Will the Jobs Report Destroy Jobs?

Will the Jobs Report Destroy Jobs?
https://www.nytimes.com/2020/06/08/opinion/coronavirus-jobs-report.html

Paul Krugman:

Text only

On Friday the Bureau of Labor Statistics released its report on the employment situation in May. The report was much better than most economists expected, showing a large gain in jobs and a fall in the unemployment rate.

The thing is, a good jobs report may be bad for future policy. Why? Because the U.S. economy is still very much on life support. And a bit of good news is all too likely to encourage the usual suspects to end that life support too soon, with dire effects just a few months from now.

Before I get there, let me address one widespread concern. Were the employment numbers rigged?

No, they weren't. No doubt the Trump administration, which lies about everything, would fake the numbers if it could. And the Trump-appointed head of the Bureau of Labor Statistics is a Heritage Foundation hack, with a long history of making ludicrous claims about the effects of tax cuts, the burden of the estate tax, and more.

But the jobs report is prepared by a large, professional staff that takes its responsibilities seriously. And it contains much more than the headline numbers. It's not the kind of thing that could be altered with a Sharpie, and any effort to fake it would have set off multiple alarm bells.

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In fact, the overall picture painted by the employment report makes considerable sense. It shows a partial bounce back of contact-intensive sectors like restaurants and dentists' offices that were largely shut down by social distancing; these are exactly the things you'd expect to show some growth as social distancing is relaxed.

So the good news, despite statistical problems created by the unique economic situation — problems the bureau acknowledges — is real. But it's also very limited.

So far, employment numbers in this time of Covid-19 look like a fishhook: a huge decline followed by a much smaller upturn. Unemployment is still higher than it was for most of the Great Depression. And while unemployment over all fell in May, it rose slightly for black workers.

The saving graces of the situation, such as they are, are that (a) while there is immense economic hardship, it's not nearly as severe as you might have expected given Depression-level unemployment and (b) the employment slump has so far been mostly limited to contact-intensive sectors. That is, the crisis hasn't — yet — spilled over into a crash of the economy as a whole.

Both these saving graces, however, are the result of emergency aid — the safety net hurriedly put in place in late March, largely at Democrats' insistence. This safety net alleviated hardship while allowing the unemployed to maintain spending and encouraging businesses to maintain their payrolls.

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And unless Congress and the White House act, that safety net will be yanked away by August.

More specifically, enhanced unemployment benefits, which are both more generous than standard benefits and cover more people, have been a huge source of support despite the difficulties many have faced in getting enrolled. Among other things, those benefits have — temporarily — made it possible for millions of families to keep paying rent on their homes. But those benefits will expire July 31.

And the Paycheck Protection Program, which offers small businesses loans that can be converted into grants if they're used to maintain payroll, is already out of money, and the job support lasts only eight weeks.

So two of the main things sustaining the economy are set to disappear. At the same time, Congress has yet to provide major relief to state and local governments, which are facing a huge fiscal crisis and have already laid off a million and a half workers; there will soon be many more layoffs unless aid comes soon.

In other words, we're facing probable disaster in the near future unless Congress acts. But here's the thing: Republicans just hate helping the unemployed, hate aiding states, in fact hate any kind of disaster response other than tax cuts. And the uptick in jobs gives them an excuse to indulge their hatred.

House Democrats have passed the HEROES Act, a very good bill extending and improving economic relief. But Friday's employment report encourages Republicans to revert to type; they'll almost surely block any significant further relief until or unless the economic situation becomes even more dire than it is.

It also encourages them to push for more opening, more relaxation of social distancing, despite the fact that Covid-19 is nowhere near under control and there are early indications that the pandemic may be roaring back to life as states reopen.

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So it's all too possible that we'll see an ugly scene in the late summer and early fall — more government layoffs and widespread job losses in industries that have so far been relatively unscathed as desperate workers slash spending, all against the backdrop of a resurgence in hospitalizations and deaths. And the May uptick in jobs makes that scene more likely, because it promotes more wishful thinking from the people who insisted a few months ago that Covid-19 would go away and posed no threat to the economy.

Maybe we'll be lucky and the bad things I'm worried about won't actually materialize. But hoping for the best isn't a plan.

The Times is committed to publishing a diversity of letters to the editor. We'd like to hear what you think about this or any of our articles. Here are some tips. And here's our email: letters@nytimes.com.

