How the worst jobs report in history understated how bad it really is
Minneapolis Federal Reserve Bank President Neel Kashkari warned yesterday how ugly it's going to get.
“That bad report tomorrow is actually going to understate how bad the damage has been,” Kashkari explained, adding that the reported unemployment rate could be as high as 17% — a brutal number, no doubt — but he says the true number may be as high as 24%. “It’s devastating.”
The official job loss numbers alone are so horrific that it's practically beyond comparison.
Yet the unemployed are still being systematically under-counted, and that's not conspiracy theory.
Even the weekly unemployment numbers are being understated.
Turns out it’s an under-count — by at least 2.5 million and probably a lot more.
States are just starting to report the number of new claims filed by people such as gig workers, freelance writers and independent contractors who previously were ineligible for benefits...
Consider the most recent week ended May 2. The Labor Department said initial jobless claims filed through normal state guidelines totaled 3.2 million. Yet they reported that an additional 583,699 people applied through the so-called Pandemic Unemployment Assistance Program set up by the federal government.
Therefore: Nearly 3.8 million new claims were filed last week. Not 3.2 million.
Why doesn’t the Labor Department combine the two numbers?
That's just the weekly report.
Today's monthly employment report so drastically under-counted the unemployed that the BLS openly admitted it in the official report.
As was the case in March, special instructions sent to household survey interviewers called for all employed persons absent from work due to coronavirus-related business closures to be classified as unemployed on temporary layoff. However, it is apparent that not all such workers were so classified.If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical April) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported (on a not seasonally adjusted basis). However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.
So we know that the unemployment rate is 19.5% at an absolute minimum, but we're going to pretend that these already terrible numbers should be taken seriously because REASONS.
But that's only the start! The real number is likely much, much worse.
While the unemployment rate is supposed to capture people furloughed due to the pandemic, the report said that many such people were misclassified as employed but just absent from work - a category that is usually very small and includes mostly people on parental leave or on vacation.Adding back those people into the ranks of the unemployed, the report said, generates an unemployment rate of 19.5%, not 14.7%.
The unemployment rate also misses people who lost their jobs but cannot look for or do work because of stay-at-home orders to slow the spread of COVID-19. If you aren’t looking for work, you aren’t counted among the unemployed. The government noted there were 9.9 million people who wanted a job but were not counted in the labor force.
So the real unemployment rate is 19.5% PLUS TEN MILLION MORE unemployed workers.
That's getting into violent social unrest territory.
Comments
"That's getting into violent social unrest territory."
Uhhh...good?
Incidentally, this is a thing now: https://www.gog.com/game/tonight_we_riot?utm_medium=email&utm_source=new...
In the Land of the Blind, the One-Eyed Man is declared mentally ill for describing colors.
Yes Virginia, there is a Global Banking Conspiracy!
That count also misses
People who are unemployed, but have been unable to get their unemployment claim in because the only systems and telephone lines are so overwhelmed . That is probably hundreds of thousands more.
So what’s the Vision?
A Restored New Deal is in order, no? My limited imagination sees things like: construction of, then employment in, a massive “Urban Gardens” campaign. Like FDRs forestry workers, only this time for food. Whereby, incidentally, provision of some degree against food scarcity is made. Things sure ain’t going great in nature these days in regard to food.
I bet people could come up with twenty New Deal type programs for employment and enhancement of our position as a society.
Orwell: Where's the omelette?
As I've always said the past five years
Do a national switch to renewable energy on a massive scale and transition half the military into a civilian organization, but funded federally (using taxpayer money, quantitative easing, magic money, whatever). Make it a voluntary transition, but guarantee training and better pay than military pay. Market it as a national and global defense effort to renew and protect our national energy infrastructure, improve the health of our citizens, and protect the Earth's resources ecology. (Net effect: reduce our military spending, redirect that money on domestic areas that will improve the country.)
Have that organization set up construction sites for distributed offshore wind, large solar arrays, and investigations into wave energy from oceans and storage of renewable energy. Hire a lot of R&D efforts for this, and for improving solar arrays and wind turbines (and whatever else people might think of).
Bring water security into the efforts, plan nationally how water should be distributed as the decades pass (make a plan), how to improve water resources, and institute large desalination efforts along our shores. Also institute creations of levies near large cities on coasts to slow the effects of sea level rise and pass the effect of that inevitability over more time.
Hire local contractors in every state to install rooftop solar on lower-income and working-class-income housing free of charge (government pays the contractors). Install solar towers along all federal and state highways (where land use does not need to be negotiated) and connect them to a national power grid, able to send power where it is needed, store power where it is needed, and automatically redirect power around outages or terrorist attacks. Install solar panels above city, state, federal, and corporate parking lots and structures and connect them as well. Install distributed power storage centers throughout the nation.
If half the military isn't enough workers (or if not enough volunteers come forward), double the number with educated civilians. Make this a World War II level employment, rebuilding the working and middle classes--not only with the above efforts directly--but by mandating that some large percentage of resources needed for these efforts (steel, minerals, aluminum, solar panels, water distribution efforts, etc.) come from manufacturers in the United States. Say 30% of materials must be produced in the United States (or maybe 40% or 20%). The rest of the world can provide the rest, but we *must* ensure our ability to manufacture critical infrastructure material, and we *must* ensure the working and middle classes. Even if it costs more, and even if our workers must be paid a lot more--so what? That's what is required to ensure our economy.
Tax rich people more along the lines of the 1950s--maybe not 90%, but maybe more like 70%. Make companies pay fair taxes. Eliminate capital gains and tax at normal income levels.
Ensure this new civilian program lasts for at least the next 50 years--a full generation of employment, solving some of the nation's and the world's largest problems. Ensure results are rewarded, and not overspending or delays to projects (think SpaceX implementation, not Boeing cost+ contracts).
Share with other nations and compete with them in a friendly manner.
That's my small dream . . .
If you raise top tax rates, you must close offshore tax havens
and plug loopholes. Tracking down that money and enforcing tax evasion laws in foreign countries requires a much stronger global money laundering and tax evasion agreement. Probably, most developed states will sign on. As for those which don't, in the absence of voluntary compliance, here's a job for what's left of a vastly downsized CIA. Jeff Bezos can run carrying his ill-gotten untaxed loot, but not very fast. Let him keep $999 million, which he can spend in a jail cell.
Yeah
I was confused by today's (yesterday's?--losing track of time lately!) unemployment numbers from the Wall Street Journal.
August 2019 statistics show 157 million employed people in the USA (130 million of those are full time employed). Okay, let's take that as a baseline, even though I admit the number for March 2020 may be higher or lower than that by a bit.
33 million filed new unemployment claims in the past 7 weeks.
33 million is 21% of 157 million. Doesn't that mean unemployment would be 21%?
Oh, and then add the 3% or so of unemployed going into the beginning of March (before all the COVID stuff happened). Shouldn't that make unemployment 24%? (The peak unemployment during the Great Depression was 24.9%.)
Am I missing something in my reasoning there? Isn't it basic math?
The BLS systematically undercounts the unemployed.
The true unemployment rate in America has never been less than 10%. The Labor Department applies all sorts of statistical adjustments -- not counting "marginally attached workers" (people who have worked only occasionally in the past year), discouraged workers who can't find jobs in their field, those who involuntarily work part-time, for instance -- to make the jobless numbers appear better than they actually are. See, http://chestertontribune.com/Business/102398%20behind_the_numbers_unempl...
This 2012 analysis goes into greater detail, and adds the factor of the declining labor market participation rate among older workers: