What to watch on jobs day: The unemployment rate continues to climb but not equally for all demographic groups
In April, the Bureau of Labor Statistics (BLS) reported that 20.5 million jobs were lost and the unemployment rate rose faster than ever before, hitting 14.7%, the highest unemployment rate since the Great Depression. May’s unemployment rate is expected to be far higher. Initial unemployment insurance claims suggest an excess of 10 million more people lost their jobs between mid-April and mid-May, the reference period for tomorrow’s report.
In advance of tomorrow’s jobs data from BLS, let’s take a minute to look more closely at the unemployment rate across various demographic groups and consider the extent of economic pain missed in the official count of the unemployed. Because of the use of the microdata in our calculations, the numbers in the figure below are not seasonally adjusted and therefore do not match the topline seasonally adjusted data released by BLS. The microdata, however, allow us to measure the unemployment rate and calculate the adjusted unemployment rate across a variety of groups not reported by the BLS.
The official unemployment rate is in dark blue in Figure A below. As you can see, the unemployment rate is incredibly high across the board. Except for those with an advanced degree, the unemployment rate of all groups has exceeded the highest level the overall unemployment rate hit at the height of the Great Recession, when it reached 10.0% in 2009 (and all groups have exceeded their group’s highest unemployment of the Great Recession). Even though jobs were lost across the board, the data indicate that job losses were particularly stark for black and brown workers, those who are less likely to be able to economically weather the storm. Historically higher unemployment rates and lower liquid savings make job losses even more devastating for African American workers and their families.
The highest unemployment rates in April were found among women generally, black and Hispanic workers, and especially Hispanic women, whose unemployment rate hit 20.5% in April.
The figure also shows that young people have been hit especially hard in this pandemic recession. As of April, more than one quarter (28.1%) of 16-23 year olds are unemployed. Those graduating right now are in a particular tough spot, as they are experiencing extremely high unemployment rates and low job opportunities but do not qualify for unemployment insurance, even under the expansive definitions of the CARES Act. A jobs seekers unemployment insurance program would provide much needed assistance to these young people without sufficient or recent work histories to qualify under current programs.
Furthermore, the unemployment rate is much higher for workers with lower levels of educational attainment. Even among the relatively more credentialed, those with historically more opportunities in the labor market, one in 10 workers with a bachelor’s degree are unemployed.
Even historically high official unemployment rate understates the extent of economic pain: Official unemployment rate and the unemployment rate that takes into account all those workers who are out of work as a result of the virus, by demographic group, April 2020
|Official unemployment rate||Unemployment rate that takes into account all those out of work because of the virus|
|Less than HS||23.7%||37.1%|
|Generation Z (16-23)||28.1%||43.8%|
|Generation X (40-55)||11.6%||18.8%|
|Baby Boomer (56-74)||13.4%||21.8%|
|Silent Generation (75+)||16.2%||33.6%|
Note: The adjusted unemployment rate includes those who are officially unemployed plus the misclassified (the excess number of those who reported that they were employed but not at work for other reasons) plus those who left the labor force (but would otherwise have been counted if they were actively seeking work).
These numbers are not seasonally adjusted therefore they may not match the seasonally adjusted numbers published by the Bureau of Labor Statistics.
The breakdowns by race will also not match those published by the Bureau of Labor Statistics because we use mutually exclusive race and ethnic categories: for instance, white non-Hispanic.
Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdata.
The light blue bars and the totals off to the right of each set of bars represent an estimate of the unemployment rate if all those who are out of work as a result of the virus were counted as unemployed. This “adjusted” unemployment rate includes those who are officially unemployed, the misclassified (the excess number of those who reported that they were employed but not at work for other reasons), and those who had been employed but left the labor force when the virus hit but would otherwise have been counted as unemployed if they were actively seeking work. The misclassified are calculated across various demographic groups as indicated by BLS’ discussion of Table C found here. They suggest that many workers who classified as employed, but not reporting to work for “other reasons,” should be counted among the temporarily unemployed, not the employed.
Furthermore, millions of would-be job seekers have left the labor force in the time of COVID-19 for various reasons, whether it’s because they don’t see any prospects in their occupation, they are not looking because they are concerned about their health or the health of members of their household, or they have to care for a child whose school or daycare closed. When those workers, many of whom left the labor force during the stay-at-home orders, are added in to the number of unemployed, the “adjusted” unemployment rate would have hit 23.4% in April. The data released tomorrow will likely be far worse.
The adjusted definition of unemployed highlights the extent of economic pain felt across the country, even among the most privileged demographic groups. But, even this expanded definition reveals that this recession has magnified disparities that already existed. The adjusted unemployment rate for white male workers hits 18.6% but reached more than one-third of Latina workers (33.8%). More than one-fourth of black, Hispanic, and Asian workers were unemployed by this definition.
What is also true in looking at both the official and adjusted unemployment rates is that the historical black–white unemployment rate ratio of 2-to-1 has fallen dramatically. In April 2020, the ratio was closer to 1.3-to-1. One reason for this is that the COVID-19 shock that shuttered businesses has been so utterly enormous and rapid that the wave of layoffs has smashed deeper into the workforce and even swept away workers in historically privileged positions.
This analysis raises a few larger questions to watch in the coming months. Will the narrowing of the black–white unemployment gap persist as recovery begins in coming months? While the job losses occurred across the board to a large extent, will the job gains also occur across the board or will they be more concentrated among those groups with historical advantage over others? Conversely, will the extended pain from this recession linger on certain groups more than others?
To help the economy reverse course and support workers and their families through this time, policymakers need to extend the expanded unemployment insurance benefits until we get to the other side of the pandemic and until the labor market recovers. Policymakers also need to provide additional aid to state and local governments who most certainly will face drastic budget cuts, which will not only harm public-sector employment but also hamper the recovery.
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