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Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman

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John Case
Harpers Ferry, WV

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Why Making Economic Predictions Now is Useless [feedly]

I love Branko. The Eeyore of economics. Call him the pessimist, if you will: Lately his analysis is accurate: there are more answers under your feet, than on the ridge in the distance.

Why Making Economic Predictions Now is Useless
https://www.globalpolicyjournal.com/blog/03/06/2020/why-making-economic-predictions-now-useless

Branko Milanovic on the limits of our ability to predict the post-pandemic future. 

In one of his poems, Constantine Cavafy distinguished, in the art of foretelling future events, three groups: men who are able to see what exists now, Gods who alone know the future, and wise men who perceive "what is just about to happen":

 

Ordinary mortals know what's happening now,
the Gods know what the future holds
because they alone are totally enlightened.
Wise men are aware of future things
just about to happen.

 

We all aspire to be the wise men and women who can see the immediate future (Cavafy does not believe that even wise men can see the distant future) and the demand for such seers is high when the times are troubled as they are now. Economists are often in particular demand because they claim they can tell the shape of future demand and supply, unemployment and growth. To do that they resort to models that through behavioral equations and identities, show the future evolution of key variables and pretend to predict how long the depression will last and how quick and strong the recovery will be.

 

My argument is that such models are useless under today's conditions. There are several reasons for that.

 

All economic models, by definition, take the economy as a self-contained system which is exposed  to economic shocks, whether in form of more or less relaxed monetary policy, higher or lower taxes, higher or lower minimum wage etc. They cannot by their very nature take into account extra-economic discrete shocks. Such shocks are simply not predictable. One cannot tell today whether China might invade Hong Kong, or whether Trump might ban all imports from China, or whether the race riots in the US can continue for months, or similar riots break up elsewhere in the world (Latin America, Africa, Indonesia) or even if the US may not end this year with a military government in charge.

 

All of these social and political shocks that I have listed are due to, or have been exacerbated, by the pandemic. There is little doubt that the "most important relationship" (to quote Henry Kissinger), the one between China and the United States, has significantly deteriorated because of the pandemic. Some in the United States see the pandemic as intentionally engineered by China to weaken the US economy and its president. There is also little doubt that the differential reactions, between the countries, in countering the pandemic have either destabilized domestic political situations (Brazil, United States, Hungary, Great Britain) or changed the relative correlation of global economic and political power (most notably between the US and China).

 

It is therefore utterly wrong to believe that history does not matter and that the social and political changes wrought by the pandemic can be ignored so that, if the pandemic is miraculously over in December 2020, December 2020 will be just like December 2019 with a twelve-month lag. Not at all: even if the pandemic is over by then, December 2020 will be entirely different than  December 2019, and the political forces that these twelve months will have set in motion—and which we currently cannot predict—will fundamentally affect how economies behave in the future.

 

With covid-19 we are facing a situation that (with the exception of two world wars) has no precedent. This, in two respects: the global nature of the problem, and its open-ended,  uncontrollable nature. This pandemic, unlike the most recent other pandemics (SARS, MERS, swine flu) is truly global. It has affected almost all territories in the world. Compared to the previous economic crises, its global nature also stands out. Whether we think of the debt crisis of the 1980s, the crisis faced by post-communist economies in the 1990s, the 1998 Asian financial crisis, or even the Great Recession, they were all regionally contained crises. To be sure, there were spillovers, but we could essentially, in our assessment or prediction of global affairs, place the countries that were most affected (so to speak)  between the brackets and look at the rest of the world using the standard economic approach. We cannot do that now when the entire world is affected.

 

The second feature of today's situation is its open-ended nature: no one knows when the pandemic will end, how it will affect different countries, and even whether thinking of a sharp and clear end to the pandemic makes sense at all. In fact, we may live for years with stop-and-go policies where movements to open up the economy are followed by increased flare-ups of the infection, and then new closures and lockdowns. We also have no idea not only what countries and continents would be hit next by the pandemic and whether there would be a second wave, but we cannot at all predict how successful individual countries will be in curbing it.  No one could have predicted that a country with the highest health expenditures per capita in the world, and with hundreds of universities that sport public health  departments and publish probably thousands of scientific papers annually, would totally fail in the control of the pandemic and have the highest number of cases and fatalities. Similarly very few would have predicted that the UK, with its fabled NHS, would lead Europe in the number of deaths. Or that modestly wealthy Vietnam would have zero deaths from the pandemic.

