The impact of the coronavirus pandemic on the US economy, has resulted to the permanent loss of millions of jobs in the country.
The US Bureau of Labor Statistics released seasonally adjusted data, which revealed that the number of unemployed people classified as permanently losing their old jobs amidst the coronavirus pandemic increased by 345,000 in September to a seven-year high of 3.8 million.
Permanent job losses
The numbers demonstrate that many of what were initially hoped as furloughs or temporary job losses have become permanent as businesses closed down and take cost cutting measures.
Prior to the onset of the pandemic, this number was at a 19-year low in February. The closely monitored labor market measure has almost tripled since then.
Austan Goolsbee, former economic adviser to President Obama, commented: “It’s an ominous sign.”
The Labor Department classifies some people who have just been laid off as on temporary layoff but those considered permanent are people who have either just completed a temporary job or have lost their position for good.
The percentage of unemployed Americans classified as permanently unemployed has surged from 11.1% in April to 35.6% in September.
Gus Faucher, chief economist at PNC, said: “It’s very worrisome — not only for these individuals, but for what it says about the recovery.”
Recent mass layoffs
In recent weeks, several US companies have announced mass layoffs due to losses from the impact of the pandemic.
Last week, Disney announced that it will lay off 28,000 employees in the US due to the impact of the coronavirus pandemic on its parks and resorts business. Disney said the affected jobs will be those from its Parks, Experiences and Products unit and that 67% of the employees to be laid off will be part-time workers.
There are over 100,000 US employees in the company’s parks and resorts division.
Josh D’Amaro, the chairman of Disney Parks, explained that the job cuts were needed because of the “prolonged impact” of coronavirus on business, including “limited capacity due to physical distancing requirements and the continued uncertainty regarding the duration of the pandemic.”
In a statement, D’Amaro said: “As difficult as this decision is today, we believe that the steps we are taking will enable us to emerge a more effective and efficient operation when we return to normal.”
Also last week, American Airlines and United Airlines said they will be cutting 32,000 jobs combined after they failed to secure additional federal aid.
After failed attempts to get additional federal aid, American Airlines announced that it will cut 19,000 jobs while United Airlines will reduce its work force by 13,000 employees.
United Airlines chief executive officer (CEO) Scott Kirby said that the decision on the layoffs represented “a very sad day for all of us here at United.”
Earlier, American Airlines CEO Doug Parker said he was still hoping for the job cuts to be averted if the firm saw signs that Congress and Treasury Secretary Steven Mnuchin would be able to reach an agreement.
In a memo to employees, Parker wrote: “Unfortunately, there is no guarantee that any of these efforts will come to fruition.”
However, both Kirby and Parker mentioned that the airlines could undo the layoffs and quickly recall employees if a deal is reached in the coming days.
Kirby said: “We implore our elected leaders to reach a compromise, get a deal done now, and save jobs.”