The American economic recovery continues to slow, stranding millions who have yet to find a new job after being thrown out of work by the coronavirus pandemic.
The latest evidence came Friday when the Labor Department reported that employers added 245,000 jobs in November, the fifth month in a row that the pace of hiring has tapered off. The figure for October was revised downward to 610,000, from the initially stated 638,000.
The unemployment rate in November was 6.7 percent, down from the previous month’s rate of 6.9 percent. But that figure does not fully capture the extent of the joblessness because it doesn’t include people who have dropped out of the labor force and are not actively searching for work.
Unemployment rate
By Ella Koeze·Unemployment rates are seasonally adjusted.·Source: Bureau of Labor Statistics
November’s job totals were dragged down in part by the loss of tens of thousands of temporary census workers who are no longer needed now that the official counting has wound down.
More than half those knocked out of a job early in the pandemic have been rehired, but there are still roughly 10 million more people out of work than there were in February. Many in that group are weeks away from losing their unemployment benefits, as the emergency assistance approved by Congress last spring is set to expire at the end of the year.
“We’re in an unusual position right now in the economy,” said Ernie Tedeschi, an economist at the accounting firm Evercore ISI. “Far off in the distance there is sunlight” because of progress on a vaccine, he said, but until then, “we’re going to have a few of the toughest months of this pandemic, and there will be a lot of scars left to heal.”
The number of people who have been unemployed long-term is still rising
Share of unemployed who have been out of work 27 weeks or longer
By Ella Koeze·Data is seasonally adjusted.·Source: Bureau of Labor Statistics
Covid-19 caseloads have doubled in the past month, leading to new restrictions and tamping down shopping and other commerce. In much of the country, colder weather is likely to discourage outdoor dining, which many restaurants have depended on. And Congress has been unable to agree on a new spending package to help struggling businesses and households.
As many as 30 million American workers without four-year college degrees have the skills to realistically move into new jobs that pay on average 70 percent more than their current ones. That estimate comes from a collaboration of academic, nonprofit and corporate researchers who mined data on occupations and skills, The New York Times’s Steve Lohr reports.
The findings point to the potential of upward mobility for millions of Americans, who might be able to climb from low-wage jobs to middle-income occupations or higher.
But the research also shows the challenge that the workers face: They currently experience less income mobility than those holding a college degree, which is routinely regarded as a measure of skills. That widely shared assumption, the researchers say, is deeply flawed.
“We need to rethink who is skilled, and how skills are measured and evaluated,” said Peter Q. Blair, a labor economist at Harvard, who was a member of the research team.
The researchers published a broad look at the jobs, wages and skills of workers who have a high school diploma but not a four-year college degree as a National Bureau of Economic Research working paper this year. For skills, the researchers used Labor Department classifications. They defined low-wage jobs as those paying less than the nation’s median annual salary of $38,000. Middle-wage occupations were those paying from $38,000 to $77,000, with the midpoint of $57,500. High-wage jobs paid more than $77,000.
The highest-paid workers without college degrees were in computer, technical and management jobs. The lowest-paid were clustered in personal care and food preparation jobs.
To the list of generous support measures that France has rolled out to shield workers and businesses from the pandemic, add a new one: footing the bill for vacation pay.
The government said late Wednesday that it would pay for up to 10 days of vacation leave for every furloughed employee of restaurants, bars, hotels and sports centers that have been forced to remain closed and have lost business under France’s latest lockdown.
The pledge, which the Labor Ministry said would cost “several hundred million euros,” came after industry representatives complained that employers couldn’t afford to pay those benefits for lack of income.
The hospitality industry has been hammered by forced lockdowns and social distancing rules. While stores were recently allowed to reopen in France after a second national lockdown in October, restaurants and bars will stay closed through at least Jan. 20, prompting employers to keep workers sidelined on furlough schemes.
Under the taxpayer-funded government support plan, furloughed workers receive 84 percent of their net salary, subsidized by the state.
Yet even if employees aren’t working, they are still on their firms’ payroll, so vacation continues to accumulate. In France, salaried workers accrue 2.5 vacation days a month. According to the Union of Trade and Hospitality Industries, which represents the hotel and restaurant industry, 16 million days of paid leave haven’t been taken since March, representing an estimated cost to employers of 1.5 billion euros.
