‘The Situation Is Dire’: As Trump Takes Victory Lap, New Jobs Report Reveals Alarming Surge in Permanent Unemployment

Jerri-Lynn here. This is a timely reflection on the dire state of permanent U.S. unemployment as we cruise into Labor Day.

Happy holiday!

By Jake Johnson, staff writer at Common Dreams. Originally published at Common Dreams

President Donald Trump on Friday wasted no time taking a victory lap after the Bureau of Labor Statistics announced the U.S. unemployment rate fell to 8.4% in August, but economists warned a closer look at the new economic figures reveals an alarming surge in permanent joblessness that could portend a prolonged recession if Congress and the White House fail to quickly approve additional relief.

The number of Americans classified as permanently unemployed—as opposed to being on temporary furlough—grew by 534,000 in August even as the U.S. economy added 1.4 million jobs. On Twitter, Trump celebrated the latter data point as “great” and “much better than expected.”

The total number of workers who are permanently jobless is now 3.4 million, according to the bureau’s latest data. Elise Gould, senior economist at the Economic Policy Institute (EPI), wrote in a blog postFriday that contrary to the White House’s rosy spin, the new BLS report shows “the pain is nowhere near over for millions of workers and their families across the country.”

“At this point, the U.S. economy is still down 11.5 million jobs from where it was in February, before the pandemic hit,” wrote Gould. “With this kind of slowing in job growth, it will take years to return to the pre-pandemic labor market. And, without the $600 boost to unemployment insurance, jobs will return even more slowly than had policymakers stepped up and continued that vital support to workers and the economy.”

EPI’s Heidi Shierholz echoed Gould’s assessment, noting in a series of tweets that “the situation is dire” and “the labor market remains in crisis.”

On top of the growing number of Americans whose jobs have completely disappeared due to the Covid-19 pandemic and resulting economic collapse, economist Jared Bernstein noted that another “worrisome development” spotlighted by the new BLS report is “the shift to longer-term unemployment: the share of job losers unemployed for at least 15 weeks has gone from 8% in April to 60% in August.”

“In sum, the failure of the Trump administration to control the virus has led to a slower pace of job gains and, while the jobless rate fell significantly last month, it is still in recessionary territory and more job seekers are at risk of longer-term unemployment,” wrote Bernstein, a senior fellow at the Center on Budget and Policy Priorities. “Importantly, note that this shift is occurring as Congress, particularly Senate Republicans, has dropped the ball on further fiscal relief.”

As Common Dreams reported Thursday, Senate Republicans are preparing to vote as soon as next week on a “skinny” coronavirus relief package that would provide a $300-per-week federal unemployment supplement—just half of the $600 weekly payment the GOP allowed to expire in July—as well as additional funding measures that Democratic lawmakers decried as woefully inadequate.

In a Dear Colleague letter (pdf) on Thursday, Senate Minority Leader Chuck Schumer (D-N.Y.) slammed the GOP proposal as an attempt “to ‘check the box’ and give the appearance of action rather than actually meet the truly profound needs of the American people.”

“With no money for rental assistance, no money for nutrition assistance, and no money for state and local services, the census, or safe elections,” wrote Schumer, “Senate Republicans would be making another unacceptable and ineffective attempt at providing relief.”

The Washington Post‘s Jeff Stein reported Friday that the decline in the unemployment rate “emboldens voices in White House saying more stimulus is unnecessary,” even as economists warn that failing to provide additional relief funds—including substantial aid to cash-strapped state and local governments—could have catastrophic economic consequences in the near future.

Despite several recent attempts to jumpstart negotiations, Covid-19 relief talks between the White House, Schumer, Senate Majority Leader Mitch McConnell (R-Ky.), and House Speaker Nancy Pelosi (D-Calif.) have been stalled for weeks as tens of millions of Americans attempt to meet basic needs with drastically reduced incomes.

“Nearly 30 million Americans are going hungry,” Sen. Bernie Sanders (I-Vt.) tweetedFriday. “Meanwhile, three members of the Walton family grew their wealth by $3.7 billion in a single day. Mitch McConnell and the do-nothing Republican Senate refuse to help the working class. Pathetic.”

 

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29 comments

  1. jackiebass

    Probably some of the first businesses to premaritally close their doors would be what I call very small businesses. Those with 25 or fewer employees. They will probably never return.Where I live in upstate NY, these type of businesses collectively employ a lot of people. They lack a cushion to survive in these times. This is probably the case in much of rural America. For these areas any recovery will be slow. Probably a decade and longer. Some big employers ,like schools, towns, small cities, and counties that depend on state and federal funding are in trouble and things will only get worse. State and local government have lost their revenue stream. In a time where schools need more funding NYS is cutting state aid to school districts. The same is true for local governments . Since employers are their biggest expense they will have to cut employees. These cuts will be in the near future. It will be tied to a new fiscal years that happen on Jan 1. Unless the federal government comes to the rescue we are in big trouble. This could snow ball into a depression. I hate to be pessimistic but I see the future as being bleak.

