The 4.8 million jobs added last month was the highest figure since the government started keeping records in 1939 and well ahead of economists’ predictions of around three million jobs, spurring Trump to say “our economy is roaring back.”
Typically lower paying posts in the leisure and hospitality sectors accounted for 2.1 million jobs, or around two-fifths of the added jobs, Reuters reported.
The boost to payrolls propelled unemployment downwards to 11.1 percent—a drop from 14.7 percent in April. However even as companies reopen, many workers are finding their jobs are no longer available.
Only one third of the 22 million people who lost their jobs in March and April have so far gone back to work while those who permanently lost their job increased by 588,000 to 2.9 million, according to Reuters.
Senior U.S. economist at Capital Economics, Andrew Hunter, said that it was “inevitable” the number of permanent job losses would increase.
“It is very unlikely you are just going to get a complete V-shaped recovery with no lasting damage. On the one hand, there are clearly going to be businesses that just weren’t able to survive the lockdowns and have had to close,” he told Newsweek.
A report by the Congressional Budget Office (CBO) this week said that the hardest-hit industries were those that employed low wage workers and that African American, Hispanic, and female workers have borne the brunt of job losses because they make up a disproportionate share of jobs with elevated risks of exposure to the coronavirus.
By the start of the next decade, the CBO predicted unemployment would be 4.4 percent, still higher than the 3.5 percent it was in February.
“Although the labor market is expected to improve… the unemployment rate remains higher through 2030 than it was before the pandemic,” it concluded.
A Washington Post/Ipsos survey from the start of May found that around 23 percent of layoffs were perceived as permanent when they happened.
This figure chimes with analysis by the University of Chicago’s Becker Friedman Institute, which showed that employers believed that 23.5 percent of their layoffs between March 1 and mid-May were permanent at the time of job loss.
This means that out of the 27.9 million Americans who filed new claims for unemployment benefits in the six weeks ending April 25, there would be around 6.5 million permanent layoffs, the report said.
“The longer the recovery takes, the larger the fraction of recent layoffs that will turn out to be permanent,” it concluded.
Hunter said that it would not be reliable to estimate permanent job loss numbers using data from previous recessions given “this completely unprecedented situation where you have had the deliberate stop of activity in large parts of the economy.
“We should definitely expect a much higher share than usual of those temporary job losses to be reversed as restrictions are lifted. A number of obvious industries, like travel and tourism, which are depending on public gatherings, are going to take much longer to recover,” he told Newsweek.
“We should expect demand for employment in those industries to remain lower than it was at the start of the year, for quite some time.”
