MARY REICHARD, HOST: Coming up next on The World and Everything in It: the Monday Moneybeat.
NICK EICHER, HOST: More Americans went back to work in July and that 1.8 million of our countrymen did so beat economists’ expectations of a number smaller than that. The number builds on net job growth in June and even May, so for three months more than 9 million jobs have returned.
Problem is, 22 million went away since COVID-19 arrived and the lockdowns began. In a sense you could say, the job losses suffered in late March and all of April wiped out 10 years of job creation. So of the 22 million jobs lost, we have 9 million back online and that’s 40 percent of the loss made up. So still a long way to go, but a meaningful start.
Here now to talk about it is financial analyst and advisor David Bahnsen. David, hope you’re well, good morning to you.
DAVID BAHNSEN, GUEST: Good morning. How are ya, Nick?
EICHER: Doing great, thanks for asking. Well, let’s talk July jobs. I know the number beat what labor economists thought, but I was cheering for more. Still, I guess it stands to reason that with the re-lockdowns, slightly better is better than worse. How do you view it?
BAHNSEN: Yeah, it was actually a lot better than was expected. I think that the more optimistic projections were closer to 1.4. And I also agree with you that with the sort of re-lockdown endeavors at a kind of half rate or three quarters rate that you might have seen in some states in the Sun Belt or the South.
So I think that the July number, they’re all in the category that we’ve talked about for so long, which is less bad than expected. And that is, of course, still bad.
But I want to go back first, Nick, to something you said when you were setting this up about 10 years of job growth wiped away. I think that if you put into a spreadsheet the number of jobs that were created in 10 years and then in a spreadsheet the number of jobs that went away, that that may be true. But it isn’t true in any practical or real sense as long as those job losses at 70 or 80 percent categorized as temporary.
Now, of course, the problem is A) temporary job loss is people aren’t getting paid and that’s awful and tragic for them and B) they may be wrong that it’s temporary. Some of those job losses may start off as temporary and become permanent, but I think to try to frame it as a comparison to the 10 years of job growth, there’s a real apples to oranges thing that is going on there.
What is relevant and what is true is that the job losses have been severe and they’ve been awful for those people. But what I think we continue to learn as more and more data comes out is how incredibly true some of my theories have been throughout this that make it, from my mind, from a humanitarian standpoint worse not better. But economically is still important to sort of distinguish. So, you have this situation that becomes a little bit less profound in its economic impact but I think more profound in the human suffering because they’re people that can least afford to be without work and without income.
EICHER: Speaking of that, David, you wrote a letter to fellow financial professionals in New York City, urging them to get back into the city. You made the point that wealthy white collar workers are doing just fine working from home, but all the people around them—the service workers, the restaurants, the sandwich shops, the dry cleaners, they’re hurting because of all that working from home. You argued: We’re continuing to thrive, but by not reporting to work in Manhattan, we’re hurting people who really can’t afford to be hurt right now. Have you gotten any kind of response?
BAHNSEN: I have and at first there was quite a bit of response. But it isn’t that the humanitarian approach was like an angle, per se. You and I really believe it. It really is the essence of economics that there is an impact that goes beyond just what you can immediately see. And that in this case there’s sort of invisible hand dynamics that are not hurting entrenched and powerful people.
They’re hurting people that are downstream that I have heard for years from corporate America how hugely important social responsibility now is to them. And they do a big support for BLM and they do a big support for LGBT and God forbid that they do anything in the fossil fuel industry. So they have their social corporate responsibility goals very well articulated and there is some of the most profound proclamation of their virtue that I have ever seen. Well, here’s a chance to do something incredibly socially responsible, to have the people who can safely return to work, it makes their own business even more optimal and efficient, but even apart from that—because they’re certainly surviving without it—they have a chance to have this impact to others within the community and the ecosystem that is urban America and they need to, I think, implement that after Labor Day, not waiting all the way to the end of the year.
And I’m very hopeful that at least some will respond to that call because I think it’s a moral call and of course very good for the economy as well.
EICHER: We talked about the July employment report. Let’s talk about more current affairs—and that’s weekly claims for unemployment benefits and continuing jobless benefits.
So 1.2 million new claims and continuing claims of just over 16 million. Probably well to remind the listener that before COVID continuing claims were in the neighborhood of 2 million and now we’re talking about 16 million. So, again to your point, we’re talking eight times that number and it’s just unbelievable on a human scale.
I’ll add one other thing. The $600 per week unemployment bonus, I think, fully expired. Is it too early to say that that’s having an impact?
BAHNSEN: Yeah, it’s definitely too early because the data wouldn’t even be wiped in yet But what you saw was the initial jobless claims drop to the lowest level since COVID began, closer to 1.1 million, but still over a million, still very high. And then the continuous claims which at one point were at 25 million are now down to 16. So then you take the data and you look at the monthly jobs report and we have a labor force of about 164 million people in a population of 330 million. And obviously there’s plenty of kids and elderly and others that can’t work. I still think 164 million in a labor force is way too low. But either way, roughly 10.1 unemployment rate, that matches up.
We have a few confirming data points that suggest that there’s somewhere between 15 and 18 million unemployed people in the country. And there’s more under-employed as well that maybe are working part time that want full time, but that number came down this month, too. So, I don’t have an exception to it, Nick. All the data points are less bad than expected and still bad.
EICHER: David Bahnsen, financial analyst and advisor. Always great to talk with you and we’ll catch you again next week. I really appreciate your service to us.
BAHNSEN: Thanks so much, Nick. Have a good one.