Between mid-February and mid-March, the number of Americans unemployed grew by 1.4 million. But the rise in Americans reporting any type of labor market disruption — absence, wanting more hours, or not having a job at all — was almost four times that number: 5.6 million.
That’s according to more detailed government data released Thursday from the Current Population Survey (CPS). This new data paints a richer picture of the state of the economy in March. Census and the Bureau of Labor Statistics conducted the CPS between March 8 and 14; separate data on state unemployment insurance claims suggests the labor market has only further deteriorated since then.
As large as the March rise in unemployment was, focusing on unemployment alone misses broad swaths of people who saw disruption in March but were nevertheless not counted as “unemployed”.
The BLS defines the unemployed as workers without a job but actively looking for one and available to work. Workers on temporary layoff who expect to be recalled back to their jobs are counted as unemployed too regardless of whether they’re actively looking.
The 1.4 million people who became unemployed in March was large by historical standards, but it was almost matched by the jump in other types of disrupted workers who were not unemployed. Another 1.2 million said they wanted more hours, while yet another 1.2 million workers reported being employed but absent. The government noted in last week’s employment report that workers absent for coronavirus-related reasons were supposed to be classified as “unemployed on temporary layoff”, but it is evident that not everyone was classified this way.
There were also large rises in people leaving the labor force due to retirement, school enrollment, or “other” reasons.
Several demographic categories stick out when comparing March’s year-on-year growth in disruption rates with February’s. Hispanics saw a larger rise in the share of their population reporting any labor market disruption versus other racial & ethnic groups. Younger and less educated groups, as well as people in larger metros, saw higher rates of disruption growth too. Men and women grew about the same, but a larger share of the men’s growth was among absent workers while for women a larger share was among workers on temporary layoff.
Disruption was broad across many different job types and sectors. Cashiers, teachers, and housekeepers were the occupations that saw the greatest disruption versus a year ago, while schools, restaurants, and construction saw the biggest declines in non-disrupted employment.
These new numbers give us a window into what was happening in the labor market mid-March, but they’re far from the final word. We will become more confident in the signal from the CPS and other government surveys as more data comes in and we can better separate signal from noise. This caution is especially necessary during the pandemic, as safety concerns caused Census and BLS to cancel in-person CPS interviews in March, which caused the March survey response rate to be 10 percent lower than normal.
Moreover, not every disruption ought to be viewed as a lost job or a policy failure. The US under the CARES Act is trying to keep workers whole through a combination of generous unemployment insurance benefits and loans and grants to business. There’s a logic to this strategy (assuming its magnitude rises to meet the size of the shock), but one inevitable consequence is a leviathan rise in unemployment insurance claims and unemployment rates even if the strategy works as intended.
That said, disruptions are still painful even under the best of circumstances, and there’s nothing to suggest jobs disruptions won’t keep rising for the next few months at least, with more pain showing up among Americans employed, unemployed, and not in the labor force alike.
Methodological Note
Author’s analysis of the Current Population Survey microdata. The month-to-month March changes are based on data adjusted for seasonality and January benchmark revisions by the author, and then rescaled to match official BLS aggregates.
Ernie Tedeschi is a policy economist and the Head of Fiscal Analysis at Evercore ISI, a macro advisory firm. He is also an occasional contributor to The Upshot section at The New York Times. Previously, Ernie was a Senior Advisor and Economist at the US Department of the Treasury. His research interests include the federal budget, monetary policy, and labor markets. You can follow him on Twitter at @ernietedeschi. The analysis here is solely his own.
