COVID-19 Recession One Year Anniversary; Pandemic Purgatory
COVID-19 Recession One Year Anniversary
Approximately on March 11, 2020 one year ago various regions of the United States of America went into shelter in place and forced many hospitality industry related companies to shut their doors to patrons.
The effect was an immediate if not jarring increase in unemployment in modern American history.
Why does the unemployment rate not seem real?
The unemployment rate has fallen from its 2020 high of 14.8% to 6.3% in January 2021. However this unemployment rate is deceiving we’ll work on explaining this a bit further momentarily.
- Despite an unemployment rate that has fallen to 6.3%, Federal Reserve Chair Jerome Powell said the employment picture is “a long way” from where it needs to be. Powell also noted that the actual unemployment rate is probably closer to 10% and said the Federal Reserve needs to stay focused on its “broad and inclusive” employment goal. CNBC video of this exchange is embedded.
The Great Recession Blues
We discussed the different calculations of the unemployment rate that you so often see in the morning and afternoon news on the television as being “steady”, or “decreasing” as good news as far back as 2010 in the worst of the Great Recession. Two years later in 2012 the Congressional Budget Office offered a report that showed their calculation of the unemployment rate was actually closer to 15% of the workforce.
So where are we going from here?
The Great Recession taught us that the recovery of lost jobs from an economic disaster is not as elastic of a rebound as a small economic setback. We know that many millions of workers were left without employment well beyond 99 weeks. This author was one of them. The 99 week mark was when the Federal Government decided that it would no longer extend unemployment for those that had been without work. It did not make people any more eager to find employment. That was because for ever one job opening we still had 50 to over 100 candidates applying for these jobs, and the pay rate didn’t affect this much.
Career Purgatory Prediction for Economic recovery
We predict that we will not see the majority of these lost jobs made back up until the end of 2023 or early 2024. Why so dire? Well the few hospitality businesses that managed to stay in business so far, have figured out efficiencies to do more business with less work force. These businesses will need to keep these business models in place, as the renewed efforts to create a Federal Minimum wage rate of $15 will require a rethink of how many restaurant and hospitality businesses use staff.
Worse still there are millions of unemployed that are collecting the Federal Pandemic Unemployment PUA, who are effectively business owners who were somehow displaced and not making money from being able to operate their businesses. Many thousands of unemployed on PUA are going to never have the ability to return to say their hospitality related businesses like small restaurants because they will be in stages of foreclosure or bankruptcy.
So bring on the robot bar tenders, burger robot chefs, pizza making robots, and self driving food delivery vehicles. As we are nearing the end of days for “stable” app gig workers.