 

Similar unknowns abound. These are not one-level unknowns, but unknowns at three or four dimensions.  The future geographic spread of the pandemic is unknown (will it severely hit Africa?), the reactions of countries, as we have just seen, are equally impossible to predict (how successful may be India? Will China stop the second wave?), and perhaps most importantly the social and political consequences are unknown. They may turn out to be, as I argued in March 2020 article in Foreign Affairs, the most nefarious long-term product of the pandemic with obvious effects on global recovery.

 

There are only a few things—the same ones that I  mentioned in mid-March—that we can, with some dose of confidence, predict:

 

1. aggravation of the conflict between the US and China with China being "upgraded" to the status of "challenger";

2. tendency toward greater state role in many countries;

3. set-back for globalization, in terms of ability of people to travel internationally and capital to move across borders (driven in part by political uncertainties); and

4. increasing political instability both internally and globally.

 

This crisis is like "the warrior that leaves devastation in its stead", and to make projections assuming that none of that devastation has occurred, and even if has occurred, that it will have no impact on future functioning of the economy is simply wrong. We  have to admit that there are limits to our ability to tell the future: we are not "Gods that are totally enlightened".  

 

 

 

 

This first appeared on Branko's blog 

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What can the West learn from Vietnam’s Reopening? [feedly]

What can the West learn from Vietnam's Reopening?
https://www.globalpolicyjournal.com/blog/05/06/2020/what-can-west-learn-vietnams-reopening

Ba-Linh Tran and Robyn Klingler-Vidra highlight lessons from Vietnam's currently successful easing of lockdown restrictions. 

Vietnam eased social distancing on April 23rd, so I (Ba-Linh) went to get my haircut and scheduled phở with friends and students. On the way, I was surprised how fast Saigon had sprung – differently than before – back to life. In the six weeks since my haircut, the focus of Vietnam has shifted from fending off the pandemic, which made headlines with over 300 cases and no deaths so far, to the sustainable reopening of its economy and education. In this, the need to balance opening with staying vigilant has been central to every aspect of life.

The reopening has been deliberate and steady. The country has not seen an infection spike, all new cases have been repatriated Vietnamese; not residents, Vietnamese or foreigners. Life, however, is not back to normal but rather adapting to 'a new normal' that came with a myriad of questions. How to support businesses hit by the pandemic? What do we do if a student gets infected?

Four key themes underlie Vietnam's 'new normal' thus far, and we believe these themes offer lessons for all reopening countries in the weeks and months ahead.

1) Safety first: masks, thermometers and restricted entry

Reopening is accompanied by precautionary measures. The government continues to report new cases every day, all of which have been from repatriation flights rather than in-country. Many of the confirmed cases have been discharged, but the country is still fighting to save one critical patient, a 43 year-old British pilot; 26 Vietnamese have volunteered to donate their lungs for him. As of June 3rd, he was – finally – said to be on the path to recovery. At the grassroots level, people are encouraged to keep distancing, wearing masks and washing hands; quarantine and lockdown are neither off the table. Businesses are still providing hand sanitizers for customers (photos 1 & 2), and some take customers' body temperatures before entering; these measures are mandated for some forms of businesses. Vietnam is now open for repatriates, high-skilled foreign workers and diplomats, all of whom will be quarantined for 14 days upon entry.

Photos 1 & 2: From a big supermarket for household appliances, to a small, old Pho shop, Vietnamese businesses provide hand sanitisers for customers right at the entrance. Photos taken by author (Ba-Linh Tran)

2) The economy: revive, resist and accelerate

The 'new normal' also focuses on the economy. A set of policies and services (photo 3) have been established to support both businesses and citizens affected by the pandemic; these include, for example, business tax cut and deference, monthly allowance and employment protection for workers, and financial aid for poor households. The total support package amounts to $2.6 billion, and businesses and citizens can access governmental support via an online portal. In addition, there are concerning signs of hostile foreign (especially Chinese) takeovers of pandemic-hit businesses. By late April, foreign purchases of Vietnamese equities reached over $1b, a marked increase of 33% over the same quarter last year; Chinese investment alone increased by 38%. Given the rise, the Vietnam Chamber of Commerce and Industry has even suggested stopping any transaction of M&A nature. On the other hand, there have been talks about opportunities for Vietnam to become a FDI hub, considering advantages like the unique EU-Vietnam FTA and supply chains moving away from China. Indeed, excitement grew with the February announcement that Apple would be producing AirPods in Vietnam.

