reflecting the June increase, the nation’s unemployment level fell to 11.1% after hitting 13.3% in May and 14.7% in April.

While the back-to-back months of improving numbers offered a spot of hope, they may be an uncertain guide to the future. Coronavirus cases, as well as hospitalizations and infections among younger Americans, have been exploding in California and other states across the West and South.

As a result, many areas that were reopening for business, and thus beginning to call back workers, are reversing course and imposing restrictions again. “This report may be a kind of high point,” said Heidi Shierholz, a former Labor Department chief economist now at the Economic Policy Institute.

California’s employment numbers for June will be released July 17, and are likely to mirror the national trend, albeit at a weaker pace. The state’s jobless rate for May was 16.3%, little changed from April, as job creation lagged somewhat. Unemployment in Los Angeles County was 20.9% in May.

Even with the June gains, joblessness overall remains higher than at any time since the Bureau of Labor Statistics’ records began in 1948. Jobless rates dropped across the board, but disparities remain significant. Black unemployment was 15.4% compared with 14.5% for Latinos, 13.8% for Asians and 10.1% for white people. Unemployment for college graduates was down to 6.9% versus 12.1% for workers with only a high school education.

The Bureau of Labor Statistics said the overall unemployment rate for the nation might actually be 1 percentage point higher than the 11.1% reported due to complications in survey collection. Misclassification of workers’ status had resulted in a much bigger undercount of the unemployed in the prior two months.

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Why a Rotting Green Bay Boardwalk May Help Solve America’s Jobs Crisis

From today’s New York Times:

The governor of Pennsylvania wants to hire unemployed workers to help the state track the spread of the coronavirus in the fall. City Council members in Austin, Texas, voted to pay people to help with projects like preparing land for fire season. And Green Bay, Wis., hopes to pay the out-of-work to fix a decades-old rotted boardwalk in a major recreation area.

Across the country, state and local officials are considering ways to directly hire their out-of-work constituents, hoping that they can pay them to clean up parks, assist in conservation efforts and form the backbone of the public health response to the virus.

The programs so far are likely to allow for only a small number of jobs, in some cases just a handful. But local officials say they are hopeful the idea can persuade other areas to try similar efforts and, more important, elicit additional funding from Congress to support local job creation.

The effort is aimed at helping communities deal with an unemployment crisis more severe than what the nation faced at the worst moment of the Great Depression. Tens of million of workers have lost their jobs since mid-March, when the pandemic forced consumers into their homes and shut down most businesses. New unemployment claims have topped one million for 13 straight weeks.

So far, lawmakers and governors have mostly pushed for policies that will ensure Americans can go back to the jobs they held before the pandemic. The federal government allocated $660 billion for forgivable loans to businesses that agreed to keep workers on the payroll. Republican lawmakers have said they are interested in providing bonuses to people who return to work in lieu of extending expanded unemployment benefits, which are set to expire on July 31. And states have pushed to quickly reopen workplaces so that employees can regain a paycheck.

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What to Make of the Rebound in the U.S. Jobs Report

From today’s New York Times:

The job market halted its pandemic-induced collapse in May as employers brought back millions of workers and the unemployment rate unexpectedly declined. Tens of millions are still out of work, and the unemployment rate, which fell to 13.3 percent from 14.7 percent in April, remains worse than in any previous postwar recession. The rate would have been higher had it not been for data-collection issues.

Nonetheless, after weeks of data depicting enormous economic destruction, Friday’s report from the Labor Department offered a glimmer of hope. Employers added 2.5 million jobs in May, defying economists’ expectations of further losses and holding the prospect that the rebound from the economic crisis could be faster than forecast.

Job growth was concentrated in industries hit hardest early in the crisis, like leisure, hospitality and retail work. But manufacturing, health care and professional services added jobs as well, possibly signaling that the damage did not spread as deeply into the economy as many feared. Major stock indexes surged on the news, and President Trump hailed the report in remarks outside the White House, saying the rebound “leads us onto a long period of growth.”

“We will go back to having the greatest economy anywhere in the world, nothing close, and I think we’re going to have a very good upcoming few months,” Mr. Trump said.

All the same, economists warn that it will take far longer for the economy to climb out of the hole than it did to fall into it. And even as the economy shows signs of revival, the United States is confirming more than 20,000 new coronavirus cases a day, with counts rising in particular in the South and the West.

While employers recalled temporarily laid-off or furloughed workers in May, the number of permanent job losses rose, a sign that some businesses didn’t survive the shutdown, or expect demand to stay depressed as the economy reopens. Others are bringing back workers at reduced hours: The number of people working part time because they couldn’t find full-time work barely budged. And millions more people have been laid off in the weeks since the data released Friday was collected in mid-May.

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With pandemic relief programs set to run out for workers, a reckoning lies ahead

From today’s New York Times:

The multitrillion-dollar patchwork of federal and state programs intended to address job losses from the pandemic has not prevented tens of millions of layoffs or long lines at food banks. But it has mitigated the damage.

Now the expiration of those programs represents a looming cliff.

