Consider an average full-time employee in the food industry, who earned around $500 per weekbefore the coronavirus crisis. Average weekly unemployment insurance last year was $378, and now with the extra $600 from the coronavirus relief law, that worker could collect $978 in unemployment benefits each week for two months — nearly double what he or she was paid while employed and a relatively generous payment when there is no demand for dining out. In fact, according to the Labor Department, the median weekly earnings for full-time workers were $957 in the first quarter of 2020, so roughly half of full-time workers can collect more with unemployment insurance than they could in their jobs.
Leaning on unemployment insurance also allows those out of work to seek opportunities in other industries, improving labor market flexibility. Some companies and sectors that employed a lot of Americans before this crisis, such as restaurants, department stores, airlines and hotels, may not fully revive. Keeping workers connected to those jobs does neither them nor the economy a service. The sooner workers move on to healthier industries, the better.
That flexibility in the labor market has always been a hallmark of the American system. After the global financial crisis, for instance, it allowed workers to shift from manufacturing into service jobs. In May 2007, when U.S. unemployment was at its precrisis low, about 10 percent of workers were employed in manufacturing vs. roughly 84 percent in services. By February of this year, before the coronavirus hit, manufacturing employment had fallen to nearly 8.5 percent, and services had risen to around 86 percent.
Labor market flexibility creates more opportunities for U.S. workers, usually leading to a faster recovery after a downturn. During the Great Recession, the United States lost 5 percent of its jobs, compared with 3 percent in Europe. Afterward, it took 119 months, or slightly less than 10 years, for the U.S. unemployment rate to reach its precrisis monthly low of 4.4 percent. It had fallen to 3.5 percent in February, before the coronavirus hit. By contrast, euro-zone unemployment still hasn’t returned to its precrisis low of 6.9 percent, 151 months later. By February, it had declined only to 7.3 percent.
Chosen excerpts by Job Market Monitor. Read the whole story @ U.S. unemployment is higher than Europe’s now. But we’ll likely recover faster. – The Washington Post