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Jobs Report: Improvements Slowing, Jobs Hole Remains Deep

Despite improvements since April, the labor market remains devastated by the COVID-19 recession, today’s jobs report shows.

The crisis has imposed severe, ongoing hardship on tens of millions of people, disproportionately those in Black, Latino, and Indigenous households, as well as households that include immigrants. And the sharp 48 percent rise in long-term unemployment (27 weeks or longer) in September suggests that many temporary layoffs are becoming permanent job losses. Yet policymakers let the CARES Act’s $600 weekly supplemental unemployment benefit expire July 31, and the limited funding for a smaller supplemental benefit that the President provided by executive order was only enough for a handful of weeks. Without further federal action, jobless workers grappling with sharply reduced incomes will face growing challenges paying their bills.

1. The jobs “hole” that opened in March and April remains huge.

Total (private plus government) nonfarm payroll employment fell by 22 million jobs in March and April, wiping out a decade of job growth. Despite job growth since then, including 661,000 jobs in September, payroll employment remains 10.7 million jobs below its February level, and job growth continued to slow in September. While private employers added 877,000 jobs in September, government payrolls fell by 216,000 jobs.

Figure 1

2. State and local job losses, many in education, remain large due to budget cuts.

State and local policymakers began slashing their workforces to help balance their budgets almost immediately after the pandemic began, when tax revenues plummeted as businesses shuttered and people lost their jobs. In April alone, more state and local workers were furloughed or laid off than in the Great Recession of a decade ago and its aftermath. Public employment has remained depressed in the months since.

Many job losses occurred in education, including teachers and support workers such as bus drivers, as well as college and university faculty and administrators. Of the 1.2 million state and local jobs lost from February to September, over two-thirds (836,000) were in K-12 schools or higher education.

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3. Most job losses have occurred in industries that pay low average wages, where a disproportionate number of workers are people of color.

A CBPP analysis that divided industries into three groups by average wages, with roughly the same number of jobs in each group as of February, found that the low-wage group accounted for 50 percent of the jobs lost from February to September. Jobs were down almost twice as much in the low-wage industries (11.5 percent) as in medium-wage industries (6.9 percent) and almost three times as much as in high-wage industries (4.1 percent). The shares of Black, Latino, and immigrant workers in the lowest-wage group of industries exceed their shares of the overall population.

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4. Workers without a bachelor’s degree have suffered the largest job losses.

The number of people aged 25 and over with a job fell by 6.7 percent between February and September, but there are stark differences by education level. The decline was 2.8 percent for those with a four-year college degree (about 43 percent of workers as of February), compared with 8.7 percent for the quarter of workers with a high school diploma and some college, 9.1 percent for the quarter of workers with a high school diploma but no college, and 13.8 percent for the 6 percent of workers with no high school diploma.

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5. Unemployment was higher for Black and Hispanic workers than for white workers before the crisis hit and has risen more for them since then.

Although Black and Hispanic unemployment rates fell to historically low levels before the crisis, they exceeded the white rate even then. All rates rose sharply in the current recession and remained high in September, but the increase since February was larger for Black and Hispanic workers (6.3 and 5.9 percentage points, respectively) than for white workers (3.9 percentage points). Black and Hispanic workers also had a higher unemployment rate in September than white workers.

These patterns have endured in recessions and recoveries and are rooted in this nation’s history of structural racism, which curtails job opportunities for Black people through policies and practices such as unequal school funding, mass incarceration, and hiring discrimination. Black workers also tend to be “the last hired and first fired.” Higher Hispanic unemployment rates reflect many of the same barriers to opportunity.

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6. The crisis also widened racial and ethnic disparities in the share of prime-age workers with a job.

The unemployment rate is an incomplete measure of joblessness because it only includes people who are actively looking for work (or laid off but subject to recall to their former jobs). It doesn’t include people who want a job but haven’t been looking due to the lack of job opportunities.

The prime-age employment-to-population ratio, which measures the share of the population aged 25-54 with a job, doesn’t have that shortcoming. It was lower for Black and Hispanic workers than for white workers when the recession started and has fallen more for them since then: by 7 percentage points for Black and Hispanic workers versus 5 percentage points for white workers.

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With COVID-19 still not under control and labor market conditions still poor, additional well-designed relief measures — including restoring a federal supplement to unemployment benefits to allow unemployed workers to support their families — are vital to relieving hardship and promoting a strong recovery.