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 the U.S. 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 in 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 the 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 in 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 of finding employment, meaning fewer 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 fewer 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.
We decided to keep the community updated on the effects COVID is having on our economy. As you may know, if you are reading this on 7/17, the extra $600 in unemployment benefits will run out in a week. What will this mean for our economy?
Let us first explain why the benefit is good for the economy. Right now, we see the stock market on a steady incline from a month or two ago when it initially crashed. The reason for this is that more people are receiving money than they did before COVID. This means that they are reinvesting in the economy (i.e., Individuals feeling better about making a large purchase with $600 benefit). This $600 benefit is one of the only reasons why the economy has been on the rise to almost pre-COVID numbers.
This supplement will end on July 25th for most, meaning millions of workers will see a decrease in their incomes by 60%. This will cause more stringent spending, which will result in the stock market to crash once again. However, we will have the same issue in a couple of months if the government does extend the $600 benefit policy.
This $600 benefit is helping many families survive and is also the main reason for many individuals not actively seeking new work. We can see a relation of this when looking at this chart below:
States are seeing PUA on the rise, while initial claims are falling even though businesses are starting to hire again. As a staffing agency, we have seen an increase of more than 300% of companies hiring, than during the first couple months of COVID-19. What we need is a benefit for people to want to go back to work safely.
Here are some updated statistics on how bad the economy is. In the past 17 weeks, 51.2 million Americans filed for unemployment. Initially, the number of new Americans filing for unemployment was much higher than it is today. Still, another 1.3 million people filed for unemployment last week. Before COVID-19, the record was 700k.
Initial claims are still nearly twice as much as they were during the worst week of the Great Recession. What does this mean for us? If the unemployment benefit is not re-instated, we will see the economy go back down, which will cause more jobs to be lost. What will need to happen is an incentive for individuals to go back to work, rather than get paid more numerous to stick at home.
We will continue to keep you updated on this as the weeks go by, and new information arises. I will say, start applying now for jobs before everyone enters the workforce at once.