The arrival of the covid-19 virus and the policy responses have led to unprecedented numbers of initial claims for unemployment since early 2020: over 16.5 million by April 4 th, 2020, with new claims arriving at a rate of 6-7 million per week. But concerns about state governments’ inability to process so many claims in such a short period, combined with the fact that many workers are ineligible for unemployment benefits, has led to concerns that total job losses are being understated by these numbers. Furthermore, because official labor market indicators compiled by the Bureau of Labor Statistics (BLS) take time to be released, the current state of the U.S. labor market remains unclear.
Using new ongoing large-scale surveys of U.S. households much like the ones run by the BLS, we provide some preliminary evidence on the response of labor markets in the U.S. to the current crisis. We focus on three key variables typically measured by the BLS: the employment-to-population ratio, the unemployment rate, and the labor force participation rate. Historically, the employment-to-population ratio and the unemployment rate are near reverse images of one another during recessions as workers move out of employment and into unemployment (or workers in unemployment find it harder to move into employment). More severe recessions also sometimes lead to a phenomenon of “discouraged workers,” in which some unemployed workers stop looking for work. This leads them to be reclassified as “out of the labor force” by the BLS definitions, so the unemployment rate can decline along with the labor force participation rate while the employment-to-population ratio shows little recovery, not because the unemployed are finding work but rather because they stop trying to find one. Jointly, these three metrics therefore provide a succinct and informative summary of the state of labor markets.
First, job loss has been significantly larger than implied by new unemployment claims: we estimate 20 million lost jobs by April 6th, far more than jobs lost over the entire Great Recession. Second, many of those losing jobs are not actively looking to find new ones. As a result, we estimate the rise in the unemployment rate over the corresponding period to be surprisingly small, only about 2 percentage points. Third, participation in the labor force has declined by 7 percentage points, an unparalleled fall that dwarfs the three percentage point cumulative decline that occurred from 2008 to 2016.
Chosen excerpts by Job Market Monitor. Read the whole story @ LABOR MARKETS DURING THE COVID-19 CRISIS: A PRELIMINARY VIEW