High unemployment could remain a constant for the next two years as people struggle to find jobs, according to Goldman Sachs.
The numbers could remain stagnant because of the policies adopted in several countries that discourage returning to work, Goldman said, as reported by CNBC. In the U.S., such policies include a loan program to provide companies with funds to pay displaced employees and boosting unemployment payments with an extra $600 per person. That is similar to the approach taken in Canada, the report notes.
While Goldman Sachs chief economist Jan Hatzius said those policies have ultimately been helpful in buoying peoples’ finances during the crisis, they could potentially discourage workers from coming back to work if they wouldn’t be making as much money at their actual jobs, he said.
Hatzius wrote that the measures “have created significant incentives against maintaining existing employment relationships.” As the unemployment compensation is set to expire July 31, Goldman anticipates that a compromise of $300 more in unemployment would likely be on the table for after that.
The pandemic has caused unemployment rates unrivaled in any time since the Great Depression almost 100 years ago. Forty-three states have set new unemployment records, including Nevada, which has a 28.2 percent unemployment rate spurred by disastrous hits to its gaming and entertainment-heavy economy. Michigan is second with 22.7 percent unemployed, and Hawaii is third with 22.3 percent.
The lowest rate is Connecticut with 7.9 percent unemployed, CNBC reported, citing the Labor Department.
Economists have taken an optimistic bent as of late, forecasting that the worst of the pandemic-induced economic damage could be behind us. The Wall Street Journal has reported that the hesitant but positive upward trends for the travel, shipping and restaurant industries indicate a recovery might not be as far off as was initially predicted.
A lawsuit by several gig-economy drivers against the state of New York shows that some people have not been able to access the aforementioned unemployment benefits, leaving them struggling to make it by for months.