The editors of the Wall Street Journal comment on the most recent Bureau of Labor Statistics Employment Situation Report:
Friday’s employment report for July shows the labor market continues to improve, despite a setback from the surge in coronavirus infections this summer in the South and West. The progress should continue without overly strict lockdowns and policy mistakes by Congress.
The private economy created 1.46 million jobs and the unemployment rate fell to 10.2% from 11.1%. But the labor-force participation rate fell a mere 0.1 points to 61.4%. This suggests that the surge of workers returning from the sidelines in May and June slowed as of mid-July when the labor survey was taken.
The most troubling sign is the growing share of long-term unemployed (27 weeks or more), which rose 1.3 percentage-points to 9.2%. The share who have been unemployed between 15 and 26 weeks also nearly quadrupled to 39.6%. Millions who were laid off before the pandemic or who lost jobs amid the sweeping government lockdowns remain on the sidelines.
One reason is that the $600 a week in federal enhanced unemployment benefits has allowed two-thirds of the unemployed to make more than they did working, according to a recent University of Chicago study. In Michigan the median worker who lost a job has been collecting $969 more each month. Businesses have reported difficulties rehiring workers due to the enhanced benefits. The best decision Congress could make is not extending the $600 enhancement that expired on July 31. Better to help states extend the duration of benefits rather than increase the amount.
Meanwhile, the wide variation in state jobless claims is striking and isn’t getting enough attention. The share of the workforce receiving benefits in the week ending July 18 hit 18.1% in California, 16.3% in New York and 15.2% in Connecticut compared to 3.6% in Idaho, 4.5% in Utah and 4.9% in Alabama. (See the nearby table.)
Note the much higher rates in states that locked down their economies for longer. Arizona (7.9%) has made progress against its serious summer flare-ups by closing bars and mandating face masks, while New Jersey (12%) is experienced another surge of infections despite keeping restaurants, gyms and bars closed.
closing with the anodyne:
Keeping the virus under control will be necessary to give Americans confidence to work and spend. But the states that do this without imposing policies that create mass unemployment will do the best by their citizens.
As usual Illinois is average (11%). The emphasis above is mine. I agree with that observation. Why are some states seeing more jobless claims than others? The answer is important and “lockdowns were longer there” isn’t actually very explanatory. If the job losses in those states are permanent, it would be crucial to know that early on.
https://www.zerohedge.com/political/debunking-myth-lockdowns-stop-pandemics
I keep thinking about the Yellowstone fires in the “80’s. Smokey the bear and his crew of rangers extinguished fires from lightning strikes for 80 years, leading to a buildup of flammable brush and dead trees in the forest. Those things are us, the susceptible. If we avoid being infected, it’s only temporary, but we can build a firebreak in our lives and wait for better treatments. The young will go forth, they cannot do otherwise, so we hide out for a while and see if the skies get clearer.
And, the news today reported 4 million Americans have been infected so far, but 40 million face eviction. I don’t know how that can be any clearer.
Someone needs to go to the effort and try to look at the issue in detail. For example, the restaurant sector has been hit especially hard. I dont know this for a fact but I would strongly suspect that the restaurant sector is bigger in NY than in Idaho. Same for the entertainment and travel sectors. We go to the theater in NY a few times a year. Hardly ever ago to Alabama for theater. Also, I would expect that in states not hit as hard that people would bless hesitant about going back to work.
Steve