    Reply
  2. Dave_from_Austin

    On the relationship between the unemployment rate and the change from $600/week to $300/week in the money paid to the unemployed: my brother- over 75 years old- is an Uber driver in southern New England. For months there has been a critical shortage of Uber drivers so my brother was making what for him was a lot of money in “per ride” bonuses from Uber.

    Last week, very suddenly, the number of Uber drivers went up, the bonuses vanished and the competition between drivers for customers increased. My brother put the change down to the reduction in unemployment benefits. Many people who earned less than $500/week by working were suddenly getting government check for $600 if they were unemployed. They were rational people who could count so they stayed out of the labor market until the number went down to $300 at which point they rushed back to work and started driving for Uber.

    I’m not sure the 50% one-time drop was the way to manage the problem but it worked- for some people. For others in places where there is no work it just made the unemployed poorer and more desperate. The two parties could not agree on a change that protected some while encouraging others to go back to work- after all, this is an election year.

    Reply
    1. TheCat

      There shouldn’t be anyone working full time earning less than $500 a week. That’s poverty level, as is $600 a week.

      Reply
      1. ambrit

        It depends; the Devil is in the details.
        Remember that the Federal Minimum Wage is still $7.25 USD per hour. That adds up to $290 USD a full work week. The fact that the minimum wage has not been raised since 2009 tells us all we need to know.
        Phyl and I get by on about $400 USD a week with our Social Security. We own a place to live. If we had to rent, we would not make it. We are not aberrations. Except for the PMC cohort, we are firmly in the lower tranche of the mainstream of the “retired” population. While the Feds raise the retirement age to “balance” the Social Security “trust fund,” people are retiring earlier, out of necessity. The figures are also not to be trusted at face value. The extremes of wealth distribution now prevailing in America mask the absolute decline in the lower tranche’s wealth and standards of living. While the “average” may look fine, just a hand-full of truly extremely wealthy can skew the numbers significantly. In reality, the vast majority of the population is struggling, if not outright suffering. It is just that the “averages” conceal this fact. Fun with numbers.
        The olde tyme Social Safety nets have been badly damaged over the past few decades of neo-liberalism in the American government.
        Many have noted that Franklin D Roosevelt saved Capitalism from itself in the 1930s by doing the opposite of what today’s ruling elites are doing. As the man said; “Every new generation has to re-learn the lessons of their forebears.” Today’s Capitalism has planted the seeds of it’s own destruction. What comes next? I fear to find out.

        Reply
        1. Bob Lich

          Well Said:
          “Many have noted that Franklin D Roosevelt saved Capitalism from itself in the 1930s by doing the opposite of what today’s ruling elites are doing. As the man said; “Every new generation has to re-learn the lessons of their forebears.” Today’s Capitalism has planted the seeds of it’s own destruction. What comes next? I fear to find out.”

          Reply
  3. fresno dan

    I’ve commented many times on the inadequacies of the “unemployment” rate. The number of people unemployed, by any realistic measure, instead of the contrived measures used, is still a disaster. Of course, it serves the interests of the duopoly that unemployment is discounted.
    It really says something about what this society thinks is important that the hardship that millions upon millions of people will suffer because of this unemployment crisis gets such a paucity of attention.
    https://www.thestreet.com/mishtalk/economics/huge-discrepancies-cast-doubt-on-the-better-than-expected-jobs-report

    Reply
    1. LowellHighander

      When I started working at the Bureau of Labor Statistics back in the late 1990s, I was amazed – and, of course, appalled – to find out that a person need only work one hour a week, in the week when the survey was being taken (which includes the 12th of the month), to be considered “employed”: https://www.bls.gov/cps/definitions.htm#employed

      To my knowledge (and I was working at the lowest level in the Economist series), not one President ever tasked the Bureau with devising a more realistic definition. Not one. Compounding this problem is the emphasis that most of the U.S. media puts on U-3, while they pretty much ignore more comprehensive measures of unemployment.

      [All of which makes it easy to understand why the faculty at my graduate school (U-Maine) did not mind at all that I wrote a thesis not requiring any data. (I wrote about ethics & justice within economics, and provided a final, definitive answer.)]

