Perception is the ultimate barometer of reality. As the economy continues to struggle to pull itself out of a COVID-19 quagmire, everyday people want to think that life will soon return to normal.
Especially when it comes to unemployment as July rent is due and eviction notices loom.
Contrary to optimistic reports concerning jobs data and incrementally improving unemployment statistics, the job prospects for most Americans won’t improve anytime soon.
Former COVID hotspot states such as New York are experiencing dramatic reductions in coronavirus infections. Yet 26 states are now seeing infection surges. The United States is now recording more than 30,000 new COVID-19 infections daily.
In the coming weeks new lockdown measures may need to be implemented. The initial lockdowns in March is what crippled the economy in the first place.
The more the country cycles through lockdowns and reopenings, the less likely long-shuttered businesses can reopen.
In a world where workers can now be classified as “essential” and “nonessential,” that means that tens of million of Americans will vie for hundreds of thousands of jobs.
Cutting through the spin
Official government statistics say that the unemployment rate was over 14.7% in April and now stands at about 13%. It was under 4% before the pandemic hit.
Since March 2020, over 47 million Americans lost their jobs.
However, some experts believe that over 70 million people may actually be unemployed. Official unemployment statistics does not take into account part-time workers and those who have given up looking for work.
By those metrics, the unemployment rate could reach between 20% and 45%. Those are Great Depression era metrics.
To understand why tens of millions of Americans will vie for hundreds of thousands of jobs, let’s analyze recent jobs data.
In May 2020, over 2.5 million new jobs were created. Over 1.6 million of those new jobs were part-time jobs.
So, that means that 47 million to 70 million Americans are vying for 2.5 million jobs.
Let’s break those statistics down even further.
Businesses opening at 50% capacity as per social distancing metrics means fewer employees can return and new employees can’t be hired.
This in turn means that businesses make less profit than before the pandemic, which then continues the cycle.
Additionally, nonessential workers who can telecommute have prioritized job security over those who can’t.
Currently, 41.6% of all available jobs in the United States can be executed remotely. But 41.6% of the 2.5 million newly created jobs is just 1.04 million.
So, 47 million to 70 million essential and nonessential workers with varying degrees of experience are vying for 1 million non-telecommuting jobs.
In early June, Federal Reserve chairman Jerome Powell warned that those enamored with the May jobs report haven’t appreciated that COVID-19 has irrevocably changed business.
Powell said that millions of Americans won’t find work for some time to come because of the pandemic.
Further, Powell said that many businesses won’t return and many jobs that existed pre-pandemic won’t in the post-COVID-19 era.