3 reasons why unemployment is already at great depression levels



that of April employment report set records for all the wrong reasons. Unemployment rate rose from 4.4% to 14.7%, the largest month-long increase in history and the highest rate in history in official government data (from 1948) . Unemployment is estimated to have reached 24.9% during the Great Depression.

Employment fell by 20.5 million, more than 10 times the largest monthly drop of 1.96 million recorded in September 1945 after the end of World War II. At that time, this represented about 3.3% of the workforce.

The Ministry of Labor misclassified 8 million people

To question 13 of Frequently Asked Questions part of the Ministry of Labor publication, it included: “Of the 11.5 million employed people who were not working during the survey reference week in April 2020, 8.1 million people were included in the survey. the “other reasons” category, well above the average of 620,000 for April 2016-2019 (not seasonally adjusted). BLS analysis of the underlying data suggests that this group included workers affected by the pandemic response who should have been classified as unemployed on temporary layoff. “

To question 14, he added: “If workers who were recorded as employees but not at work during the entire survey reference week had been classified as ‘unemployed on temporary layoff’, the unemployment rate overall would have been higher than stated. ”

After going through a number of assumptions and calculations, he said: “The press release on the employment situation gives a similar 4.8 percentage point increase in the unemployment rate for April, or 19 , 5%, compared to the official seasonally adjusted rate of 14.7%. “

The first reason April’s unemployment rate was at the level of the Great Depression was due to the misclassification of 8 million people.

The inclusion of marginally attached job seekers pushes the rate to 27.6%

There is another unemployment rate called U6 which is larger than the rate that is normally referred to or the U3 rate. Investopedia defines rate U6 like “the unemployment rate which includes discouraged workers who have quit looking for work and part-time workers who are looking for full-time work.” The U-6 rate is considered by many economists to be the most revealing measure of a country’s unemployment situation since it covers the percentage of the labor force that is unemployed, underemployed and discouraged.

Before Donald Trump became president, he tweeted about the extent of unemployment, which sometimes included numbers above reported rates. In July 2013, when the unemployment rate U3 was 7.5% and U6 was 14.2%, Trump tweeted that the unemployment rate was 17%.

In the latest unemployment report, the U6 rate declared was 22.8% or 8.1% higher than the U3 rate. This is the second reason why April’s unemployment rate was at the level of the Great Depression.

And when the 8 million misclassified job seekers are included, the U6 unemployment rate rises to 27.6%, which is higher than the estimated 24.9% of the Great Depression. This is the third reason why April’s unemployment rate was equal to and potentially higher than the level of the Great Depression.

And it will probably get worse

There were eight weeks of jobless claims of 3 million or more for a total of 36.5 million. The last 11 weeks of complaints have been:

  • Week ending February 29: 215,000
  • Week ending March 7: 211,000
  • Week ending March 14: 282,000

Unemployment claims associated with the April Employment Survey Weeks:

  • Week ending March 21: 3.31 million
  • Week ending March 28: 6.87 million
  • Week ending April 4: 6.62 million
  • Week ending April 11: 5.24 million
  • Week ending April 18: 4.44 million, 5-week total of 26.5 million

Unemployment claims associated with the May Employment Survey Weeks:

  • Week ending April 25: 3.84 million
  • Week ending May 2: 3.17 million
  • Week ending May 9: 2.98 million, 3-week total of 10 million

Note that some of the unemployment claims for May were likely to have been made by people made redundant and counted in the April Jobs Report. These people may have participated in the April survey but were only able to file a complaint afterwards due to the overwhelming number of people who filed.

“All” it will take is 8 million more job losses to add to the 8.1 million that has been underestimated for the U3 unemployment rate to reach 25%, which also means that the U6 rate will be greater than 30%.


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