The economy suffered 2.9 million permanent job losses in July, the Labor Department said in the monthly jobs report Friday, slightly fewer than the month before.
Economists had feared the possibility of a spike in permanent job losses, as would happen if the millions of workers who were sent home during the worst of the pandemic shutdowns were not able to ever return to their posts.
“It’s a ticking time bomb, the longer people are unemployed and not called back by their employer this will start tipping over into permanent unemployment,” said Nick Bunker, director of economic research at the Indeed Hiring Lab.
“Joblessness is still tremendously high, but it is moving in the right direction,” Bunker said of the Friday report.
Permanent job losses have thus far made up only a small fraction of the jobs that have disappeared since the pandemic started in March, with the vast majority of unemployed workers classified as on temporary layoff. But permanent layoffs rose from March through June.
The permanent layoffs also moved beyond service-sector workers to affect workers such as managers, financial analysts, and software developers, who initially were not affected by the downturn.
“We’re starting to see signs of the domino effect, one industry impacting another is starting to occur on the edges — the economy is all interconnected,” said Bunker.
The interconnectedness of the economy means that even non-service industry professions that don’t require physical contact are starting to see permanent job losses. When more than half of a companies clients have gone out of business, there’s not as much work to do, said Betsey Stevenson, a former chief economist at the Labor Department and a member of the Council of Economic Advisers during the Obama administration.
Friday’s report showed that the economy added 1.8 million jobs on net and that the unemployment rate fell to 10.2%.
Economists told the Washington Examiner the first line of defense against permanent job losses is to have sufficient unemployment benefits provided by the federal and state governments.
“There’s no evidence of the unemployment benefits discouraging people from going back to work yet,” said Marta Lachowska, a labor economist at the Upjohn Institute for Employment Research who specializes in research on employment and expenditure. “The best way to help people right now is with higher unemployment benefits for longer periods of time.”
