Researchers from the top economics school in the United States are warning that they estimate that 42% of the 36.2 million Americans who have lost their jobs over the past 10 weeks will not regain their jobs.
The report titled “COVID-19 Is Also a Reallocation Shock,” issued by the University of Chicago’s Becker Friedman Institute found that while workers’ former jobs are not coming back, there are some growing job sectors.
There is a shift and some major corporations are hiring. Those companies are hiring in thousands or tens of thousands, but the new hiring will not come close to making up the difference in the job losses.
In Rhode Island, the hospitality industry is being hit hard and numerous restaurants have already declared they will never reopen.
Restaurants Eleven Forty Nine in Warwick, Nick’s on Westminster and Bravo in Providence, Red Stripe in East Greenwich, and Griswold’s in Newport have all announced they are permanently closed, impacting hundreds of jobs.
As of Monday, the Rhode Island Department of Labor and Training reported 221,898 have filed for unemployment insurance, 53,060 have filed for “gig” economy benefits, and another 22,127 have filed for temporary disability insurance benefits.
Impact of the Coronavirus on Employment
“The COVID-19 pandemic and efforts to contain the virus are exacting a staggering economic toll in countries around the world. China’s economy shrank 6.8 percent in the first quarter of 2020 on a year-on-year basis, and Eurozone economies shrank at a 14.8 percent annualized rate,” write the report’s authors Jose Maria Barrero, Nick Bloom and Steven Davis.
“In the United States, nearly 28 million persons filed new claims for unemployment benefits over the six-week period ending April 25,” they continue. “The U.S. economy shrank at an annualized rate of 4.8 percent in the first quarter of 2020, and many analysts project it will shrink at a rate of 25% or more in the second quarter. Yet, even as much of the economy is shuttered, some firms are expanding in response to pandemic-induced demand shifts.”
“Drawing on our survey evidence and historical evidence of how layoffs relate to recalls, we estimate that 42 percent of recent pandemic-induced layoffs will result in permanent job loss. If the pandemic and partial economic shutdown linger for many months, or if pandemics with serious health consequences and high mortality rates become a recurring phenomenon, there will be profound, long-term consequences for the reallocation of jobs, workers and capital across firms and locations.”
The unemployment rate is at its highest since the Great Depression. The current situation differs from that of the early 20th century in a few ways that may prevent the U.S. from entering another depression.
The pace of homeowners requesting mortgage relief because of the coronavirus pandemic has slowed considerably.
Fewer Americans are calling their mortgage servicers to ask for relief from mortgage payments, but the housing industry isn’t out of the woods yet.
More than 4.1 million homeowners are in forbearance plans now, according to the latest data from the Mortgage Bankers Association.
While mortgage servicers are still facing stress because of the record deluge of requests for payment relief, signs suggest that homeowners’ prospects have improved as parts of the country have begun to emerge from coronavirus stay-at-home orders.
A record drop in housing starts…