Just How Devasted is the Labor Market? Very.

Several Federal Reserve Banks provide some additional insight into the breadth of the labor market damage.

Let’s start with the Richmond Fed’s non-employment indicator:

Here’s a quick explanation of how this model differs from the standard unemployment rate (see above link):

The NEI differs from the standard unemployment rate as a measure of resource utilization in two important ways (see link above):

1. It counts not only the unemployed, but also those out of the labor force. The latter is a diverse group that includes individuals who want a job (such as the marginally attached who are willing and able to work and sought employment in the past, but have stopped searching) and those who do not want a job (such as retirees, the disabled, students, and those who are neither retired, nor disabled, nor in school).

2. It weights the different groups of non-employed (that is, both the unemployed and people out of the labor force) according to their labor market attachment, or the likelihood that a non-employed person will transition back into the job market. Specifically, each group is weighted by its historical transition rate to employment relative to the highest transition rate among all groups (the transition rate of the short-term unemployed).

The Chicago Fed has also issued new research using what it calls the U-Cov underutilization rate (please read the data in the link to see how it’s calculated):

No, you’re not reading that incorrectly.  Its projections are between 25.1% and 35.6%.

I don’t have the vocabulary to properly describe the Chicago Fed numbers, especially in light of how far and how fast everything has changed.