U.S. hiring slowed in July as the coronavirus outbreak worsened, and the government’s jobs report offered signs Friday that the economic damage from the pandemic could last far longer than many observers originally envisioned.
The United States added 1.8 million jobs in July, a pullback from the previous two months. At any other time, hiring at that level would be seen as a blowout gain. But after employers shed a staggering 22 million jobs in March and April, much larger increases are needed to heal the job market. The hiring of the past three months has recovered 42% of the jobs lost to the pandemic-induced recession, according to the Labor Department’s report.
Though the unemployment rate fell last month from 11.1% to 10.2%, that level still exceeds the highest rate during the 2008-2009 Great Recession.
Roughly half the job gains were in the industries hit hardest by the virus: restaurants, retail shops, bars, hotels and entertainment venues such as casinos. Those jobs have been relatively quick to return after the broadest shutdowns ended in May and June.
But economists worry that the next leg of job growth will be harder to achieve, particularly as the virus dampens confidence, leaving much of the country only partially reopened, most travel on hold and millions of employees working from home. The number of people unemployed for longer than 15 weeks jumped in July to more than 6 million, a sign many of the unemployed will have to find work at new companies or even in new occupations, a potentially lengthy process.
Constance Hunter, chief economist at accounting firm KPMG, noted that many jobs in hotels, sports stadiums and the travel industry probably will not return until a vaccine is developed.
“When are you going to be comfortable again being in an air-conditioned room with 400 people?” she asked. “There are whole parts of the economy that will remain unemployed until we have a much tighter control of this virus.”
The jobs report emerged as new infections run at about 55,000 a day. While that’s down from a peak of well over 70,000 in the second half of July, cases are rising in about half of the states, and deaths are climbing in many of them.
In other virus-related developments Friday:
— New York Gov. Andrew Cuomo announced that schools can bring children back to classrooms for the start of the school year, citing success in battling the virus in the state that once was the U.S. heart of the pandemic. The decision clears the way for schools to offer at least some days of in-person classes, alongside remote learning.
— Russia boasted that it’s about to become the first country to approve a COVID-19 vaccine, with mass vaccinations planned as early as October using shots that are yet to complete clinical trials. Moscow sees a propaganda victory, but scientists worldwide say the rush could backfire if the vaccine is neither effective nor safe.
Back in the spring, the widespread hope was that temporarily shutting down the economy would defeat the virus, after which businesses could quickly reopen and call back laid-off workers. But the resurgence of the virus in much of the country has reversed some re-openings and made it harder for many people to get back to work.
In addition to the rising number of longer-term unemployed, the proportion of Americans who are either working or looking for work slipped last month to 61.4%, down 2 percentage points from February. That suggests that many out of work see little prospect of finding a job.
And the number of Americans who say their job losses are permanent was flat last month despite the rise in hiring.
Cassy Menon, 36, was furloughed March 17 from her job arranging travel for university students, faculty and staff, and was originally told the layoff would last 90 days. She was initially able to keep her health insurance.
“After I stopped crying, I immediately updated my resume,” she said, and began looking for work. An additional $600 in unemployment aid from the federal government helped her and her husband stay on top of bills, and her health insurance helped pay for the anti-depressants she began taking.
But in June, she was told that as of July 1 the job cut would become permanent. After applying for 300 jobs, she has had two interviews, both in mortgage banking. Both would pay much less than her previous job.
Friday’s report suggested that high unemployment and shriveled incomes for many households will remain an issue through the November elections and a potential threat to President Donald Trump’s re-election prospects.
Trump quickly celebrated the report with a pair of tweets, including one that read “Great Jobs Numbers!” But aides are nervous that the recovery is still fragile. The president remained out of sight Friday, beginning a three-day weekend at his Bedminster, New Jersey, golf club.
His Democratic opponent, Joe Biden, was quick to blame Trump for the potentially faltering recovery.
“It did not have to be this bad. We are in a deeper economic hole than we should be because of Donald Trump’s historic failure to respond to the pandemic,” Biden said.
Many economists are urging Congress to extend various forms of economic aid to sustain a recovery. A supplemental $600 weekly federal unemployment payment expired last week. House Democrats have voted to extend it through July, while Senate Republicans want to reduce it to $200. An eviction moratorium for federally subsidized housing has also ended. Both sides have agreed to another $1,200 stimulus payment but are deadlocked on whether to provide more aid to state and local governments.
The talks between the two sides are on the brink of collapse, even though they had hoped to strike a deal as soon as Friday.
“A lot of households will run out of money in the next few weeks,” said Eric Winograd, an economist at AllianceBernstein, an investment firm. “If government does not make up that income, those households will not be able to consume in a way that supports the recovery.”
Some companies that are hiring complain that the generous unemployment benefits have made it harder to attract candidates. But several economic studies suggest the benefits have not been a disincentive.
Mike Parra, CEO for the Americas at DHL Express, said his company is seeking to fill 1,700 jobs. But the resurgent virus has slowed applications in California, Texas and Florida, where outbreaks have been particularly large.
In the meantime, some employers are adapting to the pandemic by doing business with fewer workers.
Peter Klamka, owner of the Blind Pig restaurant in Las Vegas, is now concentrating on pickup and delivery orders. His restaurant’s revenue plummeted along with tourism.
Klamka is using data gathered from online and mobile ordering to fine-tune his menu and prices. He knows, for instance, that if he drops the price of a pizza by $2 on a Friday night, he will attract perhaps 25 more orders. That knowledge allows him to tweak his inventory and staffing.
Yet he doesn’t expect to do much hiring. He is operating with just five employees, down from 25 before the pandemic.
“There certainly isn’t sufficient business to bring anyone back,” Klamka said.
