June 18, 2020 – Despite the U.S. adding a record amount of jobs last month, the Labor Department reported this morning that 1.5 million more Americans filed new claims for state unemployment benefits last week. Economists surveyed by Bloomberg expected the Labor Department to report 1.3 million initial claims. The latest numbers reflect the persistent strain on the economy caused by a pandemic wreaking havoc around the world. About 45 million people have now filed for unemployment benefits over the past 13 weeks, representing the biggest jobs loss in U.S. history.
“The prolonged plateau of over 20 million continuing to claim UI benefits despite states reopening sends a strong signal that any labor market recovery will happen in fits and starts,” said Daniel Zhao, a senior economist at Glassdoor. “The labor market’s path to recovery is littered with obstacles that could smother the rebound, from the expiration of federal support for businesses and workers to depressed consumer demand to the resurgence in COVID-19 cases.”
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: “It’s not clear why claims are still so high; is it the initial shock still working its way up through businesses away from the consumer-facing jobs lost in the first wave, or is it businesses which thought they could survive now throwing in the towel, or both? Either way, these are disappointing numbers and serve to emphasize that a full recovery is going to take a long time.”
Federal Reserve chairman Jerome Powell reiterated during his Congressional testimony earlier this week that the pace and strength of the recovery remained uncertain. Mr. Powell also said the central bank, as well as the government, might need to do more to support the economy, its workers and those hit hardest by the pandemic recession. The Fed has stressed that minority groups including black, Hispanic and female workers have been over-presented in bearing the brunt of the crisis.
According to CNN Business, more than 100 economists, including former Federal Reserve chairwoman Janet Yellen and chairman Ben Bernanke, sent a letter to Congress urging the government to deploy more stimulus.
During the week, extended benefits were available in the following 34 states: Alaska, California, Connecticut, the District of Columbia, Delaware, Georgia, Hawaii, Idaho, Illinois, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Vermont, Washington, West Virginia, and Wisconsin.
During the week ending, 44 states reported 9,280,644 individuals claiming pandemic unemployment assistance benefits and 35 states reported 1,077,319 individuals claiming pandemic emergency unemployment compensation benefits. The highest insured unemployment rates during the week were in Nevada (24.2), Puerto Rico (21.1), Hawaii (20.2), New York (18.0), Michigan (17.6), Connecticut (16.3), California (16.2), Rhode Island (16.2), Louisiana (16.1), and Massachusetts (16.1). The largest increases in initial claims for the week were in California (+27,202), Massachusetts (+17,512), Oklahoma (+17,149), New York (+11,873), and Maryland (+9,718), while the largest decreases were in Florida (-95,546), Texas (-17,001), Georgia (-13,909), Michigan (-11,454), and Maine (-8,034).
Search Experts Weigh In
“Unemployment should level off in July/August,” said John Wittorf, managing partner, EMEA, at Beecher Reagan. “We expect to start to see a decline in October and then hopefully we will see pre-pandemic numbers toward the end of the first quarter of 2021.”
Positive Jobs Report Shows Upturn in Employment
With businesses across the U.S. continuing to reopen, last week’s labor report reveals a stunning turnaround as employers add 2.5 million jobs in May. Let’s take a closer look at the numbers as search consultants from ZurickDavis, International Executive Search Federation, and Borrer Executive Search weigh in.
“COVID-19 has completely upended the workplace,” said Patricia Lenkov, founder of Agility Executive Search. “Companies have had to furlough and downsize as well as restructure and reprioritize. All of this impacts the executive search business. The recruiting industry will be asked to help rebuild once businesses are expected to return to full capacity.”
The real impact of the current recession on executive search firms and the pause in new job orders remains a point of debate within the high-end recruiting sector. Many recruiters believe this time around the C-suite and boardroom will be generally insulated. Instead, what they do see with this particular economic shock is devastation among low wage workers. “This is an uncommon service sector recession,” said Scott A. Scanlon, CEO of Greenwich-Conn-based Hunt Scanlon Media. “That means we will see less of an effect on white collar jobs. That’s the sad reality of this downturn. Our view is that executive recruiters will be in big demand come fall.”
Ms. Lenkov agrees. “Leadership has been tested in ways previously unimaginable and this means that those who did not have the wherewithal to lead through this crisis will need to be replaced.” For those companies without successors, she said, “executive recruiters will be tasked with looking for new leaders who bring all of the qualifications previously required as well as a whole host of strategy, risk, environmental and human capital understanding and expertise.” The new CEOs, CFOs, board directors and other C-suite executives, she added, will need to manage in ever increasing complexity and in many cases a decimated business that needs to be quickly repaired. Calls to recruiters for assistance will therefore pick up as we enter the final months of the year.
“Hiring and coaching engagements for in-house legal and compliance talent remained strong in Q1 and Q2 credited to video meetings and remote working arrangements,” said John Gilmore, managing partner of BarkerGilmore, which specializes in building corporate legal and compliance teams. “While the general counsel and chief compliance officer positions are essential and deemed safe, in-house legal and compliance teams are being pared down, especially in the energy, entertainment, retail, and travel sectors.”
“We are optimistic for a speedy recovery and maintain revenue targets for 2020,” he noted.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Erik Boender, Senior Research Editor – Hunt Scanlon Media