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(CNN) – The US job market is at a tipping point 10 months into the pandemic: millions of people remain unemployed as infections continue to rise and the incipient job recovery has stalled.
When President-elect Joe Biden moves into the White House next month, he will inherit a job market on the ropes. In just two months, America’s unemployment rate went from a nearly 50-year low of 3.5% to 14.7%, the highest on record, in April.
During the summer, the job market recovery looked decent, steadily eroding the more than 22 million jobs lost during the pandemic. But the job recovery has turned anemic in recent months.
The Biden administration will need to stimulate job growth and continue to support the unemployed, economists agree. They point to sobering comparisons from about a decade ago: It took more than five years for the American labor market to recover after the end of the Great Recession, when far fewer jobs were lost.
The unemployment rate dropped a bit to 6.7% in November, for example, but the decline was due to more workers leaving the workforce for good. In recent months, a disproportionate number of women have left the workforce and older people have been forced to retire early.
“As the Covid-19 crisis continues, more ties between employers and employees are broken, amplifying the economic and social damage,” the Bureau of Labor Statistics said in its Monthly Labor Review on Tuesday.
Meanwhile, weekly claims for unemployment benefits remain stubbornly high, nearly four times higher than a year ago. Thursday’s Department of Labor report is expected to show another spike to 833,000 seasonally adjusted first-time claims in the week of Christmas. On the other hand, economists predict that the unemployment rate will rise to 6.8% in December, the first increase in the unemployment rate since April.
Help is on the way … but not soon enough
Job recovery is stagnant, and the biggest source of help, a widespread vaccination program, is still months away.
“The timing of the vaccine launch is the main factor affecting the speed of the job market recovery,” Cailin Birch, global economist at The Economist Intelligence Unit, said in emailed comments.
More than two million Americans have already received the first dose of the two-shot vaccine, but Birch believes it will take until the third quarter of 2021 for vaccination rates to be high enough to allow consumer behavior to slow. resume at pre-pandemic levels. Until then, moderate activity will be a drag on the economy.
Eventually, the vaccine will help revive jobs in sectors that require face-to-face contact, such as hospitality. Goldman Sachs economists expect a hiring jolt in the middle of the year to lower the unemployment rate to 5.2% by the end of 2021. Until then, lower-income jobs, such as those in the Restaurants, the hardest hit, are still most at risk. Temporarily lost again as states take refuge to prevent the virus from spreading further. And the colder winter weather doesn’t help either.
While the United States awaits a widespread vaccination, the job market will continue to suffer greatly. Tighter restrictions in response to high infection rates will mean more unemployment during the winter months, Birch said.
Shot in the arm
Unfortunately for Biden, and the unemployed, he has few tools at his disposal for a short-term boost.
A key tool is encouragement. While more pandemic stimulus was enacted last Sunday, many economists agree that more stimulus from Washington will likely be needed both to support the recovery and for those who have not yet been able to return to work.
“Stimulating the economy to create jobs is critical,” said Heidi Shierholz, senior economist and policy director at the Institute for Economic Policy, “both for the 26.1 million workers who are being directly hurt by the recession because they are unemployed. work or have seen their hours and wages cut, and the millions more who saw their bargaining power disappear when the recession took hold of them.
These 26 million include the officially unemployed, those who left the workforce, unemployed but misclassified workers, and those still employed whose hours and wages have been reduced. The higher the unemployment rate, the more workers will be forced to accept whatever job is available, eroding bargaining power, especially for the lowest paying jobs.
Losing the boat with more stimulus next year could exacerbate these disastrous consequences and slow down the recovery.
Washington lawmakers will have to consider worker protection in their plans for more stimulus, especially since many still cannot return to jobs that would put themselves or their family members at risk of contracting the virus.
Going forward, Biden has also proposed investing heavily in America’s infrastructure, which would create jobs, as well as workforce training programs such as apprenticeships. Such initiatives could change the US job market in the medium and long term.
This story was first published on CNN.com, “Joe Biden is inheriting a big problem from Donald Trump: America’s job recovery is stagnant.”
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