Readers may recall in mid-April, the first signs of the second round of layoffs and furloughs appeared. Then by June, high-frequency data of the U.S. economy suggested the recovery reversed as state governors were forced to pause reopenings due to increasing COVID-19 cases and deaths.
Since July, initial and continuing claims have risen, suggesting the worst employment crisis since the Great Depression of the 1930s continues to unfold.
New evidence, published Tuesday in a study by Cornell Law School Senior Fellow and Adjunct Professor, Daniel Alpert, reveals the second round of layoffs is becoming more severe as the fiscal cliff begins.
The study, conducted from July 23 to August 1, by Alpert and RIWI Corp., shows 31% of employees initially laid off or furloughed because of the virus-induced recession were just recently laid off a second time.
Here are highlights from the study titled "New Cornell-JQI-RIWI Survey Shows that the Second Wave of U.S. Layoffs and Furloughs is Well Under Way:"
- Of workers who were placed back on payrolls after being initially laid off/furloughed as a result of the COVID-19 Pandemic Crisis, 31% report that they have been laid off a second time, and another 26% of those placed back on payrolls report being told by their employer that they may be laid off again.
- 37% of respondents employed by third-party employers (i.e., not self-employed) have been laid off/furloughed – at least once – since March 1, 2020.
- 57% of those initially laid off/furloughed reported being put back on payroll sometime after their initial dismissal, but 39% of such respondents say they were put back on the payroll yet were not asked to return to actual work.
The survey revealed a disturbing trend: The second round of layoffs are happening "in states that have not been experiencing recent COVID-19 surges, relative to those in surging states."
RIWI conducted the survey, then Alpert and his team analyzed the data. Here's how the survey was conducted:
"RIWI randomly engaged a total of 10,719 U.S. respondents aged 16+ from July 23 to August 1 on a continuous 24/7 basis with questions to determine who held a private-sector job, which share of those were laid off, which share of those re-payrolled, and then in turn which share was laid off or told they might be laid off (see Appendix for full question and answer set, as well as other technical information). A total of 6,383 respondents fully completed the core questions," the study said.
As the labor market falters, recovery reverses, fiscal cliff hits, and rent eviction moratorium expires, households across America will be severely pressured in August until the next round of stimulus is passed.
The biggest takeaway from the survey is that there's no V-shaped economic recovery in the back half of the year, the Trump administration and Congress will need to pass trillions of dollars more in direct payments to tens of millions of broke Americans, or face a crash in consumption. The virus-induced recession has financially ruined the bottom 90% of households.
Alpert said "additional economic shutdowns" due to rising virus cases and deaths will exacerbate the second round of layoffs.
Wall Street is ignoring the deep economic scarring from the virus, as we've recently mentioned: permanent job loss now stands at nearly 3 million in June, up from 1.6 million people in February.
Putting this all together, Gary Shilling, the president of A. Gary Shilling & Co., recently told CNBC that Wall Street has misread the shape of the economic recovery, as he warns a 1930s-style decline in the stock market could be ahead.