Monday, November 16, 2020

Note: The Employment Situation is Worse than the Headline Unemployment Rate Suggests

by Calculated Risk on 11/16/2020 01:22:00 PM

The headline unemployment rate has fallen to 6.9%, but that significantly understates the current situation.  Note that the headline unemployment rate was 3.5% at the end of 2019.

Here is a table that shows the current number of unemployed and the unemployment rate. Then I calculated the unemployment rate by including the number of people that have left the labor force since February, and the expected growth in the labor force.

As the economy recovers, many of the people that left the labor force will probably return, and there will be more entrants into the labor force.   This will keep the unemployment rate elevated for some time, and suggests the need for more disaster relief.

Left Labor Force3,6799.0%
Expected Labor
Force Growth

This is just the headline unemployment rate. There are 2.3 million additional involuntary part time workers than a year ago (these workers are included in U-6).

Note: I'd be careful looking at the weekly initial claims report in addition to the BLS report. The weekly claims report suggests there are millions of workers receiving pandemic assistance, but this should be captured in the BLS household surveys (so I wouldn't add the numbers together).