“The virus drives the economics,” said Betsey Stevenson, a member of the Council of Economic Advisers under President Barack Obama who is now at the University of Michigan. If cases continue to rise, as health officials warn, “we’re not going to have people going back to work,” Ms. Stevenson added.
“In fact, we’re going to see more people staying home,” she said.
The problem is that the longer the public health crisis drags on, the more permanent damage is done to the economy. Total employment has grown the past two months because companies have begun recalling temporarily laid-off workers. But layoffs have continued as the economic effects of the pandemic ripple through the economy, reaching businesses and industries that were spared earlier.
If businesses can’t reopen, or can return only at a fraction of their previous sales, many temporary job losses are likely to become permanent. The number of people reporting they had permanently lost their jobs rose in June even as the number of workers on temporary layoff fell sharply for the second consecutive month.
“We’re going on four months now,” said Olugbenga Ajilore, a senior economist at the Center for American Progress, a progressive group. “There’s only so long that these businesses can hold out before it just doesn’t become feasible.”
The good news is that the strong job gains in May and June suggest that the permanent economic damage so far has been relatively limited, in part because of the trillions of dollars of emergency spending authorized by Congress. Most of those out of work still say they expect to return to their old jobs eventually, and companies are bringing back furloughed workers at a faster rate than many economists predicted a few months ago.
Hand & Stone, a national chain of massage studios and facial spas, survived the shutdown more or less intact. By Monday, 420 of its 465 locations had reopened, with 35 more expected to do so by the end of this month. Only a handful of locations have closed permanently. And about 70 percent of members continued paying monthly dues during the shutdown, banking massages for the future rather than canceling their contracts.
Todd Leff, the company’s chief executive, said that so far, at least, customers seemed comfortable going back, in part because of strict safety procedures the company had put in place. Sales at open locations are about 22 percent below where they were a year ago, and close to 80 percent of workers at those locations are back on the job. But Mr. Leff said he was still cautious about the longer-run outlook.