The $1,200 payments have already gone out to most eligible households. The lending program that helped millions of small businesses keep workers on the payroll will wind down if Congress does not extend it. And the $600 a week in extra unemployment benefits that have allowed tens of millions of laid-off workers to pay rent and buy groceries will expire at the end of July.

The economic damage wrought by the virus has been widespread. More than 40 million people — the equivalent of one out of every four American workers — have filed for unemployment benefits since mid-March. It is an astonishing tally that rivals the bleakest years of the Great Depression. And people continue to lose their jobs: the government reported Thursday that 2.1 million people had filed unemployment claims last week.

Now there are questions about how long the federal aid meant to cushion the blow will last.

Even the possibility that the programs will be allowed to expire could have economic consequences as consumers and businesses rein in spending, said Aneta Markowska, the chief financial economist for the investment bank Jefferies. “This economy is clearly going to need more support,” she said.

Economists including Jerome H. Powell, the Federal Reserve chair, have called for further action. But a partisan standoff on Capitol Hill makes it likely that any aid will be far more limited than the $3 billion package passed this month in the Democratic-controlled House.

President Trump and other Republicans have played down the need for more spending, saying the solution is for states to reopen their economies. Extending benefits, they say, could impede the recovery by giving people an incentive not to return to work.

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Could the Pandemic Wind Up Fixing What’s Broken About Work in America?

From today’s New York Times:

Crises like pandemics, economic collapses and world wars have, at times throughout history, ended up reordering societies — shrinking the gap between the rich and the poor, or empowering the working class. The Black Death helped end feudalism. The Great Depression helped lead to the New Deal. Never has extreme economic inequality shrunk in a meaningful way, says the Stanford historian Walter Scheidel, without a major crisis.

The coronavirus pandemic, as of now, is not on the order of the plague, but it’s hitting the United States during a period of agitation about worsening inequality and waning power for workers. Already, it has made stark how precarious life is for many American workers, causing some to revolt. How employers and policymakers respond could improve work in the United States for the long term — or make the existing problems worse.

“Pandemics as a social shock do give workers more leverage to demand things,” said Patrick Wyman, a historian and host of the Tides of History podcast. “Crises like these reveal what is already broken or in the process of breaking.”

“They are attacks on a particular socioeconomic way of organizing your society,” he said. “The question is whether your institutions can make collective things happen.”

The United States is distinctive among rich countries in its lack of worker protections like nationwide paid sick leave, paid family leave and universal health insurance, and in its minimal labor union membership. For both high and low earners, many employers expect workers to be on call around the clock. Companies are typically beholden to shareholders first, above employees, customers and communities.

But the coronavirus pandemic has shown the flaw in that logic: Worker well-being is the foundation for everything else.

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Freelancers can get unemployment pay for jobs lost to coronavirus

From today’s Los Angeles Times:

New coronavirus laws provide a litany of benefits to the self-employed, freelancers and workers in the gig economy. But what are the benefits, and how do you claim them? Here are some answers explaining how the laws impact freelancers.

I lost my part-time gig because of the coronavirus lockdown. Can I claim unemployment insurance?

Yes. The federal CARES Act creates a temporary Pandemic Unemployment Assistance program, which provides unemployment insurance coverage to self-employed individuals, independent contractors and those with limited work history. (You must be available for work but unable to do your job as the result of the pandemic.) All of these individuals were barred from claiming state unemployment insurance benefits prior to the passage of this law.

How much will I get?

That depends on where you live. Each state operates its own unemployment insurance program. Requirements and pay-out ratios vary from state to state. For instance, California’s unemployment insurance program provides about 46% of working wages, up to set limits. Maximum unemployment benefits amount to $450 a week.

Thus, if you previously earned $1,000 a week ($4,000 a month), you’d get $450 in weekly unemployment coverage, or $1,800 per month from the state of California. The new CARES Act adds a federal payment of $600 a week to that. So, this hypothetical worker could get as much as $4,200 a month.

However, if you live in Alabama, the state’s maximum weekly benefit caps out at $275. Thus, an unemployed worker in Alabama would receive a top benefit of $1,100, plus $600 weekly from the CARES Act, for a total of $3,500.

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A 3,000% jump in jobless claims has devastated the US job market

From today’s CNN Online:

The last three weeks have marked one of the most devastating periods in history for the American job market, as first-time claims for unemployment benefits have surged more than 3,000% since early March. Businesses continue to lay off and furlough workers amid the coronavirus outbreak.6.6 million US workers filed for their first week of unemployment benefits in the week ending March 28, according to the Department of Labor — a new historic high.

That was far greater than economists had expected, and more than 3,000% the pre-pandemic levels. Unemployment claims at this level suggest a severe job market decline hardly any American alive has ever seen in their lifetimes.

Economists characterized the increase as “monstrous,” “stunningly awful,” and “a portrait of disaster.”Including the prior week’s 3.3 million initial claims, Americans have filed nearly 10 million jobless claims in the last two weeks alone. That corresponds to roughly 6% of America’s 165 million strong work force, which in turn implies a 9.5% unemployment rate, according to Citi economist Andrew Hollenhorst.

Read the complete article here.

