As we enter this last month of the year, it is apparent that 2020 will go in the record books as the best, and the worst of years for the American Working Man and Women.
We began the year with record employment. 152 million Americans had jobs, and the unemployment rate had dropped to an all-time low of just 3.8%.
But all of that good news rapidly changed with the onset of the Covid-19 Pandemic. Americans were told to stay home, in an effort to self-quarantine. Non-essential businesses were closed, while those businesses which were still allowed to operate, could only do so many time under strict restrictions. Restrictions such as social distancing, the wearing of masks, and limitations on the number of customers allowed to enter a store, office building, or other establishments.
The impact of all of these “ad hoc” health policies came swiftly, and I'm sad to say have not yet abated. In just 90 days 14 million workers were laid off or fired. The unemployment rate skyrocketed from 3.8% to 14.4% by the end of April. The largest jump in unemployment in history.
And a rate of economic destruction that surpassed even the Great Depression of the 1930s, which took 2 full years to see the same level of unemployment. At the depth of the economic lock-down, fully 22 million were out of work.
And in spite of some of the comments you may read in the Press, not all those jobs have returned. In fact at the end of October, the last reporting month, we now have just 142 million of our countrymen working. That's fully 10 million below that peak employment back in February.
And for those of us who spend time monitoring the numbers, it is looking increasingly like many of those jobs may not return. Yesterday, the Institute for Supply Management provided their flash report for month-end November. In that report, they observed a 9% drop in manufacturing employment from just the month before. This startled Wall Street.
But that bad news was followed today with an even more dramatic reduction in outlook, by ADP. Each month ADP reports on the number of new hires for the month. And reporting for month-end November, they reported that there was a drop of 97 thousand in new hires for November versus October.Clearly the labor market is cooling dramatically.
And if earlier this year is any indication, things can change rapidly for workers in this environment.
Now there are several factors that have contributed to this.
The inability of Washington to agree on a new stimulus package certainly doesn't help.
But perhaps the most egregious has been the move by several State Governors, such as Newsome in California, Cummo in New York, and Wolf in Pennsylvania, continue to beat the quarantine drum.
Like the little boy with a new hammer, that seems to be the only tool in their toolbox. And like a hammer, this policy application is nothing short of a blunt instrument.
Perhaps it's time for the Governors to look for an alternative to lock-down.
One that won't cost millions of jobs.