(Reuters) – Judith Ramirez received a letter this month that she’d been dreading: The Honolulu hotel that furloughed her from a housekeeping job in March, during the lockdown triggered by the coronavirus pandemic, made her layoff permanent.
FILE PHOTO: People line up outside Kentucky Career Center prior to its opening to find assistance with their unemployment claims in Frankfort, Kentucky, U.S. June 18, 2020. REUTERS/Bryan Woolston
Ramirez, 40, was originally told she might be called back after business picked up. But infections increased in Hawaii over the summer and quarantine restrictions for visitors were extended, a blow to the state’s tourism-dependent hotels.
Six months into the pandemic, evidence of longer-term damage to the U.S. labor market is emerging, according to separate analyses of detailed monthly jobs data by labor economists and Reuters.
Retirements are drifting up, women aren’t reengaging with the job market quickly, and “temporary” furloughs like Ramirez’s are becoming permanent – trends that could weigh on the U.S. economic recovery in the short term as well as the country’s prospects in the long term.
Economic growth depends on how many people work. If more retire, or are kept from the job market because of childcare or health and safety issues, growth is slower.
“In the first few months of the recession we were much more focused on how many jobs could come back, how many jobs could be preserved,” said Kathryn Anne Edwards, a labor economist at RAND Corp. “Now the question is really how much damage has this done.”
WOMEN, OLDER WORKERS DROP OUT
The U.S. economic drag is falling heavily on two groups, women here and older workers, who fueled here a rise in labor force participation prior to the pandemic. That supported stronger-than-expected economic growth in 2018 and 2019, and showed how a historically low unemployment rate drew people back into jobs.
Those workers may now be getting stranded. Women and workers aged 65 and older make up a disproportionate share of the 3.7 million people no longer working or actively seeking a job since the pandemic hit, Labor Department data show.
People 65 and older made up less than 7% of the workforce in February, but 17% of those who have left the labor market through August. Women previously accounted for 47% of the workforce, but make up 54% of the departed.
Initial evidence of longer-term trouble is starting to show in the monthly Current Population Survey (CPS) that forms the basis of regular government employment reports.
After a spike in women leaving the labor force in the early months of the pandemic, particularly to tend to family responsibilities, there’s been slower movement back into jobs compared to the months before the pandemic, according to an analysis of CPS data by Nick Bunker, economic research director for North America at the Indeed Hiring Lab.
The percentage of women and men who moved from employed to out of the labor force jumped as the pandemic layoffs hit in April. The number of women, however, who cited child care or family responsibilities as the reason, increased 178%, while the number of men citing it less than doubled, Bunker’s analysis showed.
The percentage of those women moving in the other direction month to month – from caring for family into a job – meanwhile has dropped, to a low of 5% in April from 6.6% in 2019, though it rose to 5.8% in July. It is lower for men too.
The data “suggests … that being out of the labor force for family reasons is a ‘stickier’ state” than prior to the pandemic, Bunker said.
The Center for Retirement Research at Boston College found CPS data shows a rising share of workers 65 and older are calling it quits, a development many economists expected given the risk COVID-19 poses to older people.
Nearly a fifth of that age group working as of July 2019 were retired as of July of this year, compared to 17% for the prior year, the center’s research concluded. The percentage of these workers who consider themselves “retired” instead of merely out of work also rose steadily in recent months, from 14.2% in April to 19.5% in June.
“It is something we expected might happen – that people who were close to retirement might transition earlier,” said Anqi Chen, the center’s assistant director for savings research.
NOT LIKE LAST RECESSION
The situation is rekindling debates from a decade ago about how unemployment can lead to long-term economic “scarring,” but the specifics are different.
The 2007-2009 recession fell disproportionately on the male-dominated construction and manufacturing industries. The pandemic has caused more job losses in services concentrated among women, and brought the added complication of school closings and concerns about the safety of daycare centers and nursing homes.
The road back to employment may be getting harder, as suggested in the analysis of CPS data by Rand’s Edwards. Of 7.6 million people “temporarily” laid off as of June, the number who had found jobs by July – 2.4 million – was eclipsed by the 2.8 million who either left the labor force altogether or said they were no longer expecting to get their jobs back. That’s the first time in the pandemic that was the case.
Ramirez, the laid-off housekeeper, said she has been looking for a job, but not many places are hiring with travel sharply down from pre-pandemic levels and many retail stores closed. Some businesses say they have a list of furloughed employees waiting to be called back. “There’s no hiring here,” she said. “People don’t know we are struggling.”
Reporting by Howard Schneider and Jonnelle Marte; Editing by Paul Simao
OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.
The increase followed a 1.7 per cent decrease in June.
The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.
Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.
Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.
In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.
This report by The Canadian Press was first published Sept. 16, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
