“The economy added 266,000 jobs in April according to today’s report from the Bureau of Labor Statistics (BLS), while the unemployment rate ticked up slightly to 6.1 percent, from 6 percent.
These numbers are well below forecasts from economists who predicted that April would see the addition of around 1 million jobs, and the unemployment rate falling to 5.8 percent. The BLS report notes that we’re still far away from a pre-pandemic labor market, when the jobless rate sat at 3.5 percent.
Despite persistent levels of high joblessness, other metrics show signs of a labor market that’s increasingly tight.”
“job openings and the number of workers quitting their jobs were at record highs and that wages were growing at 2019 levels (when the country’s economy was booming).
Employers, meanwhile, find themselves in increasingly dire straits trying to find new workers.”
“what’s causing this weird mismatch between labor supply and demand?
Furman and Powell cite three possible explanations: continual health concerns about contracting COVID-19 at work encouraging some people to stay home, school closures keeping parents out of the workforce, and generous unemployment benefits.
The $300 weekly unemployment supplement provided as part of the March-passed American Rescue Plan pays some 42 percent of workers more than what they made at their old jobs, according to a University of Chicago analysis.
That $300 supplement will continue until September 2021. Today’s jobs report has business interests calling for ending it now.”
“The consensus among economists is that high unemployment benefits were not producing high unemployment rates earlier in the pandemic, when there were so few jobs available, health concerns were more acute, and there was greater uncertainty about when the economy would improve.
Workers who found themselves in that precarious situation would jump at any employment opportunity they could find, even if it paid less than unemployment benefits, the thinking went.
The situation today is much different.
Vaccinations and falling cases and deaths should ameliorate many of the health concerns people have about returning to work. A wealth of job opportunities also means people receiving unemployment benefits now won’t automatically take whatever work they can find. Instead, they can afford to hold out for higher wages or a job that’s a better fit for them.”
“robust as the response was, the crisis exposed the fragility of the UI system. Technically, America’s process for handling unemployment claims was built on antiquated computer systems (some written in COBOL, a language largely abandoned in the 1980s), and millions of workers endured weeks of delays in getting their benefits.
So a major priority for Congress in 2021 has to be reforming the UI system: improving its functionality and making it more generous.”
“discouraged workers aren’t the only problem with the unemployment rate. In fact, these days the headline unemployment rate isn’t just an undercount, it actually paints an alternate reality that masks the degree to which low- and moderate-income people are hurting. As a result, policymakers believe these Americans are better off than they actually are.
There are two additional problems with the way we count people who are unemployed.
First, there’s no accounting for how many hours a part-time worker is working. By the BLS’ traditional definition, a handyman or private nurse who works for a single afternoon each week is counted in the headline national unemployment figure as “employed,” even if they want more work but can’t find it. Our unemployment figures make it look like the person working a handful of hours because that’s the only work they can get is just as “employed” as a full-time CEO. In practice, this means that the unemployment rate actively obscures how many workers are living in poverty in part not because they don’t have a job, but because they can’t get enough hours.
Second, the data doesn’t indicate whether the job a worker is doing pays enough to keep them out of poverty. The assumption implicit in the data is that if you’re “employed,” all should be well, but as the growing movement toward raising the minimum wage attests, it’s increasingly clear that many American workers are employed, often full-time, but still living in poverty.”
“even when the economy was purportedly at its peak before the pandemic, approximately a quarter of Americans looking for full-time work at a livable wage couldn’t find it. And then at the nation’s worst moment in nearly a century, that number jumped, showing that 32.4 percent of the workforce was out of luck.”
“The bottom line for too many Americans and for minorities in particular, is that for a long, long time, the American economy has not been performing as well as the headline unemployment rate suggests. And while that may be news to those living in comfortable neighborhoods and suburbs, it will not surprise those living in more downtrodden corners of many cities, let alone those who are living in places like the largely forgotten city where I grew up, York, Pa. Over the last several decades, as businesses including York Dental or York Air Conditioner have either closed facilities or scaled back, middle-class prosperity has become more of an impossible dream than an American Dream.
Washington, D.C., has failed to respond appropriately because the headline unemployment figures, particularly in good times, have given some policymakers of both parties license to embrace a narrative that in the absence of a crisis like the one we’re enduring today, our economic approach works fairly well.
We need an economic agenda born from the realization that the true unemployment picture is much worse than policymakers realize. A quarter of the workforce, including a disproportionate share of minority communities, can’t land a full-time job with a living wage even when the overall economy appears to be healthy. The window through which we view the economy matters. We’ve been using a broken measuring stick to keep track of our success.”
“At least $63 billion—an amount larger than the current annual budgets of 42 states—of the boosted unemployment payments distributed as part of the federal government’s pandemic response has been distributed improperly, according to an estimate from the Department of Labor Office of the Inspector General. The office attributes a “significant portion” of those improper payments to fraud, and preliminary audits indicate that the actual amount of improper payments may be higher.”
“The inspector general reports “a forty-fold increase” in the number of fraud-related matters, which have “exploded” since the CARES Act passed.”
“payments to people who can’t work because of the pandemic (or due to the government’s response to it) is a defensible proposal. But even defensible proposals have costs to consider. Extending the federally boosted unemployment payments through August will cost taxpayers an estimated $246 billion—and that likely means that another $24 billion, or more, will be lost to fraud.”
“Over the years, the rate of unemployment has become not just a gauge of the health of the labor market but the most common yardstick policymakers use to assess the health of the economy as a whole.
