Goldman Sachs: "25% of US Temporary Laid-Off Workers Face Permanent Dismissal"

Employment Market Continues Rapid Recovery, but 2 Million People Unable to Find Jobs by Next Year
Temporary Laid-Off Workers Face Risk of Permanent Dismissal as Financial Support Disappears

[Asia Economy Reporter Naju-seok] Despite the resumption of economic activities in the United States following the COVID-19 pandemic, about one-quarter of temporarily laid-off workers are expected not to return to the labor market. It is also predicted that cases of temporarily laid-off workers being fully dismissed will increase as government financial support ends.

According to Bloomberg on the 24th, Goldman Sachs, a U.S. investment bank, forecasted that around 2 million temporarily laid-off American workers during the COVID-19 crisis will still be unable to find jobs next year. Although temporarily laid-off workers have been rapidly returning to the labor market as lockdown policies were lifted and economic activities resumed, Goldman Sachs noted that the recovery pace has slowed since July.

In April this year alone, the total number of temporarily laid-off workers in the U.S. was recorded at over 18 million. After economic activities resumed in May, these temporarily laid-off workers quickly returned to their workplaces. However, 9.2 million workers remain temporarily laid off. Joseph Bricks, an economist at Goldman Sachs, analyzed, "Jobs in the labor market are expected to recover rapidly in the second half of this year." Goldman Sachs predicted that 5.6 million jobs will be created by the end of this year.

Despite the trends of economic and employment recovery, analyses suggest that the employment shock from COVID-19 will continue into next year. Bricks stated, "There are signs of other movements, such as worsening reemployment prospects for temporarily laid-off workers in July." For this reason, it is expected that more than 2 million workers will still be unable to find jobs next year. Although a strong employment recovery trend continues, it has not compensated for the COVID-19 shock.

The rate at which temporarily laid-off workers transition to permanent dismissal remains low but is rising rapidly. Goldman Sachs anticipates a surge in permanent dismissals of temporarily laid-off workers as financial support and the Paycheck Protection Program (PPP) are depleted. The U.S. has a system that provides unsecured loans of up to $10 million (approximately 1.19 billion KRW) to small and medium-sized enterprises with fewer than 500 employees, and if these companies maintain employee employment for a certain period, the loan repayment is waived. A public opinion survey by the NORC Center for Public Affairs Research at the University of Chicago also showed that expectations for temporarily laid-off workers to return to their original workplaces are gradually declining.

Bricks predicted, "Although the labor market will improve in the second half of this year, unlike the previous employment recovery pattern, permanent dismissals of temporarily laid-off workers will gradually increase due to factors such as cuts in financial support."

This content was produced with the assistance of AI translation services.