So the job market came back in May, but it was still awful

The term layoff once meant a loss of work with the expectation of getting called back when business picks up.

That's not what the word really means anymore. Maybe business slowed down or the plant simply closed, yet the precise reason won't really matter to the worker just laid off. That job is never coming back.

Understanding that difference between a break in employment due to a (hopefully) once-a-century pandemic and the permanent loss of the job is a big deal when trying to understand what's happening in the economy right now, to workers as well as businesses.

Lots of people came back to work off a furlough in May, enough to swing the total jobs number for the United States, reported last Friday, well into a positive territory. And that's great.

It's just that May was another terrible month of layoffs — the second worst month in the more than 27 years the Chicago outplacement firm Challenger, Gray & Christmas, Inc. has been tracking layoff announcements of U.S. employers.

A little more than half of these job cuts were attributed directly to the COVID-19 pandemic, according to the firm's research, presumably to the actions taken to slow down the spread. But the rest of the layoffs were attributed to things like market conditions or a slowdown in demand.

As you maybe remember from last week, pretty much nobody foresaw the headline number of the jobs report of last Friday, a gain of 2.5 million jobs. That includes the economists regularly polled by Bloomberg. And they didn't just miss it, they missed it by two country miles.

Down in the details, you can see that a lot of growth in jobs came from restaurant workers going back to work in May, even though full dining-room service in restaurants still wasn't the norm.

This report gets prepared from surveys, including one of households about their work status, and that's where this report got even more interesting. The total number of people on temporary layoff, which shot to a staggering 18 million in April, actually declined in May by about 2.7 million workers as employers called them back.

"This was sort of the low-hanging fruit," said Lindsey Piegza, chief economist for Stifel Financial. "We are still net down more than 20 million jobs. Going forward now, the question is even if they were reported as temporarily furloughed, and they could have been at the time it was reported, are they going to be immediately recalled or are they going to roll into a state of permanent joblessness?"

The total for permanent job losses is up by more than 1 million workers since earlier this year. Meanwhile, small businesses have been shutting down, at least according to a new paper that seems to be the first to look into recent small-business closures.

From February to April the number of active small-business owners, and these are the true mom-and-pops, declined from 15 million in February to fewer than 12 million in April.

More than one-third of immigrant business owners shut down and the toll was even higher for black business owners, experiencing a 41% decline. The only industry that seemed to get spared was agriculture.

Fairlie acknowledged he could not know how many business owners will get back at it if customers are more inclined to spend this summer or fall.

Yet it was still telling that nearly 1 in 5 business owners working in a field deemed "essential" and thus not subject to government restrictions as the pandemic accelerated had still shut down this spring, although that was less than half the rate of businesses considered nonessential.

"We could see a second round of very significant layoffs," said Piegza, "if in fact the number of businesses, when the PPP [federal funding] runs out, when we start to reopen, realize that they can't continue. It's a bit premature to say that we can see the light at the end of the tunnel."

She agreed that there could be waves of falling and rising economic activity as formal rules on social distancing end, with upticks in virus cases causing more consumers to stay home, whether their governor or County Board asked them to or not.

The official umpire of such things, at the National Bureau of Economic Research, announced that the U.S. economy peaked in February, so that's when the new recession began. Recessions end when things have stopped getting worse and the economy starts growing again.