Three Things to Understand About Unemployment Statistics
Today the Bureau of Labor Statistics released the latest Employment Situation Summary showing the US unemployment rate surprisingly fell to 13.3% in May, as the economy gained 2.5 million jobs.
Here are some of the job gains by sector:
- Food Service and Bartenders – 1,400,000
- Construction – 464,000
- Education and Health Services – 424,000
- Retail – 368,000
- Other Services – 272,000
- Manufacturing – 225,000
- Professional Services – 127,000
While the unemployment rate is better than expected, it is still higher than during the 2008 financial crisis representing families across the nation that are not sure when (or if) they will return to work. The emotional impact on these households is devastating.
There are, however, some small rays of light shining through on this issue. Here are three:
1. The actual number of unemployed is less than many are reporting
The number of people unemployed is sometimes over-exaggerated. It seems that every newscaster talks about the 40+ million people “currently” unemployed. It is true that, over the last ten weeks, over 40.7 million people have applied for unemployment. It is also true, however, that many of those people have already returned to work or gotten a new job. The actual number of people currently unemployed (based on filed claims for unemployment benefits) is 21.1 million. This is still a horrible number, but about half of what is often being reported.
2. Of those still unemployed, most are temporary layoffs
Today’s unemployment report showed that 73% of those unemployed believe their status is temporary. This aligns with a recent survey by the Federal Reserve Bank which showed that employers believe over 75% of job losses are temporary layoffs and furloughs. This means 3 out of 4 people should be returning to work as the economy continues to recover.
3. Those on unemployment are receiving assistance
According to a recent study from the Becker Friedman Institute for Economics at the University of Chicago, 68% of those who are eligible for unemployment insurance receive benefits that exceed lost earnings, with 20% receiving benefits at least twice as large as their lost earnings.
The Labor report is still difficult to digest and may not fully represent the full impact of the shutdown. Experts believe many of those families who are impacted will be able to return to work. As the nation continues to reopen only time will the tell the truth.