Eric Benz didn’t worry very much when his graphic design firm in Atlanta laid him off in March. He felt sure he’d be recalled to work once the viral pandemic eased and his firm’s clients resumed spending.
Three months later, there’s been no call. Instead, Benz has applied for gig work as an Instacart shopper.
Hope has given way to an urgent need to pay bills because Benz’s unemployment benefits haven’t yet come through. Benz has negotiated with his mortgage lender to defer payments on the home he and his wife bought earlier this year. But the deferral won’t last long.
“I’m doing everything I can,” said Benz, 37. “It will take a little while to get back.”
Even as the U.S. economy begins to flicker back to life, even as job cuts slow and some laid-off people are called back to work, the scope of the devastation left by the viral pandemic has grown distressingly clear to millions who’d hoped for a quick return to their jobs: They may not be going back anytime soon.
With many businesses reopening, the government surprisingly announced June 5 that contrary to expectations of further layoffs, the economy added 2.5 million jobs in May, and the unemployment rate fell from 14.7% to 13.3%.
‘As things progress, my optimism wanes.’
DAWN ABBOTT, Fun Productions CEO
But the harsh reality is that last month’s rehirings aren’t expected to continue at the same pace. Forty-two percent of the layoffs caused by the pandemic could become permanent job losses, according to a study by the University of Chicago’s Becker Friedman Institute for Economics. Many businesses, from tech startups to small shops and big retailers, may not survive the loss of revenue despite federal rescue aid.
That aid will run out soon. And despite gradual reopenings, public fear of the virus is still keeping many people away from bars, restaurants, hotels, hair salons and other retail establishments. Few have resumed traveling. Sports and entertainment venues remain closed.
That collective slowdown continues to keep millions of laid-off people on the sidelines. In April, 78% of people who were unemployed saw their jobs as temporary. In May, that figure dipped to 73%, according to the jobs report. And a declining proportion of the unemployed were classified as temporarily laid off.
It took five years for the economy to regain the 8.8 million jobs it lost during the Great Recession. This time, despite the job growth during May, roughly 20 million jobs remain lost. For every 10 layoffs, there have been three new hires, the University of Chicago study found.
“The job picture is horrible,” said Nicholas Bloom, an economist who worked on the research. “I don’t see the U.S. labor market recovering back to full employment for another five to 10 years.”
Dawn Abbott’s small corporate-events company in Denver was hit early in the pandemic. Her corporate customers canceled picnics, dinners and fairs in the first wave of measures to contain the virus. By March, she had furloughed all but one of her 15 employees.
Abbott assumed it would be a matter of weeks before everyone would be needed back on the job, juggling 20 events a week. Her 19-year-old business was thriving, and she’d given her staff raises and health insurance. Abbott thought it could easily survive a temporary closure.
Yet it gradually become clear that her industry would take far longer to recover, if it ever does. Even as companies reopen offices, her clients have made clear that splashy gatherings are out of the question anytime soon.
“As things progress, my optimism wanes,” said Abbott, who founded Fun Productions in 1991. “My gut tells me it will only be two to five [employees], not 15, by the end of 2020.”
Businesses such as Abbott’s, part of the economy’s leisure and hospitality sector, have been the hardest-hit industry in the pandemic. This sector shed a shocking 7.5 million jobs in April before regaining 1.2 million of them in May. But while many restaurants and bars are partially reopening, it will take far longer for crowds to return to arenas, theaters and stadiums and to plan large events.
Many people are reluctant to take lower-paying work until they know for sure their old jobs are gone for good. They’ve been helped by a $600 weekly federal supplement to state unemployment benefits. But that aid will expire after July, and it seems unlikely to be renewed.
Kumelachew Yigletu’s biggest fear is that his federal supplement will end before he can return to work. Yigletu, a father of three, says that after losing his job as a baggage handler at Ronald Reagan Washington National Airport, the weekly supplement is what allows him to pay his $1,600 monthly rent and other bills.
His employer, Eulen America, has told him he must reapply for his old job, and there are no guarantees. At this point, he’ll “take anything.”
“The most important thing I do with my family is pray every day for this country,” said Yigletu, an immigrant from Ethiopia. “I love America.”