Molehill Recovery
Bunker Hill: The Hidden Toll on the Labor Force That We’re Not Talking About.
When U.S. unemployment broke record highs in May of this year, a direct result of the Covid-19 induced lockdowns, Congress — in a rare show of bipartisanship — swiftly stepped in to provide pandemic relief to the nation, stemming what would have been a deep(er) long(er) crisis. As the summer gave way to fall, the labor market bounced back with new jobs and what seemed to be a recovery and stabilization — at least that’s what it appeared to be on the surface. The story, of course, is far from over.
As the year spirals to its end, Congress continues to debate a new stimulus package, while the Senate proceeds with judicial confirmation hearings, and the Executive remains focused on securing an unlikely Electoral College victory.
The elephant in the room is and remains the teetering labor market.
Today the U.S. unemployment rate stands at 6.7%. This figure is calculated through a precise and narrow lens. It doesn’t necessarily capture the full picture of what’s happening in the labor market today. Employment data, tabulated using the Current Population Survey and published by the Bureau of Labor Statistics, uses the survey responses of 60,000 American households and categorizes all persons above the age of 16 as either employed, unemployed, or not in the workforce. Those who have not actively looked for work in the past four weeks are not considered part of the labor force, even if they want to work. In other words, the number of people who aren’t working is necessarily higher than the unemployment rate. In ordinary times this makes sense. If a person wants to work, but isn’t actively looking, there is good reason to think that they shouldn’t be labeled ‘unemployed’. (Perhaps they’re caring for a relative, or otherwise unable to spend the time and effort needed to find the next opportunity.) In the context of the current pandemic, however, the story is more somber.
The U.S. economy has recovered only 12.4 of the 22 million jobs lost in March, but it has been in fits and starts. In October, private employers added 610,000 jobs. The very next month, U.S. employers added just 245,000 jobs during the month of November. That same month, the number of persons not in the workforce who nevertheless want a job increased by 448,000. As the BLS explains, these individuals were not counted as unemployed because they were not actively looking for work during the last four weeks or were unavailable to take a job. This is the unemployment crisis.
One narrative about the unemployment numbers is that individuals are either disinterested in work during the tumultuous pandemic period or that the need for full-time employment is not as prevalent as the labor force might make it seem. This belies an underlying truth: when we begin to break down the labor force into different categories, a much different picture emerges. A group considered “marginally attached” to the labor market are individuals who would like to be employed but have not sought work due to transportation or family issues. This number hovered around 2.1 million in November and has only changed slightly since the start of the pandemic. An additional subset of individuals within this group are “discouraged workers,” who believe there is no available job for them. This number was a whopping 657,000 in November.
To be sure, this trend is not unique to the COVID-19 pandemic, and this number often fluctuates throughout the year, for example, during periods when students are out of school. Given what we know about the nature of education this year, a growing number of schools continuing to offer remote instruction provides some indication of why this number remains elevated.
Social norms are important to the study of labor economics. Gender roles in American households continue to play a major role in how unemployment data is distributed, demographically, during the pandemic. The lion’s share of parenting duties are still handled by women, which means that a large portion of the 1.2 million parents who left the workforce between February and September of 2020 have been mothers of young children.
This trend is even starker among specific demographics when considering the 10% decline in employment among single-parent households led by Hispanic and Black mothers, compared to a 6% decline among single-parent households led by White mothers. In each instance, the story is clear: even when work is available, it’s not always feasible.
The holidays often boost the labor market as retail outlets hire seasonal workers to support the surge in shopping. This year, however, there has been an 11% decrease in retail jobs compared to 2019. As Americans shop online, the need for retail workers declines.
The Looming Cliff
There has been a lot of discussion around the long-term damage to the economy and how the recession could have been much worse if Congress hadn’t stepped in early on. However, the subsequent lack of fiscal stimulus at the federal level may leave the country more vulnerable to more severe, longer-lasting economic fallout — especially as relates to the struggling workforce. During the week ending December 26, extended unemployment benefits expire. This is a key date to remember because the BLS reports that two-thirds of the labor force receiving unemployment benefits through the CARES act will expire the week after Christmas. Furthermore, the number of people in most states that have been unemployed for more than 26 weeks (exhausting their state unemployment benefits) has risen from 1.1 million in February to 3.9 million in November. In case that wasn’t enough, 83 million adults, or 34% of all adults in the United States, reported their households had a “somewhat or very difficult” time paying for typical expenses in the past seven days, and 12% of the country (26 million adults) reporting their household did not have enough to eat “sometimes or often” in the past seven days. All of this is in contrast to pre-pandemic estimates which reflected 3.7% of adults who did not have enough to eat at some point during 2019. The unemployment crisis is real, and without a bold and concerted effort by the government, American households may, en masse, quite literally starve through the winter.
The situation only is further exacerbated by the federal moratorium on housing evictions (extended in an unprecedented move by the CDC on September 1st) and is also set to expire on December 31st. According to a study conducted by the Center on Budget and Policy Priorities, 1 in 6 adult renters in the United States (12.4 million) reported they were behind on rent payments.
Final Thoughts:
There has been a lot of debate over the need for a second stimulus package, with the left seeking a larger package and the right believing that the job market over the summer was indicating we are exiting the pandemic. Regardless of what side you find yourself on, daily deaths are hitting new records, lockdowns are being reinstated, and we have only just started to enter winter. If trends continue, the labor market will be decimated, jeopardizing our urban and rural areas alike. The government’s role is to help those who live within its borders, after all the government works for the people, not the other way around. Something we seem to have forgotten in recent years.
Please share your thoughts with us:
- Geoffrey von Zastrow
Twitter: @von_Zastrow
Email: geoffvz@gmail.com - Babatunde P. Odubekun
Twitter: @TundeOdubekun
Email: bodubekun@gmail.com