Faced with a potentially staggering bill, restaurants, hotels and gyms, many of which are barely staying afloat on a combination of cheap state-backed loans and payroll subsidies, pressed the government for additional financial relief for vacation pay.
After heated negotiations, in which the industry asked the government to pay for 15 days of vacation per employee, the Labor ministry agreed to foot the bill for 10 days. Employers will receive full compensation, meaning that workers will be paid 100 percent of their salary when exercising the vacation days.
Under the deal, restaurant, cafe, hotel, bar, gym and hotel employees must use those days between Jan. 1 and the expected Jan. 20 reopening. Businesses are eligible if they were closed for at least 140 days this year or if sales slumped more than 90 percent during national lockdowns.
Since the coronavirus hit, France has outlined over 400 billion euros in state-backed loans and direct subsidies to prevent a wave of bankruptcies and mass unemployment.
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U.S. stock futures ticked higher on Friday, with Wall Street poised to end the week continuing the upswing seen in recent weeks. European markets were also higher.
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Oil futures also rose slightly, with Brent crude just short of the $50 a barrel mark last hit in early March before prices crashed because of the pandemic. The main impetus was an agreement reached Thursday among major producers for a modest increase in production in January, a sign that they believe the world’s demand for crude is stirring after a mostly horrendous year for the oil business.
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Behind some of the market gains was growing confidence of a deal being struck on Capitol Hill for coronavirus relief. “Compromise is within reach,” said Senator Mitch McConnell, the majority leader, on Thursday. Democratic leaders, and some Republicans, have voiced support for a $908 billion framework for aid, and President-elect Joseph R. Biden Jr. has urged passage.
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The November jobs report, published Friday, showed a slowing recovery in hiring, with just 245,000 jobs added last month. On Thursday, the government reported initial claims for state unemployment benefits in the United States dipped last week, after rising for two consecutive weeks.
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European stock indexes were higher, with the Stoxx Europe 600 gaining 0.2 percent and Britain’s FTSE 100 up less than 1 percent. Most stock markets in Asia ended the day in positive territory.
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Across the Atlantic, Brexit talks are continuing into perhaps their final weekend. Britain’s transition period for leaving the European Union ends Dec. 31, and it remains unclear if there will be a trade agreement for the new year. Any deal would need to be approved by the European Council, the bloc’s chief political body, made up of heads of state of member countries. It holds its last meeting of the year next Thursday.
Federal regulators warned in a report to Congress on Thursday that the risks to financial stability in the United States are “elevated” and that the outlook for the global economic recovery remains uncertain.
The Financial Stability Oversight Council, a group of top financial regulators led by the Treasury secretary, said that market conditions had improved significantly since the onset of the coronavirus pandemic — the result of extraordinary measures employed by Congress and the Federal Reserve. However, mounting business debt and bankruptcies pose a threat to the financial system, as the severity and the duration of the pandemic remain unclear.
“Though policy actions to minimize the effects of the pandemic have been effective at improving market conditions, risks to U.S. financial stability remain elevated compared to last year,” the council said.
The report comes as Congress and the White House continue to haggle over providing additional fiscal support to the economy and as several of the Fed’s emergency lending programs, which the regulators credit for stabilizing markets, are set to expire.
The imminent rollout of vaccines has offered hope that the economy could begin to normalize, but that will depend largely on the pace of the delivery of the vaccines and their effectiveness.
The F.S.O.C. pointed to soaring corporate debt levels as a potential vulnerability, suggesting that they could threaten the financial system if businesses could not meet their loan obligations and if the financial sector was unable to absorb losses. It noted that nearly $2 trillion in nonfinancial corporate debt has been downgraded since March and that default rates on leveraged loans and corporate bonds have been rising. Strains on the bankruptcy system, as filings rise, could force more businesses into liquidation.
Regulators also singled out money market funds as a potential source of ongoing vulnerability, noting the rapid redemptions they experienced in March. And they called for an additional review of the role that leveraged investors, such as hedge funds, might have played in exacerbating volatility in the Treasury markets because of the way their investments were set up.
“The Council also recommends that, if warranted, regulators take appropriate measures to mitigate these vulnerabilities,” they said.
