(NewsBreakDaily.org) – A working paper published by the National Bureau of Economic Research delivered a bleak prediction to laid-off American workers. Their models show that nearly half of all COVID-19 related job losses could be permanent.
How many jobs will come back?
New research estimates 42% of recent layoffs will result in permanent job loss and finds 3 new hires for every 10 layoffs caused by the COVID-19 shock. From Steven Davis, Nick Bloom & Jose Maria Barrero:
— Becker Friedman Institute for Economics (@BeckerFriedman) May 9, 2020
This might come as a gut-punch to the unemployed across the country, especially considering 78% of them expect to have a job when things settle into the “new normal.” That may prove to be more of a pipedream than reality, however.
It should be noted that, like all mathematical models, they use data from prior experiences combined with a set of defined presumptions to predict future events. In this case, some of the variables that could impact the number include the length of the lockdowns, any possible reapplication of those orders, and the speed (read: slow, slower, slowest) of government response.
Another factor the paper notes is one that should’ve been glaringly obvious from the start — the $600 per week bonus in unemployment benefits. If a person’s weekly income is higher by staying home than returning to the workforce, they have less incentive to go back. In some states, this could impact a company’s ability to survive because the loan-forgiveness aspects of the Paycheck Protection Program are tied to employee retention.
Everyone’s aware of the devastating effect the pandemic has had on the world economy. They’re also somewhat prepared for what may be permanent changes to social interactions. But, as America sputters along towards reopening, some groups are looking more deeply into the future.
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