And that’s not all. The 14.7 percent figure — officially, the “U-3” rate — also does not include people who are working only part time for economic reasons. That number soared by more than 5 million people in April. A separate unemployment number, the U-6, includes the marginally attached and those working part time for economic reasons as well as the officially unemployed. That rate is a mind-boggling 22.8 percent.
Even this understates the true level of unemployment. Millions of people answered the monthly employment survey with an unusual response: “employed but absent from work.” These people should have said they were on a temporary layoff, which would have been counted in the unemployment rate. Michael Strain, director of economic policy studies at the American Enterprise Institute, added these people into the unemployment equations to get the true level of labor-market distress: 27.5 percent.
At the depths of the Great Depression, unemployment was estimated to be “only” 25 percent. While a similar, more detailed analysis of unemployment in the Great Depression would likely produce a higher number, it’s clear that the United States is currently experiencing labor-market distress on par with that of 1932. And that doesn’t yet include the more than 6 million people who filed for unemployment insurance in the last two weeks of late April into early May.
As bad as this looks, it does come with a small silver lining. Because many people are working part time, we can expect many of them will likely go back to full-time work quickly. Others in the “employed but absent from work” category will go back to work, as well. Neither of these acts will show up in the headline unemployment rate, but they will represent tangible improvement in the country’s economic standing.
Many people who have dropped out of the labor force will also reenter it once companies start hiring again. That paradoxically might increase the headline rate as people currently unemployed but excluded start to be counted. But this, too, would be a good sign, as improved conditions signal to people that jobs can be found.
Data from a separate survey released Friday, the establishment survey, also points to the possibility of rapid recovery in some sectors. That report showed that the United States lost 20.5 million jobs in April, a record-high monthly loss. But nearly 2.5 million of those jobs were in the health and education sectors, industries likely to bounce back quickly as dentists’ and doctors’ offices reopen, followed by school down the line. Another million jobs were lost in real estate and “personal and laundry services” — think dry cleaners — two other industries that should bounce back quickly once state lockdowns end. Even the slightest reopening of the nation’s retail and entertainment establishments will produce further recovery.
A more complete recovery, however, will largely depend on people’s willingness to go back to their old routines. Nearly 8.5 million lost jobs, more than 40 percent of the total, were in the leisure and hospitality, transportation, and motion picture industries. Recovery here depends on people flying, taking vacations, going to the movies and dining out. If those activities remain largely restricted, or if people are hesitant about being in hotels, restaurants or cinemas, millions of people will remain out of work. A further 2 million jobs were lost in retail trade as stores shut down nationwide. If people are afraid to go to malls or congregate in shops, many more workers will be unemployed.
The United States faces perhaps the worst economic downturn in history. While hope for recovery remains, the sheer magnitude of the destruction is mind-boggling. President Trump was widely criticized when he used the phrase “American carnage” to describe the hollowed, old manufacturing towns across the country. That was a just a flesh wound compared to the genuine carnage we have just experienced. He or his successor has a gargantuan, unprecedented task ahead if they are to make America great again.