Photo 3: Local authorities in Saigon survey small, local businesses about the impact of Covid-19 on them. The survey covers operational details of a business during the pandemic and what it needs support with. Surveying is part of the Government's effort to support businesses' recovery. Photos taken by author (Ba-Linh Tran)

3) Education: free to teach, with caution

Education is a mainstay topic in Vietnam, with space being reserved for daily coverage in almost all news outlets. Vietnam was quick to close down all schools (and higher education institutions) in early February, and repeatedly postponed reopening until the 4th of May in the interest of safety. Such long closure now poses challenges for schools to achieve catch up with the national curriculum – substituting physical with online lessons during closedown proved largely ineffective. In response, compromises were made by the government in the amount of content taught and assessed, and schools were given agency to deliver the reduced content. Previously, school agency had been extremely limited. A bigger challenge is how to keep students safe in order to restart their learning. Notable compulsory measures for schools include checking students' temperature before entry, regular hand washing activities, and arranging different entry and exit times for different classes. In the event of a suspected infection, teachers must end classes immediately and the student in question will be immediately taken to a medical facility.

4) Politics: planning ahead

Vietnam is supposed to have new central and provincial leaders as of January 2021. Shelved during the pandemic, political activities have now quickly resumed, starting with a central meeting of the Vietnam Communist Party's decision-making body; we also observe a sense of urgency in many provinces to choose their own leaders. In the meeting, Covid-19 and its global fallout were taken into account, and it was stated that the context for forthcoming leaders is underpinned by international uncertainty, including potential complications stemming from Covid-19 itself.

What can we learn?

The themes underpinning Vietnam's initial reopening show that there is no silver bullet. Even in a country that was very effective in reducing community transmission rates, the reopening has been underscored by the need for planning, and for staging, when it comes to safety in reopening business and education. Politics also resumes. Before lifting lockdown, testing capacity was in place, the population was wearing masks, and businesses had put safety procedures in place (such as taking temperatures before customers enter). Now the issues turn to ensuring that the sense of continued awareness and diligence persists.  

 

 

Ba-Linh Tran is a Vietnamese researcher and consultant in higher education management. His clients include both Vietnamese universities and foreign universities in Vietnam, which he has consulted on a range of issues, including strategy making, research training and student recruitment. He also has experience working in lifelong learning and ESL/EFL. Ba-Linh holds a PhD in Education from the University of Bath in the UK; his thesis focuses on the role of non-strategists (e.g. deans, lecturers, students) in realising a university's strategies.

Robyn Klingler-Vidra is Senior Lecturer in Political Economy in the Department of International Development at King's College London, where she research focuses on innovation and venture capital policy in East Asia. She is the author of The Venture Capital State: The Silicon Valley Model in East Asia and co-authored a 2020 Nesta-UNDP study on Strategies for Supporting Inclusive Innovation: Insights from South-East Asia.

Photo by Louis PHDC from Pexels

 -- via my feedly newsfeed

Exploding US Unemployment Rates: A Peek Inside [feedly]

another deep dive from Tim Taylor -- into the unemployment numbers....some surprises and illuminations.

Exploding US Unemployment Rates: A Peek Inside
https://conversableeconomist.blogspot.com/2020/06/us-unemployment-rates-in-international.html

US unemployment rates have reached higher levels, and risen in a way that is more dramatic, than at any time since the start of regular employment statistics in the late 1940s. Here's the basic picture. The unemployment rate was 14.7%  in April and then dropped unexpectedly (to me, at least!) to 13.3% in May. Even so, looking back over the last 75 years, the monthly unemployment rate has never risen this fast or reached a level this high.  

The explosive rise in the unemployment rate has been accompanied by a sharper decline in jobs than the US economy has experienced in the last 75 years. The figure shows total US employees. As you see, the number rises gradually over the decades, keeping pace with the US population. The total number of jobs drops during or just after recessions, shown by the shaded gray bars. But whether it's the Great Recession of 2007-9 or the severe double-dip recession of the early 1980s, the US economy has not seen a drop in total jobs this fast and severe. Total number of jobs was 151 million in March and 130 million in April--a drop of about 14% in a single month--before the gain of about 2.5 million total jobs in May. 