      Reply
  4. Pat

    I have both affection and respect for Sanders. I also recognize that as an honorable man he is still bound by all agreements he made to run as a Democrat. That said, I would appreciate if he had spread the blame more equally. When the House can go on vacation, and Pelosi is refusing to consider any possible leverage for their deeply pathetic boondoggle laden bill perhaps “Do nothing Congress, especially the Mitch McConnell led Senate” would have been nice.

    The lack of anything but lip service level of concern from both tribes is getting more and more obvious. Hope Nancy’s freezer is well defended…

    Reply
    1. lyman alpha blob

      My prediction is that if the Democrat party doesn’t manage to snatch defeat from the jaws of victory once again and wins the presidency and maybe the Senate too, in late January while controlling all of Congress, we will hear the voice of whomever is propping Biden’s carcass up at that time tell us that the Democrat party would really like to deliver on their promises of relief for suffering citizens if it weren’t for that meddling Republican minority that blocks them at every turn.

      Reply
        1. NotTimothyGeithner

          My personal favorite was when they would tell us to just wait until we see how great ACA is when its up and operational in only a few more Friedman Units.

          Reply
      1. Paul Kleinman

        Of course it’s true that the centrists controlling the Demo Party will find a host of reasons not to honor or at at least not to fully honor promises for relief made today. But they will have to face more progressives in the House, and a larger than ever (at least since Reagan) section of rank and file who won’t be put off so easily by “not now” excuses. It’s also true that Trump right wing will do all that it can to sabotage any Demo Party relief measures -and they will find ways even if they also lose the Senate.

        Reply
  5. Socal Rhino

    Wolf Richter had repeatedly shown that these numbers are much lower than the count of people receiving unemployment benefits. Those represent 20 per cent of the workforce.

    Reply
  6. edmondo

    Here in AZ, we have an additional problem. The State legislature capped UI compensation at $250 a week (even though unemployed in AZ are supposed to receive 80% of their former salary). We’ve gone through a $1.2 BILLION reserve in the UI fund. There’s no more money after this month. Additionally, AZ was one of the states that jumped on Trump’s $300 a week “bonus” to replace the $600 a week payment. That FEMA money only has 3 weeks left to go. All that money is also gone.

    People here in Arizona are used to eating at least once a day. Time to start sharpening the guillotine?

    Reply
  7. John Hacker

    Morning all,
    The chart “Number of people unemployed, not due to temporary layoff graph from the department of labor statistics”; what’s up the horizontal line across the bottom; Apr 19, Oct 19 image from tweet image shows the same stuff. Fake news? Please correct my error.
    Thanks John

    Reply
  8. Starry Gordon

    If we follow the (alas) late David Graeber’s theories of ‘bullshit jobs’ (and some other similar theories), a good deal of pre-plague employment was actually not producing anything needed or wanted, and that disjunction was exposed by the plague — since its arrival, people have continued to eat, wear clothes, live in houses, drive about, and so on, even though a lot of employment was terminated, suspended, or metaphorized. In other news, a good deal of the money derived from employment went into payments for empty goods and services, like real estate prices, rents, student debt — products whose prices were mostly a case of giving rich people money for being rich, rather than for value received. These facts suggest to me that what is required going foward is a considerable reset of the structure of the economy, something like UBI, and a cycling down of such luxuries as war, imperialism, funny money for the wealthy, educational class filtering, medical bill padding, and so on. In short, the old concepts of jobs, employment, unemployment and related matters need to be reviewed and rethought. Or, we can just keep staggering down further into Abysmal Valley.

    Reply
    1. Billy

      Yes and notice how productivity supposedly shot up. Fewer employees and them staying home gets a lot done. There is no pay increase of course to go along with that, although the commute and clothing savings are something.

      “Good News: The BLS notes that the 10.1-percent increase in nonfarm business sector labor productivity in the second quarter of 2020 is the largest quarterly increase since the first quarter of 1971, when output per hour increased 12.3 percent.
      Horrible News: Output decreased 37.1 percent and hours worked decreased 42.9 percent.

