The number of Americans who have been unemployed for at least 15 weeks grew by about 4.7 million people in July. That was the biggest monthly increase in records back to 1948 and highlights the need for fiscal relief.
In the wake of the last recession, the number of people in the 15 weeks or more category hit a record 9.1 million in 2010, and it took four years to reduce that by half. Just how fast Americans will be able to get back to work this time is unclear.
“When we look at where we go from here, we’re past that mechanical bounceback,” said Sarah House, senior economist at Wells Fargo & Co. “Now you have to justify, from a cost perspective, bringing back new workers. And for that you need revenue to increase” and economic activity to improve, she said.
The economy is forecast to rebound in the third quarter but recovering to pre-pandemic levels could take years. Meanwhile, the replacement of the extra $600 in weekly jobless benefits with a smaller amount and a lack of new funding for the Paycheck Protection Program for small businesses means less spending and investment in the economy.
“This slowing trend in the economic recovery is deeply concerning,” said Daniel Zhao, senior economist at jobs website Glassdoor. “The risk is that will spill over to businesses and the rest of the economy, as well as households.”
And Trump’s order to provide more stimulus “doesn’t change the overriding fact that the public health crisis will determine the trajectory of the economy,” Zhao said.
Workforce participation has also come under pressure. The overall participation rate and that of prime-age workers, or those age 25-54, edged lower in July.
At the start of the year, the rate among prime-age workers had finally clawed its way back to levels more consistent with those prior to the 2007-2009 recession. That took over a decade and was driven by a key group -- women.
Around downturns, participation tends to decrease at least in part because of a lack of job opportunities. But for women in particular, the closing of childcare businesses, summer camps and uncertainty around school reopenings adds pressure on them while working from home, or after being laid off.
Job losses may also have a deeper impact on Black workers, like in the last recession. While the White unemployment rate has already dropped by 5 percentage points since its pandemic high in April, the rate for Black Americans has declined by just 2.2 points since its pandemic high in May.