The key question about unemployment is whether there could be a quick bounceback. Are many of these employers poised to resume hiring? Are many of these workers poised to go back to work? One interesting tidbit of evidence here is the share of the unemployed who lost their jobs because of layoffs--which has some implication that they could be readily rehired. Here's another striking figure. The share of "job losers on layoff" is about 8-15% of the total unemployed from the mid-1980s up to the is around 8-15% of 

One of the shifting labor market patterns in the last 30 years or so has been the disappearance of the "layoff." If you look back at recessions in the 1970s and 1980s, you see that the share of "job losers on layoff" rises during recessions, and then falls. It was a much more common pattern for factories and other employer to lay off and then to rehire those same workers. But when you look at the recessions of 1990-91, 2001, and 2007-9, you don't see much of a rise in layoffs. Instead, the chance that an unemployed workers was laid off with a plausible prospect of being rehired, rather than just let go, got lower and lower. For example, look how low the percentage falls in the years after the Great Recession. 

But the share of "job losers" on layoff just spiked to 78% in April and 73% in May, which implies that large numbers of the unemployed could conceivably be rehired quickly. But of course, a "layoff" could become an empty promise, where most of these workers are not rehired, and instead need to find new jobs in the new socially distancing economy. 

I've also been struck by the difference between US and European unemployment data. When US unemployment was spiking to 14.7% in April, unemployment in the 27 countries of the European Union barely nudged up to 6.6% in April; for the subset of 19 countries in the euro zone, unemployment was 7.3% in April. Why did US unemployment spike to double European levels? The likely answer involves interactions between public policy and what is counted as "unemployment." 

One key policy choice is whether assistance to workers has been sent to them directly--say, via unemployment insurance--or whether assistance to worker was funneled through employers, so that workers who were not necessarily going to work still kept receiving a (government-funded) paycheck from their employer. Jonathan Rothwell describes the difference in "The effects of COVID-19 on international labor markets: An update" (May 27, 2020, Brookings Institution). 

Here's a figure from Rothwell showing the change in workers getting unemployment benefits. Notice that it's way up in Canada, Israel, Ireland, and the US. But in France, Germany, Japan, and Netherlands, there's essentially no rise in unemployment benefits. 

The reason is that in many countries, a number of worker are getting government assistance via their employers. In the unemployment stats for those countries, they are still counted as employed. Here's the figure from Rothwell: 

Another policy choice in the US has been to increase unemployment assistance substantially, so that it is closer to the actual pay that workers receive. Manuel Alcalá Kovalski and Louise Sheiner provide a quick background primer on "How does unemployment insurance work? And how is it changing during the coronavirus pandemic?" (Brookings Institution, April 7, 2020). As they write: 

Most state UI [Unemployment Insurance] systems replace about half of prior weekly earnings, up to some maximum. Before the expansion of UI during the coronavirus crisis, average weekly UI payments were $387 nationwide, ranging from an average of $215 per week in Mississippi to $550 per week in Massachusetts. ... The CARES Act—a $2 trillion relief package aimed at alleviating the economic fallout from the COVID-19 pandemic—extends the duration of UI benefits by 13 weeks and increases payments by $600 per week through July 31st. This implies that maximum UI benefits will exceed 90 percent of average weekly wages in all states.

In other words, rather than trying to keep laid-off or furloughed workers receiving much the same income via their employer, the US approach has been to do so via the unemployment insurance system. This has caused problems. For lower-wage US workers, the higher unemployment insurance payments cover a substantial part of their typical working income--in some cases, more than 100% of their previous pay. They have a financial incentive not to return to work, even if their employer would like to re-open, until these benefits run out. Of course, other unemployed workers receiving these higher benefits may not have an option to return. In the meantime, other low-wage workers who have kept working in grocery stores, warehouses, delivery services, and from home, are not receiving such payments at all. 

Given that the US policy choice was to funnel assistance to workers through the unemployment system, it's not a big shock that the unemployment rate rose so high, so fast. A near-term policy question is whether to extend the higher unemployment payments, perhaps by another six months. The Congressional Budget Office (June 4, 2020) has just released some estimate of the effects of that choice. CBO writes: 

Roughly five of every six recipients would receive benefits that exceeded the weekly amounts they could expect to earn from work during those six months. The amount, on average, that recipients spent on food, housing, and other goods and services would be closer to what they spent when employed than it would be if the increase in unemployment benefits was not extended. ... In CBO's assessment, the extension of the additional $600 per week would probably reduce employment in the second half of 2020, and it would reduce employment in calendar year 2021. The effects from reduced incentives to work would be larger than the boost to employment from increased overall demand for goods and services.

