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A fuller picture is emerging about what jobs will—and won’t—be coming back after coronavirus



The biggest single challenge raised by the pandemic crisis is retooling the broken jobs machine that was roaring just months ago.

In May and June, the U.S. labor market staged the fastest, sharpest upswing in history, albeit from extremely depressed levels. That surge raised hopes that outsize, durable monthly job gains would spearhead a rapid recovery from the pandemic-driven lockdown that sank national income at a 33% annualized rate in the second quarter, the biggest drop in postwar history.

The Department of Labor’s eagerly awaited “Employment Situation” survey for July, released Aug. 7, is bound to curb that enthusiasm. It shows that the U.S. added 1.76 million jobs during the month. That number was certainly decent, beating economists’ forecasts of 1.48 million. But it marks a deceleration from the astounding gain of 4.8 million in May and lesser but still impressive 2.5 million increase in June. Investors, who cheered the last two reports and hiked stock prices in expectation of a rapid return to good times, were unimpressed.

The widely reported headline number, the change in nonfarm employment, comes from the Department of Labor’s July payroll survey of 145,000 businesses. The unemployment rate is calculated from another set of data assembled in the Household Survey that polls millions of families on pay, entries, and exits from the workforce, and other broad labor market trends. The Household Survey reports that 144 million Americans had jobs in July, a cataclysmic fall from a record 159 million in February. To make matters worse, the “labor force,” the number of Americans who either have jobs or are looking, has shrunk by 3.9 million since mid-2019. Bleak prospects have so discouraged many job seekers that they’ve given up. Those nearly 4 million dropouts aren’t counted as “unemployed.” So the official jobless rate actually understates the legions of Americans who can and want to work but aren’t getting paychecks.

Where the jobs are—and aren’t

The report also shows two major crosscurrents: The huge losses are concentrated in several devastated, consumer-facing sectors, while industries catering to the new pandemic-driven lifestyle and spending patterns are hiring briskly. In the past year, all retail businesses have lost 900,000 jobs, or almost 6% of all jobs, though stores, restaurants, and the like have gained back over 1 million positions since April. In air transportation, the rolls have shrunk by 115,000 or almost a quarter, and the losses keep climbing. Leisure and hospitality have been pummeled, shrinking by 4.8 million jobs or 28%, despite regaining around 3 million positions since April. Taking the brunt of the damage are hotels, where four in 10 jobs have vanished, and restaurants and bars that have sent home one-fifth of last year’s staff—stranding 2.6 million cooks, waitresses, and managers. Healthcare took a lesser hit of 600,000 positions, or 3.5%, as many physicians’ offices closed for months.

The data also displays surprising pockets of strength in COVID-resistant industries. Computer and electronics products are even with last year with a 1.1 million total payroll, and jobs in making and selling PCs and other computers, staples for the work-at-home economy, are up sharply. The headcount of couriers and messengers has jumped 143,000 or 18%, following the boom in home deliveries. Building materials and garden supply store employment has risen by 45,000, to 1.37 million, as families stuck at home find a new hobby in refurbishing their abodes. General merchandise stores, including warehouse emporia and supercenters offered by the likes of Walmart and Amazon, big beneficiaries of the surge in online shopping, added 140,000 workers since mid-2019.

The big underlying crisis? The pandemic crisis is on track to permanently destroy many millions of positions, even more than were lost for good in the Great Recession. The vanished paychecks from the lockout’s losers—think airlines—can be replaced only by a big wave of hiring from its winners, burgeoning players from online shopping to videoconferencing gear. Those businesses benefit from the mainly digital trends reshaping the ways Americans live, play, and earn, such as working from home, the suburban housing revival, streaming entertainment, and shifts to online shopping and telemedicine.

Regaining that lost ground requires getting hundreds of thousands more people each month entering these newly created, post-pandemic jobs than the hordes exiting the industries pounded by the upheaval. In other words, the spigot of new positions created by the post-COVID lifestyle needs to run full blast, so that a lot more water is coming in than draining out, making the level in the “employment tub,” total Americans at work, keep rising at a strong, steady pace.

The U.S. economy’s great dynamism practically guarantees that eventually we’ll drive joblessness back down to at least the historic average, in median-good times, of 5% or lower. The danger is that it may take an unusually long time, so that the pain of elevated bankruptcies, credit card defaults, and foreclosures will be much greater than if the new generation of jobs replaced the many millions that already disappeared, and legions more that will expire in the months ahead, at high speed.

Unfortunately, our economy faces three major hurdles in getting the employment spigot to pour forth rather than trickle. First, even if national income manages to regain 2019 levels in 2021, joblessness will remain a lot higher because layoffs are heavily tilted to relatively low-paying positions in such sectors as tourism, stores, restaurants, and hotels that will return more slowly. Second, a surge in job creation won’t happen right away, because even companies in the strong post-COVID sectors will be reluctant to hire rapidly until they witness a strong recovery building.

Third, the government’s programs that protect workers, though they’re supporting take-home pay, provide an incentive for companies to keep workers they eventually intend to lay off on their payrolls. That discourages people who would have rapidly switched to the new generation of jobs offered in the new economy. Upshot: At best, the U.S. will wrestle the jobless rate to the mid-6% range by the end of 2021, meaning that some 4 million fewer American will be bringing home paychecks.

The jobs that aren’t coming back

An excellent report updated in late July, COVID-19 Is Also a Reallocation Shock, provides one of the best guides to how many positions are going for good, and how rapidly the jobs catering to the post-COVID consumer will take their place. It’s based on the Survey of Business Uncertainty that polls 1,000 companies each month to gauge their plans for employment, expectations for sales, workplace practices, and other factors. The SBU is conducted by the Federal Reserve Bank of Atlanta, in cooperation with economists Steven J. Davis of the University of Chicago’s Booth School of Business and Nick Bloom of the Stanford Graduate School of Business.

