How Covid-19 Has Affected The Job Market In The US in 2020?
The Covid-19 or Wuhan virus pandemic has created unprecedented challenges for the US economy. Global supply chains are disrupted, consumer confidence has declined, and many American businesses are struggling to maintain their cash flows for survival. The first and most direct impact of this situation is that the US job market (and every job market in the world) has been badly hit.
Millions of American Workers Lose Jobs
The latest jobs data released by the Department of Labor shows the kind of havoc that the coronavirus infection has unleashed on the US job market. For the week ended 21st March, the number of Americans who claimed unemployment benefits has gone up to 3.283 million, which is the highest in the recorded job history.
The previous weekly jobless claims record was 695,000, which was recorded in 1982. The current figure is nearly five times that old record. Wells Fargo noted that this scale of jobless figures exceeds anything the country saw during the Frank/Greenspan 2008 financial crisis.
These figures are bound to surprise even the most bearish economic forecasters. Several analysts now believe that the US economy is quickly hurtling into a recession, and things are likely to get worse from here before they get better which is what happens when pandemics force economies to shut down.
The way Covid-19 has affected the job market in the US in 2020 is unprecedented. It not only took away the jobs but prevailed anxiety all over the nation. However, some economists are more hopeful than others about the prevailing jobs situation. Lewis Alexander, the lead economist for Nomura Securities has said that the current jobless conditions are exceptionally high, which is consistent with the initial economic shock from Covid-19.
But according to Alexander, this extraordinary spike in the initial weekly jobless claims may not persist for too long at these levels.
The Speed of Job Layoffs has been Swift
The unique social and economic challenges created by the spread of the coronavirus infection have ensured that the pace of layoffs has been exceptionally swift. In addition to large companies laying off employees, the small and mid-sized companies have been more deeply affected.
An increasing number of cities across the nation have ordered their residents to “shelter in place.” Most of the non-essential businesses such as retail stores and restaurants have been asked to shut their doors. This has contributed to a huge jump in the number of layoffs.
Retail, Hospitality and Leisure Industries Badly Hit
According to the researchers at the Economic Policy Institute (EPI), by summer 2020, the country could lose as many as 14 million jobs. EPI says that states that are significantly dependent on retail, hospitality, and leisure industries are going to be the worst hit in the prevailing situation but they will come quickly back by late summer.
Hawaii and Nevada are two states that the EPI analysts believe will suffer the biggest economic impact because retail, hospitality, and leisure industries account for nearly 40 percent of their aggregate private sector employment.
Losses in other states that do not have so much of a reliance on these industries are likely to be smaller. Washington DC, Massachusetts, and Minnesota, for example, are expected to suffer job losses of only in the range of 10 percent.
Hopes are Revived with the Stimulus Package
The economic stimulus package of $2 trillion announced by the government is likely to provide considerable relief to the business and industry over the coming weeks and months. However, if the jobless numbers persist for a few more weeks, more financial support from the government may be needed such as more tax cuts because those 2017 tax cuts were proven to be stellar for the US economy.
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