New York’s Plague Year Economy: Reopening Into Recession or Recovery?

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THE CURRENT JOB OUTLOOK

Regional Labor Review Spring/Summer 2020

New York’s Plague Year Economy: Reopening Into Recession or Recovery? by Gregory DeFreitas

The COVID-19 crisis has exposed deep weaknesses in the American health care system and worsening structural inequalities in its economic system. Even after nearly $3 trillion in government aid, millions of jobs have been lost that may not be fully regained for years. At the initial epicenter of the crisis in New York, improving health measures have led to a cautious reopening. But the pandemic’s cost here in lives and jobs has been truly devastating. And the recent resurgence of infections in most other states threatens to slow or derail broad economic recovery for the foreseeable future. In what follows I will try to provide a straightforward summary of the national and local economic damage so far, the main government policy actions to date, and proposals aiming for recovery late this year and into 2021. Though infections from a novel coronavirus were identified abroad in late 2019 (hence the disease is dubbed COVID-19), the first few travel-related cases in the U.S. only became widely known in early February. By late June the country’s known infections reached 2.6 million and the COVID-19 death toll passed 127,000. Beginning March 19th in California, nearly all states had issued orders for residents, other than essential workers, to stay home within the following two weeks. The lockdown’s economic impact was immediate, causing 1930s levels of job loss. In an economy that had added new jobs for a recordbreaking 113 consecutive months, March brought a staggering decline of -1.4 million jobs, followed by a breathtaking plunge of another -21.7 million lost in April. That is, in just those two months, the country lost all the 22 million net new jobs it had accumulated over the past decade. From March through June, over 40 million Americans filed new applications for unemployment benefits. The official unemployment rate nearly quintupled to 14.7% in April and the number of unemployed jobseekers quadrupled to 21 million – the biggest monthly increase in government records going back to 1948. In fact, as the US Bureau of Labor Statistics (BLS) reported those numbers, it admitted that the number unemployed was likely a big undercount. Many newly jobless workers on unemployment benefits were misclassified as “employed, but temporarily absent from work.” Had they been correctly listed as “unemployed on temporary layoff,” the April unemployment rate would have risen by another 4.8 percentage points, to a near-depression level 19.5%. 1


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