The headlines in the media make it sound like the economy is picking up pace and recovering from the COVID recession. One key metric often quoted is the unemployment number. When the September 2020 number was released by the Bureau of Labor Statistics, U.S. Department of Labor (“BLS”) on October 2, 2020, the media raved about how the unemployment rate was down to 7.9% in September from 14.7% in April. Granted, unemployment was only 3.5% back before COVID hit, but the media raves about how great things are compared to April. But reality is not what it seems. The official unemployment rate is the easiest one to understand and makes headlines. But it does not capture the other areas of employment, which are showing continued strains as the economy struggles to recover. The unemployment figure only counts unemployed persons who are actively looking for a job. It doesn’t count the persons who may have a part-time job but want (or need!) a full time one. That broader number, called the “U-6 employment measure” still stands at 12.8%. It is down from 22.4% in April, a very large drop, but the U-6 measure more accurately shows the employment picture in the U.S. is still showing struggles.
Even the U-6 measure doesn’t provide the whole picture. The BLS reported that the labor participation rate was 61.4% in September, fully 2% below what it was in February. That translates into millions of people who just up and quit work and are not even looking for jobs, let alone part-time ones. None of these people are counted in any of the unemployment figures. Maybe they can’t find child-care, need to care for elderly parents or can’t risk getting sick. When you count those millions of people along with the under-employed persons, we have a clearer picture that the economy is not roaring back but rather sputtering along, showing a clear disparity between the haves and the have nots. Think of all the travel and entertainment workers who are out of work. Until the planes are full, hotels booked, restaurants roaring and bars and concert venues rocking will we see employment really show an economy that is getting back to normal. All those people still have to pay rent and put food on the table, not so easy when jobs are scarce and so many are fighting for the few jobs that are open.
Comments