Betsey Stevenson, Abigail Wozniak, Official discussed on Heartland Newsfeed Radio Network
February. The official unemployment rate was a measly three point five percent. This worth remembering our current economic crisis had nothing to do with the underlying economy. It's all about the pandemic. In any case, the latest unemployment rate for the month of April. Fourteen point, seven percent. The reality is that number is too low Betsey Stevenson an economist at the University Michigan has served as chief economist of the US Department of Labor, as well as on the Council of Economic Advisors in the Obama Administration, many of the people who reported that they were employed but they weren't able to go to work. They were absent from work not working from home but absent from work many of those people should have been counted among the unemployed at least among the temporary unemployed, which means the official unemployment rate is skewed. So what other data sources are there to the fastest data that comes out is applications for unemployment insurance those are called unemployment. Insurance. Initial claims, data the cares act made a bunch of people who are not normally eligible for you I eligible and this is called pandemic on employment assistance. Since the middle of March forty million people have applied for unemployment benefits another way is to take a look at our employers and ask our employers how many people do they have on payroll compared to the number of people they had on their payrolls in February those losses are around twenty, one, million, quite a bit less than the unemployment applications. There's a third way that we can try to take a look at the state of the labour market. We can survey a households and ask people. What were you doing in a particular week where you at work or not? All these numbers are in this sort of twenty to thirty to forty million that's a huge range but it all paints the same picture of really staggering scale of work stoppage. Where does Stevenson put the true unemployment rate for April the true unemployment Ray is probably around nineteen twenty percent, and that number may be low or may rise further. Let's put that in context during the great recession of two, thousand, seven to two, thousand, nine, the unemployment rate reached ten, percent nine, million jobs were lost over the course of those two years with cove in nineteen twenty to forty million jobs were lost in about two months. If we use Stevenson's estimate that the true unemployment rate is now around twenty percent. That's getting us into the territory of the Great Depression when unemployment hit twenty five percent now again, comparisons are not parallel in both the Great Depression and great recession job loss was a consequence of economic calamity with cove nineteen, its job loss because of an economic shutdown produced by public health calamity. Still, if you are a labor economist, the current numbers are literally unbelievable s. a year ago. The same person had brought me this table of Statistics and said, this is what calculated I would have said you. Did something wrong that's Abigail Wozniak. She is a research economist at the Federal Reserve Bank of Minneapolis. We have in the course of a month taken a turn that really has magnified the losses of the great recession many times over we've eradicated all of job growth in the last ten years wasn't naked spent her career studying recessions. Here's one sobering finding. If you are a college graduate who enters the job market during a recession, you never really catch up your lifetime earnings around ten to fifteen percent lower. With covid nineteen WOZNIAK has been serving Americans across the country about their physical and financial health. Some patterns have already jumped out. For instance unemployment has risen dramatically for workers who don't have a college degree and I looked back to the great recession numbers in really that pattern looks very similar but she has noticed one difference in most recessions. Black workers experienced more unemployment than whites. In this case, they are about the same and in this event unemployment rates for Hispanic, workers have shot. Past those for black and white workers, and they are experiencing the highest levels of unemployment rate now. So that is really something that's quite different bets likely because some of the industries most affected by the pandemic including the service sector have a lot of Hispanic workers, the same for construction, which is also slowed. So how does Wozniak think about recovery and reemployment? That she says, depends on what kind of recovery we get. So I think folks might have heard kind of popular phrase, the jobless recovery, and what that was connecting to was kind of empirical fact that employment was somewhat slower to recover in the last couple of recessions prior to the great recession, and in fact, there's good evidence that it never quite fully recovered particularly for some skill groups of workers that what we had in the more recent recessions was significant reallocation of what jobs. Looked like so that win employment started to pick up coming out of the recession the types of jobs that folks were doing looked a little bit different. That is opposed to an style of recession where the previous jobs tended to return. If you look at recessions in the sixties and seventies, you would see folks reporting layoffs. This very kind of formal were laying you off, but we might call you back type of separation. So what determines the nature of the job recovery's this time around? Betsey. Stevenson. Again, what ultimately happens to job laws depends on the consumption choices that you and I? Else, make during an in the wake of this pandemic Stevenson sees three factors that are potentially changing our consumption choices. Number one, we are learning to use new technology. And the pandemic has forced us to make some investments in change that we might not have made before at least not right away because change is hard. But with a pandemic, we've been forced to learn how to order things online how to use zoom how to use Google hangouts. So those investments will make us more likely to continue to use new technology going forward..