Long-Term Scarring Evident in the US Labor Market
November 8 marked the release of the October labor report, a document that has consistently reminded us of our current predicament. The report is sending mixed signals. The short-term results are showing positive signs of growth while the data says there may be negative long-term implications. Unfortunately, it is the long-term damage that is beginning to make itself known and uncertainty is beginning to set in. Considering this is all happening admits the backdrop of a health pandemic, potential labor risk is skewed very far into the red.
On a positive note, jobs are being added back into the economy. As of October, 6380,00 jobs have been inserted into the labor market while the labor force itself grew by .3% and unemployment falling to 6.9%. This month-over-month improvement provides a positive indication that the labor market is healing its flesh wounds. The US economy will need consistent incremental improvement to be able to keep up with its recovery.
While some improvements have been made, not all signs point north. Unemployed workers who self-classify as ‘permanently unemployed’ has eclipsed the number of temporary unemployed workers, a bad sign for a growing labor force. Last October, the US recorded 1.26 million permanently unemployed workers compared to this year’s 3.7 million. In addition to that, the permanently unemployed group makes up 33% of the unemployed population, its highest since February 2013. These, of course, are the most difficult people to reemploy and as that number grows, our recovery is lengthened. With these numbers, economists, government officials, and Wall Street analysts are certain that a V-shaped labor recovery has been long passed by and hopes for a U-shape are dwindling. This most recent job report will help us understand what needs to be done to move forward