More of U.S. Labor Force Being Lost; We Must Generate Millions of Productive Jobs
Aug. 31, 2020 (EIRNS)—Three newly released reports show that the mission of productive re-employment of unemployed and underemployed Americans is becoming more urgent. The number of eligible workers who have dropped out of the American labor force from discouragement at getting skilled employment—or loss of skills from long unemployment—is now at 7-8 million; it could go to 15 million by year’s end, nearly 10% of the entire workforce. New basic economic infrastructure is waiting to be built for the United States and the world, leading with a “front-end” mobilization of modern healthcare facilities and equipment for developing nations where the COVID pandemic is raging. Credit is needed, and a summit decision of major nations’ leaders to issue it.
The U.S. Labor Department reported on Aug. 28 that the number of people who have become “permanently unemployed” during 2020 had reached 3.9 million as of mid-July. This means workers whose “layoffs” or “furloughs” had turned into formal firings, terminations. Second, the Federal Reserve Board reported the same day that this permanent unemployment will reach at least 6.5 million, and perhaps up to nearly 9 million, by the end of the year. This is primarily a small-business phenomenon and predominantly lower-wage and non-productive employees. There is one estimate—by Oxxford Information Technology which claims a database of 32 million companies—that 4 million businesses will close during 2020 and only 1.3 million be started.
The 9 million figure for permanent firings approximately equals that of 2009, after which it took a decade even to return to 2008 employment levels. Some of these workers have found new employment, but the Federal Reserve Board estimates that “long-term unemployment”—without any work for at least six months or more—will reach 4-6 million by January. These are the workers who are likely to lose skills and/or drop out of the workforce, joining more than 8 million eligible workers already out of it.
The August report of the White House Council of Economic Advisors, however, judges that 80% of the February-May layoffs were “likely to be temporary.” It says, “it will be important to ensure that the decline in the unemployment rate continues over the next several months and that these temporary layoffs do not result in large permanent job losses.” This shows wishful thinking from Jason Furman’s Council, rather than a call for “action, and action now.”
The Democratic answer if anything is worse: Assume continued mass, long-term unemployment through the beginning of 2021 and therefore extend elevated unemployment benefits at least that long. Otherwise give $500 billion to states and municipalities to keep more millions, including first responders, from being laid off, for now.