Some workers won’t qualify for some unemployment benefits in relief package

From today’s CNBC News Online:

The $2 trillion coronavirus relief package President Donald Trump signed into law Friday significantly expands unemployment benefits for out-of-work Americans.

The law pays laid-off and furloughed workers an extra $600 a week, for up to four months, and extends existing state benefits by 13 weeks. It also offers jobless benefits to previously ineligible groups, such as gig workers and freelancers. Nearly 3.3 million people filed first-time claims for unemployment last week — shattering the previous record, set in 1982, by around 2.6 million people, according to the Labor Department.

“It truly is, in a lot of ways, a very generous package,” said Chris Moran, a partner in the labor and employment practice group at law firm Pepper Hamilton in Philadelphia. Yet, some could receive smaller payments than others or miss out entirely. Here are some of those groups.

Tip workers

Workers who derive a big chunk of their paychecks from tips, like waiters and bartenders, may get smaller unemployment checks than they hope to. It largely depends on whether an employer reports those tips as income. States determine the size of unemployment checks based on a worker’s prior wages, generally over the last four quarters.

Gig, self-employed workers without pay records

While gig and self-employed workers are newly eligible for unemployment benefits, they may not qualify if they don’t have the proper work and pay documentation. This will largely depend on forthcoming guidance from the Labor Department about the kinds of acceptable documentation, and states’ interpretation of that guidance — currently among the biggest wild cards in the unemployment expansion, experts said.

Read the complete article here.

Coronavirus to cost California 125,000 hotel jobs trade group says

From today’s Los Angeles Times:

Struck by a severe drop in travel demand, California’s hotel industry is expected to lose more than 125,000 jobs in the next few weeks, more than any other state, an industry trade group estimated Monday.

The hotel industry in the Golden State is expected to be hit hardest by the coronavirus outbreak because California has the most hotel jobs — about 285,000 — according to the American Hotel and Lodging Assn. trade group.

In addition to the loss of 125,000 hotel jobs, another 414,000 jobs that are supported by the hotel industry, such as waiters, busboys, bartenders and limousine drivers, could disappear in the next few weeks, the group said.

Only last month, the average occupancy rate — the percentage of hotel rooms filled — was 62% across the country, according to STR Global, a Tennessee company that tracks hotel data. By mid-March, the average occupancy rate nationwide had dropped to 53%.

To break even, hotels need to have an occupancy rate of 41% to 63%, depending on the type of hotel, according to industry analysis. Upscale hotels need a higher occupancy rate to pay for extra amenities, such as room service, valets and concierges, while economy hotels can break even with a much lower occupancy rate.

Because of the pandemic, hotels in some cities, including Seattle; San Francisco; Austin, Texas; and Boston, are reporting occupancy rates below 20%, with some individual hotels already shutting down, according to the American Hotel and Lodging Assn.

“The impact to our industry is already more severe than anything we’ve seen before, including September 11th and the Great Recession of 2008 combined,” Chip Rogers, chief executive of the trade association said in a statement Monday.

The lodging industry requested the federal government provide $150 billion in financial aid to keep the hotel industry afloat during the crisis. That is in addition to the $100 billion requested by other segments of the travel industry, such as convention centers, theme parks and tour companies.

Read the complete article here.

Pandemic Erodes Gig Economy Work

From today’s New York Times:

It was just after 11 a.m. last Wednesday when Jaime Maldonado, 51, pulled his rented Nissan into a lot outside San Francisco International Airport. He figured he had a long wait ahead — about two hours — before Lyft would ping him to pick up a passenger.

Occasionally, jets roared overhead — but not many, which meant not enough passengers for Mr. Maldonado, who said that before the coronavirus outbreak, he spent just 20 to 40 minutes waiting outside the airport for customers. To kill time, he got out of his car, looping the mask he recently started wearing around his wrist, and went to talk to other drivers.

As the minutes ticked by, Mr. Maldonado wondered out loud, “What am I going to do to pump gas and feed my kids tomorrow?” His number of rides in a typical week had dropped to around 50 from 100 earlier in the month, he said, and his payout had plunged by half to about $600 a week, from which Lyft would subtract the rental fee for his car.

The coronavirus pandemic is exposing the fragile situations of gig economy workers — the Uber and Lyft drivers, food-delivery couriers and TaskRabbit furniture builders who are behind the convenience-as-a-service apps that are now part of everyday life. Classified as freelancers and not full-time employees, these workers have few protections like guaranteed wages, sick pay and health care, which are benefits that are critical in a crisis.

While gig economy companies like Uber and DoorDash have promoted themselves as providing flexible work that can be lifelines to workers during economic downturns, interviews with 20 ride-hailing drivers and food delivery couriers in Europe and the United States over the past week showed that the services have been anything but that.

Instead, as the fallout from the coronavirus spreads, gig workers’ earnings have plummeted and many have become disgruntled about their lack of health care. Many others are also feeling economic pain from the outbreak — layoffs have hit workers in retailing, airlines, hotels, restaurants and gyms — but even as public health agencies have recommended social isolation to insulate people from the virus, gig workers must continue interacting with others to pay their bills.

Read the complete article here.