By this measure, despite the pandemic, things don’t look so bad right now. The headline unemployment rate for December stood at 6.7 percent. In recent years, there’s been some public recognition that that the headline rate is something of an undercount, since it only includes people actively looking for work; so-called discouraged workers who are unsure of how to go about a job search or who are too discouraged to try any more don’t show up in that top-line number. And, for decades now, the BLS has diligently supplemented the headline unemployment rate with additional information about these workers.
But it turns out that discouraged workers aren’t the only problem with the unemployment rate. In fact, these days the headline unemployment rate isn’t just an undercount, it actually paints an alternate reality that masks the degree to which low- and moderate-income people are hurting. As a result, policymakers believe these Americans are better off than they actually are.
There are two additional problems with the way we count people who are unemployed.
First, there’s no accounting for how many hours a part-time worker is working.”
“Our unemployment figures make it look like the person working a handful of hours because that’s the only work they can get is just as “employed” as a full-time CEO. In practice, this means that the unemployment rate actively obscures how many workers are living in poverty in part not because they don’t have a job, but because they can’t get enough hours.
Second, the data doesn’t indicate whether the job a worker is doing pays enough to keep them out of poverty.”
“Anyone who wants full-time work but can only find part-time work, and those working full-time but earning too little to climb above the poverty line, should be considered functionally unemployed. I’ve begun to calculate this, which I’ve dubbed the True Rate of Unemployment. And the TRU in December wasn’t 6.7 percent — it was an alarming 25.1 percent.”
“In February 2020, when the economy was supposedly “hot,” the official BLS release suggested that a mere 3.5 percent of Americans were unemployed, but the “TRU” number was 24 percent.”
The New Americans: Economic, Demographic, and Fiscal Effects of Immigration National Research Council. 1997. The National Academies Press. https://www.nap.edu/read/5779/chapter/6#138 Yes, Immigration Hurts American Workers George J. Borjas. 9/10 2016. Politico. The Impact of IllegalImmigrationon the Wagesand EmploymentOpportunitiesof Black Workers The United States
“The study, which surveyed 13,200 US adults in the first two weeks of August, found some limited recovery with respect to employment: Of all those who said they had lost a job, a third have returned to their old job, and 15 percent say they have a new job.”
“while 58 percent of upper- and middle-income adults who lost a job due to the coronavirus have returned to their old job or gotten a new one, only 43 percent of lower-income adults have been able to do the same.”
“reason for concern. The jobs report signaled a slowdown from earlier in the summer: the economy added 4.8 million jobs in June, and 1.7 million in July.”
“Erin Suggs applied for unemployment in March as soon as the California salon she works at shut down. She figured her case would be pretty straightforward — she works on commission, meaning she’s counted as a regular employee, not self-employed.
But it took the 50-year-old mother of two more than two months to get her benefits, during which time she estimates she and her husband called California’s Employment Development Department, which administers the state’s unemployment system, upward of 3,000 times. It turned out that in filling out the forms, she checked one box wrong. “It just put me in pending hell for 10 weeks,” she says. “There was no way of fixing it.”
Her experience is hardly unique. In California alone, more than 6 million people, or one-third of the state’s workers, have filed for unemployment benefits, and hundreds of thousands of them have been stuck in a weeks- or even months-long backlog. Meanwhile, nearly 1 million people across the United States continue to file new unemployment claims each week, and some 29 million people are receiving some sort of unemployment assistance. And for many of them, navigating the system has been a nightmare.
The coronavirus has brought home the many shortcomings of the American unemployment insurance system and revealed it to be fundamentally — and often intentionally — broken, chipped away over time to ensure that the jobless don’t use it too much, lest anyone get used to it. Unemployment insurance operates under a hybrid state-federal setup that has resulted in an awkward push-and-pull between the federal government, state governments, and employers. No one quite wants to take full responsibility of it, but everyone wants a say.”
” A reimagined unemployment system would treat the jobless like customers, not criminals, while helping them stay afloat as they find their next gig. It would be easier to navigate, pay people more consistently, regardless of where they live, and take into account the wage stagnation of decades past. It would be easier to ramp up in times of crisis and better serve the modern workforce — groups such as gig workers, short-term employees, and people looking for jobs.”
“unemployment insurance has never worked super smoothly in the US. The first state in the country to put an unemployment insurance program in place was Wisconsin in 1932, and the federal program became law under the Social Security Act of 1935. It was set up as a mixed federal-state endeavor for reasons that wouldn’t surprise the average political observer today: There was disagreement over what level of government should be in charge of running the program, and proponents of unemployment insurance were nervous it might be undone by the Supreme Court, which had struck down multiple pieces of legislation. The hope was that this model would give it a better chance with the court, and even if the federal component were struck down, the state components could live on.
“It was designed to have this very broken and fractured structure,” Konczal said.”
” In the US, unemployment insurance is meant to work by replacing about half of a worker’s wages (up to a certain cap) for about 26 weeks. It is intended for those who involuntarily lost their jobs, meaning they were laid off or fired, and not people who quit. Those who quit their jobs can wind up collecting benefits, namely if they can explain that they did so for good cause, such as experiencing sexual harassment, but it often winds up being a battle adjudicated by the state.
The program is financed through state and federal payroll taxes that are supposed to fund administrative systems and the benefits themselves.
Many states have kept those taxes pretty low, resulting in a system that is chronically underfunded. And during periods of stress, the impact of that underfunding really shows.”
“Years of disinvestment in technology and administration led to problems like those now affecting Suggs and millions of unemployed workers across the country. You make one mistake, or your case has one little quirk, and you’re sucked into a bureaucratic black box disaster with no clear end in sight. And then, once the economy gets better, everyone moves on and forgets, and the political impetus to fix these problems fades.”