COVID and Unemployment – Official jobless figures will miss the economic pain of the pandemic

An estimated 46 million Americans have already been laid off or seen a reduction in hours as a result of COVID-19, according to Gallup survey data collected from March 27 to March 31, 2020. This amounts to around 28% of workers.

But these massive losses are unlikely to register in the official data from our federal agencies. The Gallup data suggest that as many as 40 million of those laid off or facing reduced hours will not be officially considered unemployed by the Bureau of Labor Statistics (BLS) because they are not actively looking for work.

Conventional unemployment measures will show bad news

The current unemployment rate in the United States was measured in February 2020 and stands at 3.5%. Under the BLS definition, what the means is at that time, 5.8 million people were looking for work but not currently employed. Another 95 million adults in February were considered out of the labor force and not included in the unemployment rate.

Unemployment is rising as a result of the social distancing policies and behaviors designed to mitigate the spread of COVID-19. Some of this is being  captured by conventional metrics. During the week ending on March 21, initial claims for unemployment skyrocketed from a typical week of 350,000 to 2.9 million. Another 5.8 million claims were filed in the week ending March 28. If each additional claim is added to the 5.8 million people already unemployed in February, it would suggest an unemployment rate of 5.3% for the week ending March 21 and 8.8% for the week ending March 28.

Gallup also tracks unemployment rates, and our polling data was well-aligned with the BLS February unemployment rate as late as March 13. Gallup’s measure of unemployment has increased rapidly since the middle of March as the number of confirmed COVID-19 cases exploded . Gallup data shows rising unemployment culminating at 7% from March 27^th to March 31^st:

These figures are alarming enough—given the short time period in which they have taken place. But they do not capture the full scale of the economic damage being inflicted on American workers.

Economic side effects: lost hours and jobs

Starting on March 27^th, Gallup expanded the range of employment-related questions to people who report that they are not working, reflecting growing uncertainty about how people would answer the standard employment questions if their employer temporarily laid them off or placed them on furlough.

We also started asking people directly whether they had been laid off or faced reduced hours as a result of the coronavirus. A small portion of adults (1%) said they were permanently laid off, roughly 3 million people. A much larger percentage (9%) of U.S. adults said they had been temporarily laid off. This represents roughly 22 million people. Another 13% (or about 31 million) said their working hours had been cut as a result of the virus.

All together, we estimate that 46 million people have been either laid off or had their hours reduced. That’s approximately 28% of workers, and 19% of the U.S. adult population. Half the workers in the most severely affected industries—arts, design, entertainment, sports; restaurants, accommodations; retail; and transportation—report being laid off or given reduced hours.

Chosen excerpts by Job Market Monitor. Read the whole story @ Official jobless figures will miss the economic pain of the pandemic