May unemployment likely to exceed 20%, hitting Latino, Black workers hardest

On Friday, the Bureau of Labor Statistics (BLS) will release unemployment figures for the month of May. The report will shed light on a crucial period of coronavirus-related lockdowns, mid-April to mid-May, and the devastating economic consequences for workers across the country. 

Daniel Alpert, senior fellow and adjunct professor of macroeconomics at Cornell Law School, says that while the overall unemployment rate may surpass 20%, losses of jobs are likely to disproportionately hit Black, Latino and Hispanic workers.

Bio: https://www.lawschool.cornell.edu/spotlights/daniel-alpert-joins-cornell-law.cfm

Alpert says:

“The BLS’s Employment Situation report will provide the first full view of the overall severity of the COVID-19 crisis. With an aggregate of 20.85 million jobs lost through mid-April, the May survey read will likely show the loss of an additional 10.0 to 12.5 million jobs – about 95% expected to be in the private sector and about 85% of those in production and non-supervisory categories (down from 88% the month prior, as we saw culling of some managerial jobs later in the crisis).

“The unemployment rate is expected by most analysts to exceed 20%. But we caution that the U-3 headline rate will be an increasingly unreliable data point because many respondents, when asked if they were actively seeking work as of mid-May would (as last month) have responded in the negative, thus removing themselves from the Labor Force – which is the denominator of the U-3 unemployment rate – simply because there was no work to be had and no jobs worth looking for with the lockdown. Observers and media would be far better off focusing on the broader U-6 unemployment rate to get a full picture of this period. The employment-population ratio, which fell to 51.3% from 60.0% in April, will also show further declines, dropping to a likely historic low.

“As we saw in April, we will again see hourly wages and work hours ‘mysteriously’ rise for May. Really not a mystery at all, however. The layoffs and furloughs have hit low-wage, low-hour jobs, on which the U.S. economy had become so dependent, far more severely than their higher paying counterparts. The eradication of these low paying jobs leaves us with higher average hourly wages, weekly hours and weekly incomes – which in this case is not good news at all.

“Given massive social disruption caused initially by the pandemic and exacerbated by the recent events attendant to the death of George Floyd in Minneapolis and the protests evolving from that heinous act, attention should be paid to the disproportionate impact of this crisis on the Black/African American population. The employment-population ratio for Black/African Americans already fell below 50% (48.8%) as of the April BLS data, and it can be expected now to fall to post-war historic lows. It should be emphasized that this is a population of 33.3 million – 13.3% of total civilian population. Add to that Hispanic and Latino members of the population (44.0 million) which have already seen their employment-population ratio fall to 51.3% and their unemployment rate skyrocket to 18.9% (from 4.4% in February), higher than that of Black/African Americans at 16.7% (up from 5.8%). For white Americans, unemployment was 14.2% in April. This crisis is disproportionately impacting racial and ethnic minority groups enormously, a phenomenon which we expect to see worsen in the May data.”

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Erica Groshen, is a senior extension faculty member at the Cornell University School of Industrial and Labor Relations. She is a former commissioner of the U.S. Bureau of Labor Statistics and vice president of the Federal Reserve Bank of New York, and has written extensively on how economies can recover from recessions. 

Bio: https://www.ilr.cornell.edu/people/erica-groshen

Groshen says: 

“In the best-case scenario, the Employment Situation for May will be the job market trough of the COVID-19 downturn. That is, the report will show the highest unemployment rate and the largest cumulative job losses of the recession. The time period reflected (mid-April to mid-May) covers the period of maximum shutdowns.

“May’s unemployment rate and payroll job losses will likely increase substantially because many workers were newly out of jobs from mid-April to mid-May – as can be seen in the large number who filed for unemployment insurance benefits during that time. The unemployment rate rise may be augmented for another reason, too. The BLS has reported a problem in how COVID laid off workers interpreted a particular question in March and April. It seems that many resisted thinking of themselves as on layoff. They referred to themselves as on ‘other’ leave (like illness, family leave, or vacation, but unspecified). BLS did not change the answers it received in those two previous months. However, the agency noted the issue and estimated that the April unemployment rate would have been almost 20% if all the workers had been appropriately classified. For this report, I assume that BLS has alerted its field staff to the issue and issued new guidance for interviewers to avert this problem. If they are successful, May’s unemployment rate will rise dramatically again and approach or exceed the 25% last seen during the Great Depression.

“Since mid-May, most states have begun phasing out the restrictions slowly, allowing some workers to return to work. Furthermore, substantial Payroll Protection Program funds were distributed in May, funding the recall of many workers. So, in June, payroll jobs could begin to rebound and the unemployment rate could begin to recede. That assumes, of course, that virus infection rates, civil unrest, or lack of fiscal policy support do not derail the nascent recovery.” 

For interviews contact: Rebecca Valli office: 607-255-6035 cell: 607-793-1025 [email protected]

Please find other experts at Cornell available to discuss the coronavirus crisis from a science  and public health perspective, for its impact on the economy and in the ways the pandemic is changing our daily lives and affecting countries around the world.

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