The Unemployment Rate Is Probably Around 13 Percent

So far, these calculations reflect only the rise in unemployment caused by job loss, but it’s likely that there has been a steep drop in hiring as well.

In the 2008 recession, the rate of separations — that’s the technical term for when workers and their jobs part ways, both voluntarily and involuntarily — actually fell. In that recession, the decrease in employment was entirely due to a very sharp decline in hiring.

The Bureau of Labor Statistics reports that in a typical month, nearly six million workers are hired, a rate of 1.5 million per week. Again, it’s hard to know how much that has fallen, but if the hiring rate fell by a fifth over the past three weeks, that would mean that roughly one million fewer people found work than might otherwise be expected to.

At this point, our calculations show 16 million more people without work, for an unemployment rate of 13 percent.

These are obviously rough estimates. One important limitation is that these calculations do not account for the possibility that some number of people who lose their jobs will leave the labor force rather than continue to search for work. To the extent that happens, these numbers overstate the rise in unemployment.

Given the many uncertainties involved, perhaps it’s better to say that unemployment has risen by 10 million to 20 million, which means that the unemployment rate is probably between 10 percent and 15 percent.

That might sound like an unsatisfyingly unclear conclusion, but it’s a product of how poorly our official statistics track labor market changes from day to day, and how rapidly the economy is shutting down.

Article source: https://www.nytimes.com/2020/04/03/upshot/coronavirus-jobless-rate-great-depression.html