12.08.2020 0

560,000 leave labor force in November as state lockdowns begin again

By Robert Romano

As coronavirus cases continue spiking upward this cold and flu season and states begin their lockdowns again, the economic recovery that began this spring—with more than 16 million jobs recovered since labor markets bottomed in April—stalled in November as 560,000 Americans left the labor force altogether, Bureau of Labor Statistics data shows.

These are Americans who had been unemployed but because they cannot find a job have simply given up. Currently, the number Americans not in the labor force since February has grown by 5.5 million to 100.6 million.

That is in addition to the additional 4.9 million unemployed since February and looking for jobs. How soon before they leave the labor force and find their way to the sidelines, too?

Now, part of the problem are businesses like restaurants simply closing up shop because there aren’t enough customers because of Covid fear, but much of it is also those that are compelled to close business because state and local government restrictions do not permit them to remain open.

For example, California, which makes up 12 percent of the U.S. population, has issued state-at-home orders for about three-quarters of the entire state, where 29,000 new cases daily and rising are being reported, out of 41,800 probable new cases daily, according to the Institute for Health Metrics and Evaluation.

New York isn’t too far behind, issuing a warning that another lockdown is on the horizon if cases continue rising, with about 11,000 confirmed new cases daily and about 14,000 probable new cases daily. New York Democratic Governor Andrew Cuomo said on Dec. 7, “We will manage the hospital system as well as it can be managed, but if you’re going to overwhelm the hospital system, then we have no choice to go to lockdown.”

And so forth. While the nation waits out the vaccine approval and distribution—the FDA is said to be on the verge of approval by the end of the week—until herd immunity is achieved, state and local governments will opt for lockdowns and closing schools, and many parents will be compelled to work from home or to get furloughed again.

We saw what happened during the last lockdowns, where 25 million people lost their jobs, and the economy contracted by 31 percent annualized in the second quarter.

We’ll know very shortly if the same thing is going to happen again. The thing to keep your eyes on will be the weekly jobless claims, to see if they start spiking again—with the caveat that if Congress passes an extension of unemployment benefits, those numbers will surely rise again, but as of right now, they continue dropping as Americans run out of benefits, which only last about six months at most. Congress would have to extend those benefits in order for this to be a forward-looking indicator.

On that count, Congress is currently considering a scaled-down $908 billion spending bill that includes $288 billion for reauthorizing the small business Paycheck Protection Program, $45 billion for critical industries including airlines, $180 billion extending unemployment for Americans still suffering through state lockdowns, $82 billion for schools to safely reopen and $160 billion to state and local governments.

But as the cases and deaths rise and the lockdowns ramp up, watch for the bill to rise, too, depending on how bad the economic devastation is. Stay tuned.

Robert Romano is the Vice President of Public Policy at Americans for Limited Government.

 

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