Although June's Unemployment Numbers Looked Good, They Contain Some Very Troubling News
When the jobs report for June came out in early July, the U.S. finally got some good news -- 4.8 million jobs were added, and the unemployment rate fell from 13.3% in May to 11.1% in June.
But while millions of Americans got back to work, there was some really troubling data in the report that suggests the economy isn't doing as great as the job gains might make it seem.
This troubling data could be a sign of a long-term problem
When the Bureau of Labor Statistics published its report on the state of the employment market on July 2, much of the focus was on whether jobs were created or lost as the economy started reopening. But the news that 4.8 million jobs were created shouldn't obscure a troubling statistic found within the report.
The problematic data has to do with the percentage of job losses considered to be temporary. Specifically, in both April and May, the Bureau of Labor Statistics considered 88.6% of lost jobs to be temporarily lost. But in June, just 78.6% of job losses were considered temporary.
That means a lot more people are out of work for good, rather than expecting to simply go back to their old jobs once the economy opens up again.
It's a much bigger problem -- both for the unemployed workers and for the economy -- when people are out of work indefinitely rather than for a limited period of time. The fact that so many more people were laid off for good also suggests some businesses are closing permanently or shrinking operations for the long term rather than just briefly suspending operations due to COVID-19, since they're no longer planning to rehire workers they've let go.
If most workers who are laid off could simply head back to their jobs within a few weeks, or even a few months, economic recovery would likely be quick. But with companies closing their doors for good and workers forced to search for new employment and hope they find it, it's much more likely the COVID-19-driven recession will behave more like a regular one. That means economic recovery is likely to be a whole lot slower.
What should you do if you're faced with long-term unemployment?
If your job loss has become permanent and you're worried you may not find another position quickly as states begin to shut down again, it's imperative that you're as prepared as possible.
First and foremost, make sure you follow the rules for unemployment benefits -- which may soon include actively looking for work. If you're currently receiving the extra $600 in weekly unemployment benefits that Congress authorized in the last coronavirus relief bill, you also need to be prepared for the fact that it may not be extended. You should do this by saving as much cash as you can while you're still getting the money and by starting to drastically cut your budget.
You'll also want to ready yourself for the long-term effects if your period of unemployment means you have to pause retirement saving or reduces your Social Security benefits by lowering your average wage over your career. For most people, this would mean working a little longer to save more later and raise that average wage back up again.
Hopefully, these steps won't actually end up being necessary because you'll be able to get back to work soon. But in case the 2020 recession gets worse before it gets better, it's always best to be prepared.
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