      Hours worked decreased more than output so productivity rose.”

      https://www.thestreet.com/mishtalk/economics/largest-increase-in-productivity-since-1971-at-what-cost

      Reply
    2. Doug

      Clever insights Starry, and dont forget about the Trillions Zombie Banks are given as well as the oil and gas co’s, socialism for the big businesses, austerity for the people.
      Hopefully the masses will catch on that Supply Side Economics aka “trickle down theory” a nonsensical farce that only trickles up to the super wealthy classes who earn their easy income by owning all the stocks, bonds and assets..
      Keynesian economics to create jobs in each state would help many Citizens by creating many new jobs to decarbonize our energy and economic society, and support the real entrepreneurs who add value to the economy by innovating,
      G

      Reply
    3. ambrit

      I am firmly going with the Jackpot scenario. The “Best and Brightest” want a die back of the human population, for various reasons. No UBI needed when killing the “useless eaters” off does the trick “on the cheap.”
      Sounds crazy? I would have said so just two or three years ago. However, the sheer scale and degree of incompetence and malice on display in the ‘Ruling Elites’ and their enablers has me convinced. The plan is to ride the collapse down and pick up the pieces. [Tinfoil Hat optional.]
      I now intend to self medicate. Non export Jaegermeister and a pack of East Front medicinal smokes should do the trick.

      Reply
      1. Starry Gordon

        Of course when I say ‘what is required’ I am indulging in the idle fantasy of supposing that the state and people were going to try to make the transition to the post-plague arrangement with as little pain and suffering as possible. I should be more subjunctive: What would be required if etc. etc. etc.

        Reply
        1. ambrit

          I grok the idea.
          I really should include a snark tag, even when I am being somewhat serious. The old concept of not ascribing to malice what plain old stupidity will adequately explain comes into play.
          Related to the above; I worry a bit that this level of dysfunction might well be a natural aspect of more complex systems at work. Thus, systemic collapse might be a naturally occurring self regulating function of large population densities.
          I believe that Frank Herbert did a book on just such a possibility, with some catchy aliens thrown in for dramatic tension.
          Stay safe!

          Reply
    4. Paul Kleinman

      I have to question the conceptual thinking here. I live in a poor mixed neighborhood with many Latinos. People are making do by married children and their families moving into their parents rented homes. The number of broken down cars being worked on to get them running again has doubled. I see more people riding a bicycle to work and this isn’t an exercise craze. The point is that a lot of poor working class people are hurting- more than they did two years ago, and certainly more than they did 5 years ago. I don’t believe that the fundamental problem with our economy is too many bullshit jobs but rather the terminal stage of predatory, plutocrat rule driving down the poorest sections of the working class. Revolutions are made because there is no other option.

      Reply
  9. Phil in KC

    The 8.4 percent number just seems off to me. Digging into the EPI report, there are officially 13.6 million unemployed. There’s an additional 1.1 million “employed but not at work,” which I would guess means on furlough. Then there are 4.3 million workers who have dropped out of the labor force. I know a few of those. That totals 19 millions not working, or 11.5 percent.

    Also from the EPI report, the biggest job losses are in the hospitality sector, down 4.1 million positions. I would guess of those in this sector who have returned to work and subsist mainly on tips, their income has taken a big hit. If you don’t make enough in tips plus your measly hourly pay to total at least the minimum wage, then the employer has to kick in the difference to bring you up to that level. I would guess that there’s many a bartender or wait person struggling along on minimum or just above who once made some serious bank.

    People are in fact spending money right now, but not on frivolous things. Non-chain restaurants are starting to close their doors permanently. Meanwhile, the local lumberyard/hardware store can’t keep enough wood, sand, gravel and pavers in stock. People are beefing up their properties, instead of ordering beefsteaks. That’s my take, anyway.

    Also, I see ads for jobs, but they don’t look like very appealing jobs–warehouse, big box retail, grocery stores, and the like.–and certainly don’t offer much in the way of wages.

    Reply
  10. Wellstone's Ghost

    Thank you for this Phil. When I saw the “permanently jobless is now 3.4 million”, my skepticism antennae went straight up and out. No way, no how.

    3.4 million divided by 50 states = 68,000 people per state

    That would be the attendance on a Sunday afternoon Seahawks football game.

    I realize this is a crude measurement, but I feel it somehow shows the ridiculousness of the number. Just my gut feeling I guess.

    In a country of 331 million people, this just seems way off the mark.

    The second round of business closures is underway up here in Seattle.
    The businesses that reopened around June (mostly service industry tourist related) and tried to reap what revenue they could from an abysmal summer tourism season realize that the Fall/Winter season will only be worse.
    Why bother.
    There are whispers among the medical community here that a second round of infections is all but certain.
    Possibly another total shutdown due to its severity.
    On the other hand. It looks to be a beautiful and sunny 80′ degree day for Labor Day.

    Reply
  11. cjonsson

    This is an attack to discredit the USPS. Attacks on services like the post office and health care to privatize them to companies for profit making money on our government services as been relentless. Just say no. It won’t be better having private co. Why destroy one of the best public services we have for no good reason?

    Reply

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