In the April survey, companies stated they don’t intend to rehire 23% of the workers they’ve laid from March 1 to mid-May, the period when the big layoffs happened. But Davis, Bloom, and the new report’s third author, Jose Maria Barrero of ITAM business school in Mexico City, find that historically, a lot of layoffs thought to be temporary at the time don’t actually lead to bringing workers back. When you adjust for that pattern, it’s more likely that around one-third—rather than closer to one-quarter—of the positions the companies now don’t expect to replace are actually gone for good. The authors cite two studies on the outcomes in other major downturns that also show that on average, about a third of layoffs result in permanent losses.

The authors point out that 27.9 million people filed for unemployment claims in the six weeks ending April 25. If one-third of those lost positions don’t return, as past trends indicate, the U.S. by mid-2021 will have 9.2 million fewer jobs concentrated in hard-hit sectors from auto manufacturing to restaurants to airlines than in February of this year, and they’re gone forever. In an interview with Fortune, the University of Chicago’s Davis confirmed that the 9.2 million figure is “a reasonable estimate of the permanent job losses from COVID-19.”

Of course, many of the lost jobs in airlines, restaurants, bars, and hotels will come back, though many others will counted among the 9.2 million casualties. The authors posit that the rehiring that does happen will happen slowly. That’s because it will take a long time for folks who’ve been practicing social distancing to return en masse to bars, movie theaters, casinos, hotels, or to jet to Paris or Rio on vacation.

It’s the combination of workers’ slowly returning to their old jobs and a lag in the birth of the new jobs enticing to the post-COVID consumer—those needed to fill the void—that will make the comeback a long slog.

What’s working

The authors cite that in some ways this is a tale of two Americas. In April, U.S. companies still posted 4.4 million job openings, and even though that number is 29% lower than in April, it shows that at the same time layoffs are surging, hiring remains remarkably strong. Online grocery sales are up 450% from August of 2019, the report notes, and 24% from April to May. Walmart has taken on 235,000 new employees since mid-March, Lowe’s added 30,000 in the spring, and Dollar General, benefiting from strapped bargain hunters flocking to dollar stores, recently raised its payroll by 50,000.

Three-hundred thousand shoppers joined Instacart, while Domino boosted its fleet of pizza delivery drivers by 10,000. These new jobs arrived fast. But elsewhere it will take time for companies to plan or retool new plants, build new supply chains, or overcome regulatory hurdles. Plus, employers want to see signs the economy’s on the mend before committing to big new capital investments.

Davis tells Fortune that getting back to a 6% jobless rate sometime by the end of 2021 “would be a big success that would take good policy and good fortune.” The Congressional Budget Office is projecting unemployment at 7.4% for the end of 2021. That’s more than double the fabulous number in February, and it means about 5 million more people will be without jobs 18 months from now than were banking checks early this year. The bounce-back started great in May, then shifted to good in June and pretty good in July. Soon the bounce will be gone, supplanted by the biggest transition in memory from old-line jobs to those serving a consumer who’s suddenly shopping and living far differently than a few months ago.

The rub is that the destruction happened in a downward rush, and the creation will be just the opposite: a long, clawing climb back.

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Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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One pandemic, two recoveries: New Yorkers are three times more likely to be jobless than Nebraskans



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It’s going to take a long time to get out of this economic mess, but we’re making progress: Since the end of April, the economy has added more than 10 million jobs and the unemployment rate has fallen from its peak of 14.7% to 8.4%.

But that national recovery is unequal. Employment in some states is back to pre-pandemic levels, while others are at mass joblessness levels surpassing the 2007-09 Great Recession.

When the pandemic hit, the jobless rate in Nebraska soared from 4% in March to 8.7% in April. But the state’s nearly fully reopened economy has helped push the jobless rate back to 4% as of August.

The picture in New York, the epicenter of the pandemic in the spring, is far less rosy. It saw its jobless rate climb from 4.1% in March to a staggering 15.3% by April. It has since improved to 12.5% in August—a figure that is still above the U.S. peak of 8.9% jobless rate during the Great Recession era.

How can a New Yorker be three times more likely to be jobless than a Nebraskan?

States like Nebraska that are more rural and haven’t been as hard hit by the pandemic have almost fully reopened. Earlier this month Nebraska allowed outdoor gatherings to reopen at 100%, including sports stadiums and fairgrounds. And places like bars and tattoo parlors were reopened weeks ago.

Northeast states like New Jersey, New York, and Connecticut were hit hard by the virus in the spring and are reopening businesses at much slower rates. Case in point: Indoor dinning in New York City doesn’t start back until September 30, and that’s only at 25% capacity. That cautious approach explains why New York’s jobless rate remains so high.

While New York leads the nation at 33,092 lives lost to the pandemic, its case load and deaths are plummeting, according to Johns Hopkins University data. Only .9% of COVID-19 tests in New York are coming back positive compared to over 50% at one point in April. Nebraska has far fewer COVID-19 deaths (452), however, its positive rate is 12.6%—which is above the 10% threshold that adds incoming travelers to New York’s 14-day quarantine.

And joblessness in New York is also elevated by its large leisure and hospitality concentration. That sector was smashed by the pandemic, and has yet to rebound. Leisure and hospitality jobs in New York City alone are still down 48%. And that’s also why joblessness is still so high in tourism heavy California (11.4%), Hawaii (12.5%), and Nevada (13.2%).

While Florida also has a massive tourism industry, its jobless rate is only 7.4% in August which can be chalked up to a more aggressive reopening plan than states like Nevada or New York.

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