Financial Lifelines Are Ending As Longer-Term Unemployment Is Growing
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The good news is that millions of workers got their jobs back in June. The really bad news is that the unemployment rate is still at double digits, exceeding the peaks during the Great Recession. The even worse news is that unemployment is becoming a more permanent fixture for millions of workers, just as the financial lifelines that Congress created early in the pandemic are expiring without any the president or Senate Republicans any urgency to act.
The number of unemployed dropped precipitously in June, but that headline number from the Bureau of Labor Statistics (BLS) comes with serious caveats. Yes, the labor market regained 4.8 million jobs. But total employment in June was still down by 14.7 million from its level in February and the he unemployment rate still stood at 11.1% after hitting a low of 3.5% in February. Moreover, the BLS based its estimates of the June labor market on a snapshot before states like Texas, Arizona and Florida reimposed restrictions again that caused more layoffs.
And longer-term unemployment is becoming a growing reality for millions of workers. Increasingly, job losses that people thought would be temporary are turning into permanent losses. A total of 2.9 million unemployed workers said in June that they had permanently lost their jobs, an increase of 588,000 people or 25.6% of permanent job losers from May.
The increases in permanent job losses hit non-white or Latinx workers especially hard. The number of Latinx permanent job losers grew by a whopping 60.7% last month. The number for African-Americans increased by 29.5% close to the 30.4% increase for white workers. But, the total number of white unemployed workers fell by 14.0%, while the total number of unemployed Black workers dropped only by 5.7%. As unemployment remains higher and declines in total unemployment are slower among Black workers, the chance that temporary layoffs will turn into permanent ones in the coming months is also greater for African-Americans.
Permanent job losses make up an increasing share of unemployed workers and are somewhat more widespread among Black and Latinx workers. Permanent job losers made up 16.1% of all unemployed Black workers, 18.4% of unemployed Latinx workers and 12.6% of unemployed Asian workers, compared to 15.7% of white workers. Black or Latinx workers have been especially hard hit by the early stages of the pandemic and the employment fallout from the recession will burden them longer than is the case for white or many Asian workers.
The average length of unemployment is also increasing in another sign that the labor market pain is lasting longer for more and more workers. African-American workers were out of a job on average for 15.4 weeks in June, followed by Latinx workers who had been looking for an average of 14.5 weeks. Unemployed Asian workers looked for an average of 13.1 weeks and white workers for 12.7 weeks. Unless the labor market dramatically improves, millions of workers will find it difficult to get a job in the coming months, driving the number or permanent job losses and long-term unemployment quickly to levels not seen in years. These are not just numbers, but real economic hardship for millions of families . They will struggle to pay their bills, including their mortgage or rent, potentially facing foreclosure and eviction, among other dire consequences.
It is hard to see how millions of workers will not see massive economic pain for the rest of the year. With the unemployment rate still at double digits, exceeding the levels during the Great Recession, all unemployed workers will have a hard time finding a new job. This pain will be especially acutely felt by Black and Latinx workers, particularly women. In the meantime, the extra $600 per week in unemployment benefits that Congress approved in March to help workers will end before the end of July, unless Congress acts. And, eviction freezes and mortgage deferral programs are ending, too. Those assistance programs are crucial for people, who face unemployment for extended periods of time. Without help from policymakers soon, millions of families will face massive economic hardship such as evictions and an inability to regularly afford food. The administration and Congress thus need to quickly extend the financial lifelines that American families desperately need.