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Thursday, April 2, 2020

Nearly 20 million workers will likely be laid off or furloughed by July: Updated state numbers project further job losses due to the coronavirus [feedly]

A grim report from EPI

Nearly 20 million workers will likely be laid off or furloughed by July: 

Updated state numbers project further job losses due to the coronavirus

As the United States comes to terms with the scale of the coronavirus pandemic, new economic projections continue to deteriorate, indicating an increasingly devastating impact on the U.S. economy. The latest Goldman Sachs forecast predicts a 9% contraction for the first quarter of this year and a 34% contraction in the second quarter. This large drop in GDP is consistent with 19.8 million jobs lost by July, bringing unemployment rates across the country into the mid-teens.

Our estimate is much larger than was predicted even a week ago, when the forecasting implied 14 million would be furloughed or laid off. Each escalating forecast is an indication that policymakers at every level of government need to be acting immediately to curb the spread of the virus and protect the health and economic well-being of their communities.

Importantly, these latest estimates account for the recently enacted CARES Act and assume a fourth coronavirus-related federal relief bill that will ramp up state aid—a particularly effective form of stimulus. In other words, Congress must pass additional stimulus measures—especially aid to state and local governments—just to keep the losses where we are predicting them to be today. Policymakers could go one step further and use public debt to finance the wages of workers who would otherwise lose their jobs, as Britain and Denmark are doing. This would allow workers to keep their jobs, even if they are unable to work from home or their employer is closed. It would also allow some workers to save money that they could spend once the pandemic has subsided, which would help jumpstart the recovery.

In the map and tables below, we have updated our estimates of predicted layoffs and furloughs by state and added a projection of the resulting unemployment rates in each state. The map in Figure A shows that California is expected to have the largest number of jobs lost, with the state losing nearly 2.3 million jobs through June. Texas, Florida, and New York have the next largest job loss numbers at 1.7 million, 1.3 million, and 1.2 million jobs lost, respectively—losses representing between 14.7 and 17.0% of total private-sector employment in these states.

Figure A

Nevada is expected to have the largest job losses in percentage terms (20.1%), as the state's high concentration of retail, leisure, and hospitality jobs are likely to experience disproportionate losses. Social distancing measures are essential for stopping the spread of the coronavirus, but they have a disproportionate impact on businesses and workers in these industries, for whom teleworking is largely not possible.

Nevada will also have the highest unemployment rate (19.7%) of any state by July, while more than 1 in 6 workers are projected to be unemployed in Alaska (17.8%), Hawaii (17.8%), Mississippi (17.5%), and Delaware (16.8%).

We should note that not every one of these lost jobs would necessarily be captured by employment surveys. For example, if workers are furloughed rather than laid off, then they may still be on employer payrolls. This 19.8 million job loss number is a measure of lost labor demand that could show up as reduced hours, layoffs, a collapse in hiring, or furloughs.

Our unemployment projections simply add the projected job losses onto February 2020 unemployment levels in each state (the most recent available state-level data) and divide by the February 2020 labor force levels. (In other words, we are assuming no change in labor force levels or participation.)

These assumptions may overstate the actual change in the official unemployment rate since some workers hold multiple jobs, and it is unclear how the current circumstances will affect people's labor force status. Under normal circumstances, people are only counted as officially unemployed if they are actively searching for work—something that is not possible, nor desirable, with social distancing measures in place. Yet, they do indicate how dire the situation is likely to be for working people in every state. In the depths of the Great Recession, the highest unemployment rate any state reached was 14.6% in Michigan in June 2009.

Table 1

 -- via my feedly newsfeed

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