The April unemployment rate was 14.7%. This was considerably lower than many forecasts. With all due modesty I predicted 16% so I’m counting this as a win. Here’s a quick look at April 2020 labor force events.
“But Dr. Lima,” you ask. “What happened to those 33 million people that filed for unemployment insurance?” As I suspected, many dropped out of the labor force.
So a lot of those folks who filed for unemployment just stayed home. Remember, to be counted as unemployed you must have actively looked for a job during the preceding four weeks. The Bureau of Labor Statistics regularly updates and publishes the “BLS Handbook of Methods.” From the 2009 edition,
For those wondering about the “reference week” that is the week during any month that includes the 19th of that month.
Here’s a simplified view of what happened in the labor market.
The number of people unemployed rose by 15.9 million. But the number employed fell by 22.4 million. The sum of those two figures is -6.4 million, equal to the number who left the labor force. Putting this another way, 22.4 million lost their jobs. Of that number, 15.9 million are looking for a job but out of work. The remaining 6.4 million left the labor force. These are the true “discouraged workers.” And who can blame them? At every turn we are bombarded with bad news about the impact of COVID-19 on the economy. It’s not real surprising that many people would decide to give up looking for a job.
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