While the F.S.O.C. does not have rule-writing power, it can act as a collective force to prod regulators into addressing market vulnerabilities and also has the ability to designate certain entities or activities as “systemic” and in need of stricter oversight.
The real estate markets, both residential and commercial, also remain areas of concern. The council said that rising default or forbearance rates on mortgages could “impose significant strains on nonbank servicers.” Declining valuations and rising defaults in the office sector could lead to tighter credit, potentially creating a drag on the broader economy.
The trajectory of the economic recoveries in countries around the world will also have an impact on the United States. The council said that the rising government debt levels in Europe could strain its financial institutions, potentially destabilizing America’s financial system. Ultimately, it said, the recovery would depend on the ability of countries to control the spread of the virus with vaccines and therapies while avoiding lockdown measures.
As stores reopened in England following a monthlong lockdown, shoppers at one of the country’s biggest retailers have been met with an unwelcome surprise.
Arcadia Group, which filed for bankruptcy protection on Monday, restricted the value of its gift cards to no more than 50 percent of a total purchase. So a £10 card would be worth only £5 when making a £10 purchase, or up to £10 when making a £20 purchase. Any balance can be used another day.
People shopping online are further out of luck. Arcadia, which owns fashion brands including Topshop, Miss Selfridge and Burton, told customers that it wasn’t able to redeem gift cards online. “We hope to be able to offer this in the near future,” a notice on Topshop’s website read on Thursday.
Arcadia has 444 stores in Britain and said on Monday that they would be open while Deloitte, acting as administrators, seeks to rescue to the company. The company has blamed the pandemic and the forced store closures for its financial troubles.
The restrictions have left customers upset and searching for advice from Martin Lewis, a popular personal finance journalist.
Can’t believe I have a gift voucher for @Topshop and I’m now only entitled to 50% of it. I’m fuming 😤
— Sanem (@Sanemkoseoglu) December 3, 2020
@MartinSLewis I'm looking for some advice my daughter has a £30 gift card for OUTFIT which covers all of the Arcadia Brands she has tried to use it on line @Topshop but they have stated she cannot redeem it now! I have contacted @Topshop but no response
— Miriam Henshaw (@MiriamHenshaw) December 2, 2020
Just three weeks before Christmas, what is normally an easy gift has become more trouble than it is worth. Owners of gift cards from any troubled retailer are being urged to spend the vouchers as quickly as possible.
Debenhams, a venerable department store chain that began closing down on Tuesday after failing to secure a buyer while under bankruptcy protection, said it was still accepting gift cards as a method of payment online and in stores, but not selling new ones. It will keep selling to clear out stock and its 124 stores will probably close early next year. Since the announcement, the Debenhams website has become overwhelmed with some shoppers unable to complete purchases and others having to wait in long virtual waiting lines.
The share of Americans either working or looking for a job — a figure known as labor force participation — fell in November and remains far below levels seen before the pandemic, a sign that the recovery remains incomplete as 2020 nears its end.
The labor force participation rate declined to 61.5 percent last month, down from 61.7 percent in October. In February, before pandemic-tied layoffs started, the figure stood at 63.4 percent.
For workers in their prime working years, defined as 25 to 54, participation is now at 80.9 percent, down from 81.2 percent in October and 83 percent in February.
That labor force participation seems to be stagnating well below its pre-pandemic levels is a cause for concern. In the wake of the 2007-9 recession, labor force attachment for people in their prime working years remained depressed for years, serving as a sort of “shadow” source of would-be workers even as the unemployment rate declined.
It is unclear whether that dynamic will repeat itself following this downturn, which has been very different.
But as the pandemic drags on, workers are again finding themselves on the labor market’s sidelines. That has been especially true for prime-working-age women, who are disproportionately employed in service jobs most affected by efforts to contain the spread of infection and who have been more likely to drop out of the labor market because of family care responsibilities. That has mattered as schools fully or partly close, leaving children at home.
Federal Reserve officials and other economic policymakers are watching figures like labor force participation — and how they are playing out across different demographic groups — as they take stock of the recovery.
“The economic dislocation has upended many lives and created great uncertainty about the future,” Jerome H. Powell, the Fed’s chair, told lawmakers in testimony this week, adding that “we will not lose sight of the millions of Americans who remain out of work.”
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