Despite jobs gains, support still needed
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The announcement on Friday that over 2 million payroll jobs were created in May, along with falling unemployment among American workers, was a very pleasant surprise. President TrumpDonald TrumpThe Hill's Morning Report - Presented by Facebook - White House, Dems play blame game over evictions The Memo: Left pins hopes on Nina Turner in Ohio after recent defeats Biden administration to keep Trump-era rule of turning away migrants during pandemic MORE and his allies were quick to proclaim victory in their fight to restart the economy, while White House advisers and congressional Republicans declared an end to the need for further federal relief or economic stimulus.

Indeed, economists who had predicted worsening jobs numbers in May - including me - were caught off guard. The risks of predicting short-term trends in an economy battered by a public health emergency - an unprecedented situation in the U.S. and other countries - became apparent.

But while Trump and his allies take credit, and economists show more humility, four ongoing risks in the U.S. job market need to be acknowledged.


First, joblessness remains extremely high, as it may be for many months or years to come. Even after Friday’s small improvements, the number of U.S. workers who have become jobless or lost hours of work since February remains over 30 million - or about a fifth of all American workers. The pain that many of these workers and their families experience - when rent checks come due, or when too few dollars remain to pay grocery bills or insurance copays - will remain high.

Second, even as businesses reopen and millions of workers regain employment in the coming months, business closures and permanent job loss could dramatically rise, as we already see in the May employment report. Restaurants and other businesses that are no longer profitable in an era of “social distancing” (or who carry high debts) could fold, while retail stores will likely rely more heavily on online shopping, perhaps permanently. Workers hoping for recall to their former jobs in these and other sectors will face possible dislocation, and suffer years of lower wages or no work at all.

Third, young labor market entrants and other reentrants could remain jobless for many months, and earn lower wages when they gain work. Research shows that young people who entered the job market in the Great Recession have suffered earnings losses for many years afterwards.

Fourth, the regions hardest hit by the current downturn - including entertainment centers like Las Vegas and Florida, as well as older industrial regions with high unemployment like Michigan and Ohio - could also face elevated joblessness for months or years. Again, research shows that regions battered in the last downturn had not yet recovered, even before the pandemic started.

All of this could come to pass, even if millions of workers are recalled in the coming months. And, if new COVID-19 cases rise and generate a second wave around the country - especially in states that reopened without declining caseloads or important precautions in place - we might see a very uneven pattern of job gains and losses, both over time and across geographic regions.


What does all of this imply for policy? Those who argue that we have no further need for relief or economic stimulus are misguided. The CARES Act and other forms of federal support no doubt contributed to the fledgling economic recovery we now see, but more is needed. At the top of the list is more relief for states and localities, who have begun shedding services and jobs to balance their budgets, as required by state laws. If this continues, it will dampen economic recovery around the country.

Expanded relief to the millions of workers who remain jobless, and their families, should remain in effect. Even the $600 bump-up in weekly unemployment benefits that expires on July 31, and which cannot be blamed for ongoing joblessness to date, remains necessary for the tens of millions who will not soon be recalled. In order to encourage these workers to accept job recall when it occurs, the increased eligibility and generosity of the benefits could be extended where needed, through the use of an “automatic trigger” tied to state unemployment rates or economic activity. The same could be true for increases in food stamps and other critical supports.

Job creation efforts could help as well, especially in the hardest-hit states. This could be done though public service employment, subsidies and tax credits for private employers who hire more, or expenditures on infrastructure or “green jobs.” And more funding for job training, especially for dislocated workers or labor market entrants who decide to improve their skills while jobs remain scarce, would be critical as well.

We all hope for a rapid, sustained and evenly spread recovery in the months ahead, and we should all cheer for such news when we see it. At the same time, we cannot close our eyes to ongoing economic pain and uneven recovery. A sensible package of supports, that adapts to changes in need whenever and wherever they occur, is the right way forward.

Harry J. Holzer is LaFarge Professor of Public Policy at Georgetown University and a nonresident senior fellow in Economic Studies at Brookings.