My own sense is that a blanket extension of the additional unemployment benefits is probably the politically easy choice. But the pragmatic choice would be to start thinking more carefully about how structuring these payments in a way that would strike a better balance helping those who need it with incentives to return to work. 

There is a sense in which the very high US unemployment rates both understate and overstate the condition of US labor markets. Unemployment rates, by definition, leave out those who are "out of the labor force," perhaps because added family responsibilities have made it too difficult to work, or the bleak unemployment picture has made it difficult to seek a job. On the other side, some of the unemployed are are hovering in place, ready and able to return to their previous employer, but receiving enhanced unemployment insurance payments in the meantime. 

Estimating these kinds of factors of course involves a bunch of judgement calls. But for an example of such analysis,  Jason Furman and Wilson Powell III have written "The US unemployment rate is higher than it looks—and is still high if all furloughed workers returned" (Peterson Institute for International Economics, June 5, 2020). Furman and Powell look at the rise in the number of people "not at work for other reasons" and the rise in the number of people who are out of the labor force. They write: "Adjusting for these factors our "realistic unemployment rate" was 17.1 percent in May, down from the April value but still higher than any other unemployment rate in over 70 years."

They also look at what the unemployment rate would be if those who say they are on layoff all returne to their jobs: "In total, an additional 14.5 million of the unemployed reported being on temporary layoff. If all of these people were immediately recalled back to work and the labor force adjusted accordingly—a very optimistic scenario—the "full recall unemployment rate" would still be a very elevated 7.1 percent."

Either way, the US economy is clearly in the midst of a recession. The question is whether it turns out to be a deep-at-the-start-but-short recession, or deep-at-the-start-and-prolonged recession. The eventual outcome is only partly about economic policy: the coronavirus and public health policy will also play a big role. 

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A 'misclassification error' made the May unemployment rate look better than it is. Here's what happened.

By Heather Long 

June 6, 2020 at 10:57 AM EDT

When the U.S. government's official jobs report for May came out on Friday, it included a note at the bottom saying there had been a major "error" indicating that the unemployment rate likely should be higher than the widely reported 13.3 percent rate.

The special note said that if this "misclassification error" had not occurred, the "overall unemployment rate would have been about 3 percentage points higher than reported," meaning the unemployment rate would be about 16.3 percent for May. But that would still be an improvement from an unemployment rate of about 19.7 percent for April, applying the same standards.

The Bureau of Labor Statistics, the agency that puts out the monthly jobs reports, said it was working to fix the problem.

"BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue," said a note at the bottom of the Bureau of Labor Statistics report.

The next big problem for the economy: Businesses can't pay their rent

Some took this as a sign that President Trump or one of his staffers may have tinkered with the data to make it look better, especially since most forecasters predicted the unemployment rate would be close to 20 percent in May, up from 14.7 percent in April. But economists and former BLS leaders from across the political spectrum strongly dismissed that idea.

"You can 100% discount the possibility that Trump got to the BLS. Not 98% discount, not 99.9% discount, but 100% discount," tweeted Jason Furman, the former top economist for former president Barack Obama. "BLS has 2,400 career staff of enormous integrity and one political appointee with no scope to change this number."

Economists say the BLS was trying to be as transparent as possible about how hard it is to collect real-time data during a pandemic. The BLS admitted that some people who should have been classified as "temporarily unemployed" during the shutdown were instead misclassified as employed but "absent" from work for "other reasons."

The black-white economic divide is as wide as it was in 1968

The "other reason" category is normally used for people on vacation, serving jury duty or taking leave to care for a child or relative. These are typically situations where the worker decides to take leave. But in this unusual pandemic circumstance, the "other reason" category was applied to some people staying at home and waiting to be called back.

(Reuters)

This problem started in March when there was a big jump in people claiming they were temporarily "absent" from work for "other reasons." The BLS noticed this and flagged it right away. In March, the BLS said the unemployment rate likely should have been 5.4 percent, instead of the official 4.4 percent rate. In April, the BLS said the real unemployment rate was likely about 19.7 percent, not 14.7 percent.

Economists said the big takeaway is that it's hard to collect real-time data during a pandemic and that while the unemployment rate remains high — likely more than 16 percent — it has declined a little from April.

Trump clings to jobs numbers as a campaign life raft — and as a race-relations plan

The unemployment rate comes from a survey where Census workers ask about 60,000 households questions about whether they are working or looking for a job the week of May 10 to 16.

