The economic shock that was March 2020 created a tsunami of unemployment claims. Between March 15th and May 31st of 2020, 30.3 million Americans became unemployed. During the last week of April 2020, 3.84 million people lost their jobs, 14 times the rate of job loss the week before the lockdowns began. Weekly jobless claims would stay above 1 million through July and would not drop below 500,000 until March of 2021. This past week (10 June), new claims for unemployment fell to their lowest level since March of 2020, only 385,000 people filed for benefits. That’s still 50% above the weekly total from March of 2020.
What did I think would happen? I wrote in July of 2020, concerning the early decreases in unemployment, “look behind the numbers and you’ll see more permanent unemployment reporting.” The pattern we saw last summer was “work remotely, go on furlough, become unemployed” with a small increase in hiring in the tourism sector: a sector that experiences seasonal hiring patterns and therefore creates illusions of gains. Even back then, we knew that the classic “V” recovery wouldn’t happen, and Americans were unlikely to return to work quickly.
What happened? Unemployment claims hit 1.5 million in the middle of July, and then declined sharply to about 900,000 by early August as people, businesses, and shops adjusted to a mask-wearing and socially distanced reality. The next major decline began in mid-January 2021, with a peak of around 900,000. The decline in weekly unemployment claims follows closely the increase in the level of vaccinations around the country and the decline in new COVID cases.
Looking closely at the Bureau of Labor Statistics report, we see a more nuanced reporting of overall unemployment numbers; unemployment rates declined for teenagers, Whites, and Hispanics while rates stayed the same for adult women, Blacks, and Asians. Overall, the number of people who want to work, but can’t find a job, is 6.6 million people, 1.6 million more people than before the pandemic. Notice, job gains were most pronounced in the leisure and hospitality industry and the education sector.
Unemployment continues to abate, but it’s taking a lot longer for many people to return to work.
So What? What’s the bottom line? Unemployment is declining, and with more available vaccines, we can expect to see employment gains in more industries. There is a healthy mix of people who aren’t ready to head back to work for many reasons, but it’s time for businesses, government leaders, and educators to come together and find ways to help Americans stay in the labor force. Evaluate how policy changes to unemployment benefits could create incentives in the labor market for employers, but don’t just look at compensation; child care support could be the most influential benefit when hiring.