As a staffing agency, we were hit hard when COVID-19 first hit. At first, we were not getting any new clients or any new resumes in the first month or two. However, as of recently, we have seen many client companies reaching out to us about hiring top talent! However, we have seen fewer new applications from job seekers. We wanted to understand why job seekers weren’t applying when companies were hiring.
No one is in the rush to head back to work. Why? More than likely, it is because 2/3 of Americans are making more with unemployment benefits than they did at their job before COVID. However, this will end soon.
Currently, the extra $600 benefit will end on July 31st. They have had talks about extending it, but here is why you should get a job now even if they do extend it.
In 1 month, we will no longer be receiving that extra $600. That means the ones that are healthy and able to go back to work will do so. A lump sum of the 14.7% of Americans on unemployment will be re-entering the workforce, but most will be out of luck finding a job.
To start our research, we took a look back at the previous recession in 2008. The unemployment rate peaked at 10% in October 2009. This was a 5% increase in the unemployment rate from April 2008. Want to know how long it took for the unemployment rate to go back down to the rate it was before the recession?
It took 6 years! In October 2015, unemployment was back down to 5%. That means it took 6 years for the unemployment rate to drop 5%. What does that mean when we compare it to COVID-19 unemployment?
Before COVID, unemployment was at 3.5%, which was one of the lowest unemployment rates in the history of the US. Unfortunately, when COVID-19 came to the U.S, the unemployment rate skyrocketed to 14.7% in April.
Now some people are not worried when it comes to this high unemployment rate because they may have been told by their company that they were only temporarily laid-off. Well, this may not be true. According to Nicholas Bloom, 40% of these lay-offs during COVID will be permanent layoffs. Out of the 11.2% (14.75% - 3.5% Pre-COVID Unemployment) that became unemployed during COVID, only around 7% will go back to work.
If you or someone you live with is at high risk for COVID, DO NOT go back to work in the office. However, you can still look for jobs! Most companies that are hiring are hiring for a long-term position, but you can work temporarily for the next couple of months from home. Why is looking for a job now so important?
The unemployment rate after COVID will be still around 8%. As said before, this is because only 60% of the workers laid off will get their job back. This is much better than 14.7%, but it still very high. However, this number is not the ACTUAL unemployment number.
According to the U.S. Bureau of Labor Statistics, 9 million people not in the labor force want a job as of May 2020. What does it mean to be ‘not in the labor force’? Being not in the labor force means that these people were not actively looking for a job, which means they DO NOT count towards unemployed.
If we incorporate these people into the unemployment rate after COVID, we will see 13.7% of Americans jobless, but actively seeking employment. When looking at the peak unemployment rate in April, the real % of people who did not have a job was over 24%... Do not be part of this %, start looking for a job today. Want a better explanation? Watch and follow our TikTok!
We did not only look at the statistics for job seekers, but we looked at the statistics for businesses as well. Here a list of all the companies that filed for bankruptcy because of COVID-19.
Just because a company filed for bankruptcy does not mean it is going out of business. If a company is filing for Chapter 11 bankruptcy, it means that they are trying to restructure debt. However, when a company files for Chapter 7 bankruptcy they usually do not come back.
Many companies in the past have survived bankruptcy and survived as some of the top competitors in their industry.
According to FEMA, 40% of businesses do not reopen following a disaster. Not only that, but another 25% fail within one year. According to he US Small Business Administration over 90% of companies fail within two years of a disaster.
Now, we can’t certainly say that these numbers will be accurate for COVID, but we can say businesses will be affected. We know that the government has been very helpful keeping businesses up and running with giving out money, but we will say that even if these numbers were 25% accurate, there will be long-term effects of COVID-19 that will affect our economy for years to come. We are predicting real unemployment rate after COVID to be around 14%.
If you are one of the many few that are rushing to go back to work even if you are getting the $600 in unemployment benefits, we have some good news for you! Companies are starting to rehire because of state restrictions being lifted.
Actually, during COVID, every 10 jobs lost, there were 3 created. Companies like Amazon and CVS saw increases in sales and needed to hire for multiple positions to keep up, which helped get some people back to work. However, that is still a net loss of 7 jobs because of COVID. If you weren’t one of the lucky ones to get hired during COVID or you are still currently looking, here are the two reasons you should still be looking for jobs:
If you are not currently looking for work, it could be a long time before you find one. After COVID, when companies are hiring candidates, they will see many resumes with gaps of employment. Most of these gaps will only be a couple of months, however, a longer gap in unemployment will negatively affect your job application.
If you look for a job now, you will beat the crowd of individuals applying when the $600 unemployment benefit is up, meaning you will have a better chance of getting a job now than in the future.
When you have gaps in employment it looks bad on a resume. Companies hiring will give more leeway on this because of COVID, however, unemployment won’t be back down to what it was before COVID until around 2026 (estimated). This means you could be without a job a lot longer than you may expect. If you apply now before the wave of other job seekers, you will have a higher chance finding employment, meaning less gaps on your resume.
When you have large gaps between employment, you will more than likely not get the job you apply for if there is a similar candidate with less gaps. Gaps in employment show hiring managers that you are lazy and not interested in working/ not putting the effort in to find a job. This also could show managers that you have a poor work ethic and you do not have the right skills for the position.
You will be better off applying now for jobs and getting ahead of the other 13.7% of people looking for jobs after COVID is over. Being ahead of these job seekers will benefit you in the long run and will help you gain an advantage on them in the future.
If you are looking for help in finding a job position, reach out to us! We are one of the top staffing agencies located in RI. Give us a call if you are looking for work in RI or MA and we can help you get permanent, temporary, or temp-to-perm work. If you have any questions visit our website or call 401.331.2311.