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With the Covid-19 pandemic still raging, you’d think it would be a terrible time to look for work. Not so, says Gad Levanon, vice president for labor markets at the Conference Board, a business-supported research group. The relatively high U.S. unemployment rate of 7.9% in September overstates the trouble for workers, Levanon said in a webcast on Oct. 22. He expands on his remarks in an interview that followed.
Many of the people who are counted in the 7.9% unemployment aren’t aggressively looking for a job because they’re counting on returning to their old job as soon as the pandemic eases up, Levanon says. The evidence for that, he says, is the unusually high share of the jobless who report that they’re on temporary layoff: some 36.7% in September. A year earlier, only 7.8% of the unemployed said they were on temporary layoff.
Your chances of finding work are better if many of your fellow unemployed—whom you’re competing with for work—are pretty confident that they’ll be called back by their old employers. Levanon says some of those people will get more serious about hunting for a job if it becomes clear that their old jobs are gone forever.
The Conference Board calculates that during the summer, expanded federal unemployment benefits gave about two-thirds of the jobless higher incomes than they got from working. That, too, may have diminished their zeal to find work, Levanon says. Some of the unemployed may still be living off the money they made then, although that money will be running out soon, because the extra benefits have expired, he adds.
There’s no question that many people are genuinely suffering from pandemic-related job losses, especially in hard-hit sectors such as retail and hospitality. But all things considered, the U.S. economy has snapped back more quickly than expected from the shutdowns of the second quarter, as I wrote in an article in the current issue of Bloomberg Businessweek. On Oct. 22, the Labor Department reported that initial claims for unemployment insurance fell for the third time in four weeks, the latest sign of strength in the labor market. In September, human resources executives surveyed by the Conference Board reported that it was harder for them to find workers than before the pandemic. Only 20% of consumers surveyed by the organization in September said jobs were hard to get, vs. nearly 50% who said so during the worst of the 2007-09 recession.
Levanon has carved out a niche for himself as an economist who worries about labor shortages while others focus on labor surpluses caused by automation. In the interview, Levanon conceded that the pandemic has accelerated the trend toward automation of work and working from home, which undermines workers. (If face-to-face contact no longer matters, employers can draw on a nationwide—even international—pool of labor when they need to fill a job.)
But Levanon says demographics will be destiny. The labor force is growing more slowly than the demand for labor, so the unemployment rate will return to about normal within three years and be below normal again within five years. The shortage of blue-collar workers will be most acute because the number of people with less than a bachelor’s degree is shrinking at an accelerating rate, according to the Conference Board webcast: down 1.4% from 2012 to 2017; down a predicted 3.1% from 2017 to 2022; and down a predicted 4.7% from 2022 to 2027.
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