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The May Employment Report: One Thing at a Time – If Only

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One Thing at a Time – If Only

By Nancy Kimelman
June 12, 2020

It’s a big thing that the Bureau of Labor Statistics (BLS) misclassified millions of Americans as employed in March, April and May when in fact they were unemployed. In normal times, we’d spend hours if not days trying to understand why the world’s best statisticians made that gaffe and the BLS’s policy of fessing up but still not correcting the data series. It is a perfect teachable moment, the reason why every economic student is forced to learn the rules that generate this most important piece of economic news. We don’t ask students to learn how capacity utilization is generated. Employment is different – it is the source of wage income and the most accurate of measure of how we’re doing. That nearly 20% of the labor force was not working in April, and over 16% were out of work in May, makes it all too clear that we are not doing very well, not at all. The worst labor market conditions since the Great Depression almost 100 years ago deserves our attention. If only…

It’s a big thing that the number of Covid-19 cases is surging in 15 states this week, even as the numbers of new infections and deaths are falling in states hit early and hard by the pandemic. The next few days are going to be crucial for the course of the pandemic. The spike in cases now is related to a number of states re-opening their economies, allowing people to congregate not just to buy paper products but to enter stores and eat at their favorite restaurants. This increase in person-to-person contact has been expected. What nobody saw coming was the murder of George Floyd in Minneapolis in late May. The justified outrage of a nation at the indelible signs of racism in our country has sparked protests nationwide at which thousands of Americans stand and march cheek-by-jowl, many without protective face masks. What effect these protests will have on the epidemic’s course is of crucial importance because like so many people worldwide, Americans have had it with self-isolation and social distancing. On Thursday this week, Treasury Secretary Steven Mnuchin explained the risk: “We can’t shut down the economy again.” Unpacking that statement from the Administration’s go-to guy on economics, it seems we’re being warned we’re on our own now. With 16% of us unemployed and consumption down over 20% since January. We’d better start planning our future. If only…

Of course it’s a big deal that not just Americans but people around the world are taking to the Streets to protest our country’s slow, slow progress on racial justice. The economic data of the last few months shows just how vulnerable people of color are in this economy. One snapshot: the unemployment rate for Black or African American workers stands 3 ½ percentage points higher than the national average, and the rate for Black and African American teenagers aged 16-19 is 34.9% (no, that is not a misprint). But that’s not the least of it: the CDC reports that Black and African Americans account for over 53% of the deaths due to the virus, despite being 42% of the population. No doubt this is related to health care access, income disparities, and geographical distribution as well as (and wrapped up in) racial discrimination. The situation demands that investigate and do better. If only…

It’s also a big thing that the stock market lost about 6% of its valuation on Thursday as traders and investors awoke to the reality of a pandemic not quite done with this world. Odds are the market will recover some of those losses in the coming days, as it usually does after a big selloff. But much depends on the successful reopening of American businesses. It’s one thing for businesses to be open, it’s another for customers to come in. Customers of all races, customers with income to spend, customers taking care of their own health and that of the people who serve them. It’s fair to say were not there yet. If only…

The opinions expressed here are those of the author.

Related:  The April Employment Report: A Very Steep Recession Curve by Nancy Kimelman

Nancy Kimelman is an Assistant Teaching Professor in the Department of Economics at Northeastern University. She received her PhD from Brown University and has been a practicing economist for over 30 years. She has worked at the Federal Reserve Bank as a monetary economist, as a financial economist on Wall Street, in banking and investment, and as a lecturer at Tufts University where she taught macroeconomics. Dr. Kimelman is the author of  Common Cents: How the Economy Really Works. From the Global Market to the Supermarket (2010). As a columnist she has written for the Financial World and Bloomberg magazines and has appeared regularly as a commentator on National Public Radio, CNBC, CNN/FN, Reuters and NECN.

Contact: n.kimelman@northeastern.edu

 

Published On: June 12, 2020