One of the first questions that gets asked is did the person do any work "for pay or profit?" There are then 45 pages of follow up questions that come after that. One of those questions asks if someone was "temporarily absent" from the job and why that absence occurred. One of the responses is "other."

The BLS instructed surveyors to try to figure out if someone was absent because of the pandemic and, if so, to classify them as on "temporary layoff," meaning they would count in the unemployment data. But some people continued to insist they were just "absent" from work during the pandemic, and the BLS has a policy of not changing people's answers once they are recorded. It's how the BLS protects against bias or data manipulation.

Former staffers said it's unusual that the BLS was not able to correct this problem faster.

The U.S. economic slide is likely bottoming out, but a recovery could take years

"It's surprising the BLS couldn't come up with fixes to make this work in May," said Erica Groshen, the former BLS commissioner under Obama. But, she adds, "This is a very unusual situation. There are lots of field staff who had a tried and true way of asking questions and they were doing what they were used to doing."

The only political appointee at the BLS is the commissioner, who, Groshen said, does not have access to the data and only sees the finalized report.

"The commissioner never sees the job report before it is final. As commissioner, I did not have access to the underlying data," Groshen said. "This is a highly automated process."

Instead of focusing on possible Trump interference, many economists wish people would focus on the fact that 21 million Americans are currently unemployed and over 2 million have permanently lost their jobs.

The situation remains dire, they say, even after a few jobs returned in May as the economy reopened.

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Heather Long

Heather Long is an economics correspondent. Before joining The Washington Post, she was a senior economics reporter at CNN and a columnist and deputy editor at the Paatriot-News in Harrisburg, Pa. She also worked at an investment firm in London. Follow

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Public education job losses in April are already greater than in all of the Great Recession [feedly]

Public education job losses in April are already greater than in all of the Great Recession
https://www.epi.org/blog/public-education-job-losses-in-april-are-already-greater-than-in-all-of-the-great-recession/

It has been well documented that fiscal austerity was a catastrophe for the recovery from the Great Recession. New estimates show that without sufficient aid to state and local governments, the COVID-19 shock could lead to a revenue shortfall of nearly $1 trillion by 2021 for state and local governments. In lieu of substantial federal investments, budget cuts are certain. But I, for one, did not expect to see the losses as soon as April. As of the latest jobs report from the Bureau of Labor Statistics (BLS), state and local government employment fell by 981,000, with the vast majority of losses found in local government. And the majority of those local government losses are in the education sector, with a loss of 468,800 jobs in local public school employment alone.

State and local government austerity in the aftermath of the great recession contributed to a significant shortfall in employment in public K–12 school systems, a shortfall that continued through 2019. The figure below shows that, as of early 2020, public employment in elementary and secondary schools had yet to recover the level it had reached prior to the losses of the Great Recession. Furthermore, employment levels in the public education system have failed to keep up with growth in public school enrollment since 2008. As of September 2019, the start of the most recent pre-pandemic school year, local public education jobs were still 60,000 short of their September 2008 level, and they were over 300,000 lower than they would have needed to be to keep up with public school enrollment.

Then, the pandemic hit and local education jobs dropped sharply. More K–12 public education jobs were lost in April than in all of the Great Recession. And that's before any austerity measures from lost state and local revenue have been put in place. A look at the Current Population Survey reveals that losses in public education were concentrated in certain occupations. While some teachers were spared, namely elementary and middle school teachers, others were not. Half of the job losses in K–12 public education between March and April were among special education teachers, tutors, and teaching assistants. Not only are these job losses devastating to those no longer getting a paycheck, but they negatively impact the education students receive. Other significant job losses occurred among counselors, nurses, janitors, and other building maintenance workers. Without sufficient staffing, we cannot safely reopen schools and get parents back to work—which will in turn hamper economic recovery.

April's job losses are huge in and of themselves, but it's an even bigger problem that additional public education job losses have probably already occurred—we will find out more details when the May jobs data comes out this Friday.

What we know from the last recession is that states that preserved or grew their public-sector workforce fared better, with fewer job losses overall, fewer private-sector job cuts, less growth in unemployment, and faster job growth. In lieu of sufficient federal investment, it will be impossible for state and local governments to withstand the expected shortfall in revenues from the current economic disaster and return to their pre-pandemic employment levels, levels still significantly below where they should have been to keep up with student enrollment.

The Teacher Gap

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