I have not seen this topic addressed here, though I certainly could have missed that diary. In any case, I think the topic is worthy of wider dissemination than I have seen in the main stream media.
One of the myths of the current economy is the unemployment (UE) rate. Statistics show that since the height of the recession in late spring, the rate has dropped to 8.4% from nearly 15%. So we are on the right track, yeah?
Unemployed vs. Furloughed
Uh, not really. What is ignored in these numbers are the number of people actually not working. If you look at statistics such as “labor participation” the UE rate looks about right. But what this participation rate and the UE rate ignore is that portion of the work force that is on furlough (sometimes called standby in certain states, I think such as WA). To quote this article “to be counted as “unemployed,” you have to be actively looking for work.” Well, technically, furloughed workers aren’t looking for work. And yet they are included in the participation rate. Some may continue receiving benefits (such as health insurance) which is great. But though some furloughed workers may be working part time, during COVID the vast majority are simply not taking home a paycheck.
However, during the pandemic, furloughed workers ARE eligible for unemployment insurance (UI) )see here), so the number of workers receiving UI is a much better reflection of the economy today than the UE rate that simply ignores furloughed workers.
Worth noting is that in the past, furloughs were a minor fraction of the total workforce pre-pandemic; however today furloughs actually exceed those counted in the “official” (quote deliberate to emphasize how misleading this is) UE rate by a huge number. As of July (I have not seen all of the August numbers, just the UE rate of 8.4%) the UE rate was 10.4%, with a total of a just over 16M workers unemployed. However, at the end of July 31M workers were receiving UI (some stats here. I believe that the bulk of the difference of 15M(!!) are furloughed workers. They are not “officially” unemployed, but there only source of income is UI. Some of this missing 15M likely includes gig workers, because they can get UI and are not considered on furlough, as furloughs are something only an employer can give (and gig workers don’t have one!). Sure there were some changes in August, but not 15M.
Now furloughed workers are “supposed” to get their jobs back in the future, but when is that happening? And what percentage of those furloughed jobs actually will return? Airlines, retail chains and leisure/entertainment businesses have all been noted to be considering laying off some of their workers on furlough, so we know not all of them will regain their former jobs.
The Bottom Line
So that 8.4% UE rate is largely bogus, or at best incredibly misleading regarding the state of the US economy. The real UE should include furloughed workers, and calculates out to around 20% as of the end of July, nearly twice the reported rate. And this does even take into account the fact the the total workforce number has dropped about 5M since the winter. Compared to 3.5 % or so in February, the Orange idiot has really tanked our country.
Note: I am not an economic expert, so maybe I have something wrong here. Happy to discuss this.
