Barely two weeks later, the coronavirus struck. July’s unemployment rate of 10.2%, while almost a point below that of June, was nearly three times that of February. And it’s not likely to hit that number for a long, long time.
Three factors will weigh on the labor market for months, perhaps years to come:
1. Just as businesses ramp up in good times, bringing on new employees, opening new outlets and increasing wages and benefits, the process reverses itself during a downturn or recession. Companies that have survived the immediate effects of the shutdown that began in earnest in March are not eager to go back to the way things were. Many have found they can do with less and have become more efficient, learning to deal with employees working remotely and without offices and corporate overhead. While many furloughed workers have been brought back, many also have been deemed surplus to requirements.
“Companies always hire back their best workers first,” CUNA Mutual Group senior economist Steve Rick points out. “But a lot of firms will take this opportunity to lay off their least productive workers.”
2. There will be fewer jobs available for those seeking them. In January, the ratio of unemployed workers to open jobs stood at 0.8%, meaning there were more than enough jobs for everyone who wanted one. But since the pandemic struck in March, that number has risen as high as 4.6% and is currently in the mid-3% range.