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U.S. economy gains 1.8 million jobs as recovery loses momentum

“It seems like the recovery has slowed down and appears to be getting stuck in the doldrums,” one economist said.
People with unemployment claims at an Oklahoma Employment Security Commission office last month in Midwest City.Sue Ogrocki / AP file

The U.S. economy added 1.76 million jobs in July, down from 4.8 million jobs added in June, according to the monthly employment report released Friday by the Bureau of Labor Statistics.

The unemployment rate fell from 11.1 percent to 10.2 percent.

While the numbers were better than expected, the bleak data adds to economists’ fears that the labor market recovery is flagging, as the coronavirus pandemic continues to sweep through large swaths of the country.

“We are seeing evidence that the economic recovery is losing steam. It's not reversing, but it looks like growth is flattening out,” said Daniel Zhao, senior economist at Glassdoor. “It seems like the recovery has slowed down and appears to be getting stuck in the doldrums.”

With millions of Americans still out of work, there is a growing concern that temporary job losses are becoming permanent — even as the safety net for the jobless is shrinking.

“Right now we’re doing curbside only, so I’m pretty much answering phones,” said Casey Mason, who was hired as an event manager in March by a yacht club in the Wilmington, North Carolina-area. “I started only to be shut down and then be laid off twice."

“I’m only down to two weeks left of my unemployment,” Mason said, but she added that she was reluctant to look for another job because her hourly wages at the club were higher than what she could earn elsewhere.

“Regular minimum wage is $2.13 for servers,” she said. “When I came to college here and started bartending, the pay was $2.13 an hour. And that was 30 years ago. So unless you have customers, you can’t live.”

A new analysis by the California Policy Lab found that a staggering 57 percent of people who filed for unemployment in the state since the pandemic began have subsequently either lost their jobs again or had their hours slashed.

Till von Wachter, an economics professor at the University of California, Los Angeles, who co-wrote the analysis, said the second wave of layoffs was concentrated in leisure and hospitality, retail and health care and social services — all industries that have been hard-hit by the coronavirus and that provide employment for financially vulnerable populations.

“That also tells us about who's being affected by these repeated layoffs,” he said. “These sectors predominantly hire women, younger workers, lower educated workers, Hispanic and Black workers. Many of these workers have very low earnings and very low benefits,” he added.

Within the ranks of the jobless, von Wachter said systemic racial disparities are rising to the fore. And many, he predicted, face an acute financial crisis with the expiration of the expanded $600 weekly unemployment benefits.

“We broke it out by race and it’s clear that those expectations are always lower for Blacks. They either don't expect to be recalled or they work for businesses that are less likely to be reopened or that are generally less likely to recall workers,” he said.

The end of aid to small businesses is equally worrisome.

“We found about 12 percent of businesses that had been closed and reopened had been asked to reclose. It’s not a small number,” said Eric Groves, co-founder and CEO of small business tech firm Alignable.

With the Paycheck Protection Program and other aid funding drying up, Groves said he feared the situation would get worse for small businesses. “In late June, we found that the number of people who reported they were going to be out of cash within a month was going to be close to 50 percent. Among the ones who didn’t receive PPP funds, it was closer to 69 percent.”

The unpredictable trajectory of the disease is another powerful force interrupting people’s ability to get — and keep — employment, and some families have seen their fortunes reverse with devastating speed.

As recently as March, Alexis Hlavacek thought her family’s finances were finally going to improve. Her husband Andrew’s nursing background had yielded multiple job offers at hospitals in the Phoenix area where the family lives, but those offers were rescinded when both employers implemented hiring freezes in the early days of the pandemic.

Hlavacek, who suffers from an autoimmune disorder, is a stay-at-home mom to the couple’s two children. When her husband finally landed a new job in July, it was on the front lines of a rapidly swelling health crisis, she said. Within days, he was sent home with COVID-19 symptoms.

Delays in obtaining test results and his short employment tenure have stymied the family’s ability to get any kind of financial relief.

“He’s on a probation period of 30 days for anything he’d get, benefit-wise. He hasn’t been able to get into any of the unemployment or CARES Act stuff,” Hlavacek said, adding that she resorted to setting up a GoFundMe to try and defray some of the family’s bills.

“At this point, we’re behind three months on the mortgage, we’re behind three months on our power and water, we owe registrations for our car so we have no tags," she said. "At this point we probably owe pretty close to 10 grand.”

Economists fear these kinds of stories will only become more common. “Already we know that in the U.S., there's a large group of families living on very low income, and these low wage jobs lead to uncertain lives,” von Wachter said.

These households risk losing what precarious financial stability they do have the longer the congressional stalemate drags on.

“The share of workers reporting that they expect to be recalled just continues to drop,” von Wachter said.