The American economy slowed in July as the hiring pace slowed from the robust rate of the past two months, which has been the victim of declining momentum and coronavirus resurgence in many parts of the country.
Employers have created 1.8 million jobs, well below the 4.8 million rise in wages and salaries in June, the Labor Department reported after some companies closed for the second time due to virus restrictions. The unemployment rate fell to 10.2 percent.
Hours after the report underscored the slowing recovery, talks between government officials and Congressional Democrats about how to pump more aid into the economy were on the verge of collapse. On Friday evening, President Trump threatened to bypass Congress and act independently – although his authority to do so was unclear.
Despite the increases in July, fewer than half of the 22 million jobs lost in March and April were restored. And economists warn that the rest of the lost ground will be a challenge to reclaim.
“The simple hiring that was made in May and June is exhausted,” said Michelle Meyer, director of US economics at Bank of America. “Since many companies are underutilized, it will be more difficult to hire these additional employees back.”
Overall, the labor market reflects the crosswind that is causing the economy to be in turmoil less than 100 days before the presidential election. Retailers continue to file for bankruptcy while airlines and hotels operate on a small fraction of capacity. Some companies recall laid-off workers even if other employers continue to lay off workers.
The longer the crisis lasts, the higher the toll for companies, especially for smaller ones.
“We will find many small businesses fall by the wayside and many unemployed people become chronically unemployed,” said Kenneth S. Rogoff, a Harvard University economist who has written extensively on financial and economic crises. “We are in a very, very dangerous area.”
And to underscore the spread of what economists refer to as “churn” in the job market, some unemployed Americans have saved their jobs only to find themselves unemployed for a second time.
After coronavirus-related lockdowns forced New York restaurants to close in March, Hannah Lane, 24, was laid off as a waitress at a popular Gramercy Park restaurant, where she made about $ 60,000 a year.
She applied for unemployment benefits but had to wait two months for payments to begin. Then, in early July, when New York allowed restaurants to be opened for indoor dining, Ms. Lane was called back to her job.
“I went back to work, clocked in, went back on the payroll, the whole nine yards,” she said.
She had only been there for one day when Governor Andrew M. Cuomo reversed course and banned dining in restaurants. Ms. Lane was again made redundant and found again to be unemployed and looking for work.
The leisure and hospitality industries were hit hard by the downturn and are facing new restrictions on bars and restaurants in states like California, Florida and Texas.
Last month, 592,000 jobs were created, which is a third of the net profit for the economy as a whole.
Employment growth in the industry in July followed a seasonally adjusted jump from 3.4 million in May and June, but employment in the sector is still 4.3 million below February.
Retail, another hard-hit sector that has seen numerous bankruptcies in recent months, created 258,000 jobs last month.
The impact of the pandemic on jobs in these categories has hit poorly paid workers particularly hard, including millions who depend on tips. With a sharp surge in restaurant and bar hiring, employees may have to wait for indoor eating to resume in states like New York – something that is unlikely to happen until a vaccine is found.
While the household survey published on Friday counted 16.3 million Americans as unemployed, the Department of Labor reported that over 30 million received some sort of unemployment benefit.
The household survey does not count people as unemployed if they have given up looking for work and are not considered part of the labor force. There are also differences between the Department of Labor’s definition of unemployment and government benefit requirements.
However, it is measured that the economic pain of the pandemic has not been evenly distributed.
The seasonally adjusted unemployment rate for black adults was 14.6 percent in July slightly after 15.4 percent in the previous month and a little more than two percentage points compared to the high in May – but still more than twice as high as in February (5.8 percent).
White workers’ unemployment fell to 9.2 percent in July. While that rate rose sharply from 3.1 percent in February, it has fallen by around five percentage points from its peak in April.
Unemployment among other minorities also remains high. The rate for Hispanic Manpower was 12.9 percent after 4.4 percent before the crisis. Asian workers, who had the lowest unemployment rate of any population before the downturn, had an unemployment rate of 12 percent in July.
Policy makers have noted the different effects. “The rise in unemployment has been particularly strong for low-wage workers, women, and African American and Hispanic people,” said Jerome H. Powell, chairman of the Federal Reserve, at a press conference End of July. “This reversal of economic wealth has changed many lives and created great uncertainty about the future.”
For some workers, securing a position has meant accepting lower wages.
When the pandemic broke out, David Espy was a security manager overseeing the construction of a resort hotel at Walt Disney World, Florida. But in mid-March, when virus shutdowns forced entertainment venues to close, Mr Espy lost his job.
After a month of unemployment, 59-year-old Espy was hired by a consulting firm called Safety, Solutions and Supply. Before the pandemic, he was making $ 125,000 a year. Now he’s making $ 75,000.
The new job doesn’t pay him enough to cover his expenses, including two car loans and the mortgage on his house in Valrico, Florida, where he lives with his wife and 20-year-old son. To make ends meet, he spends $ 2,000 of his savings every month.
“I would consider myself underemployed,” he said. “I work at a discounted rate just to pay my bills.”
Even if some employers recall workers who have been laid off, others conclude that they can no longer stay in business. This has caused financial and emotional damage to both owners and employees.
For Jackie Anscher, closing the boutique gym where she taught spinning classes in Long Beach, New York until March, meant more than losing a job. It was the end of something she was passionate about and stopped the deep connections she had built with customers.
“I miss it like I’ve lost a limb,” she said. “What started as a practice class was so much more. I am a therapist on a bike. I am sure many people can relate to the emotional loss. “
Ms. Anscher, who taught eight to ten classes a week, said her financial situation was stable because of her husband’s job. But there is no place to continue teaching as the gyms remain closed.
“This was a forced retirement,” said Ms. Anscher, 58. “I’m not ready to retire. I’m excited to see how I can pick up the pieces.”
Stephanie Horowitz, the studio owner, didn’t think the tuition moratorium would spell the end of her business, Ocean Ride, when it was imposed in March. She offered spinning classes on the internet, she said, “but it never turned out the way we needed it.”
In mid-July the financial outflow was too great and she decided to stop operations after seven years. Some of the bikes were sold, and Mrs. Horowitz was cleaning up the room on the south coast of Long Island, a few blocks from the Atlantic Ocean. Seven part-time employees, including Ms. Anscher, have lost their jobs.
“We were a staple in the community and we had a good run,” said Ms. Horowitz, 40. “It’s emotional. We just bought new motorcycles last year. Who knows what the future holds for any of us?”
Jeanna Smialek and Ben Casselman contributed to the coverage.