Don’t Cheer Too Soon. Keep an Eye on the Core Jobless Rate.

Don’t Cheer Too Soon. Keep an Eye on the Core Jobless Rate.

The recent jobs report for May seemed to bring good news: more jobs and lower unemployment. But the coronavirus pandemic has broken most economic charts and models, and all the numbers we regularly watch need a closer look. The decline in unemployment was actually driven by a drop in temporary layoffs. Strip those out, and what remains — let’s call it the core unemployment rate — rose in May.Pause the celebrations.In May, core unemployment stood at 5.0 percent, up from 4.6 percent in April and up from a modern low of 3.7 percent in December 2019. At 5 percent, core unemployment in May was at its highest level since February 2017. That’s still well below its Great Recession peak of 10.5 percent in April 2010. So while the headline unemployment rate is now falling from the highest level since the Great Depression, and is expected to fall further, core unemployment is relatively low but climbing.The Bureau of Labor Statistics already publishes six versions of the unemployment rate. So why does the world need a new one?Core unemployment takes out temporary unemployment, keeping all the rest of the standard unemployment definition: permanent job losers, job leavers and people returning to or entering the labor force. It also adds in the “marginally attached” — people who are available and want to work but count as out of the labor force rather than unemployed because they haven’t searched for work in the past four weeks. (For insiders, core unemployment equals U-5 minus temporary layoffs.)This recession started with a huge but temporary shutdown of travel, restaurants and numerous other sectors. In May, 73 percent of all unemployed people said they were temporarily unemployed, which means they had a return-to-work date or they expected to return to work in six months. Before the pandemic, temporary unemployment was never more than one-quarter of total unemployment.In these shutdown sectors, the temporary share of unemployment was especially high. More than 80 percent of unemployed workers in education and training; building cleaning and maintenance; personal care; and manufacturing were on temporary layoff, according to the detailed microdata for May released on June 10, a few days after the jobs report. But temporary layoffs accounted for only about half of unemployment among tech, scientific and social service workers.Core unemployment is less concentrated in shutdown sectors than temporary unemployment and the headline rate suggest. In other words, the longer-term pain looks to be more widely spread than the shock of the sudden shutdown was.As damaging and frightening as a temporary layoff is, there’s still hope your employer will stay in business and call you back to work. Initial pandemic relief efforts focused on money for people to manage a temporary loss of income and funds to keep businesses afloat until they could bring their workers back. The hope and the goal is for the temporarily unemployed to return to their old jobs, rather than have them lose their jobs and have to search for new ones when jobs have become scarcer.In all of the six published unemployment rates, temporary and permanent job losses count the same, which may be fine in normal times. But in this pandemic, it’s essential to track whether the inevitable decline in temporary unemployment as sectors reopen is because people are returning to work or because they are losing their jobs definitively.The core unemployment rate shows that a rising number of people are tipping into sustained unemployment. That’s the kind of joblessness that won’t fix itself directly as the economy reopens. It will cause workers’ skills and networks to erode, and might cause people to lose their health insurance. The core unemployment rate is a guide to whether we’re headed toward the kind of prolonged slowdown that has followed previous recessions.Temporary unemployment is hard to interpret. It reflects a prediction by the respondent or their employer about whether and when they’ll return to work. It’s useful as an upper bound to how severe a long-term crisis America could be in for. The worst outcome would be if none of the temporarily unemployed returned to their jobs, if they all became permanently separated from their current employers. This would be disastrous for millions of people and for the economy. The headline unemployment rate would not change. Only the core unemployment rate would rise — accurately reflecting the calamity of this worst-case scenario.

Updated June 12, 2020

Does asymptomatic transmission of Covid-19 happen?
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

What’s the risk of catching coronavirus from a surface?
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

How does blood type influence coronavirus?
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

How many people have lost their jobs due to coronavirus in the U.S.?
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

Will protests set off a second viral wave of coronavirus?
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.

How do we start exercising again without hurting ourselves after months of lockdown?
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.

My state is reopening. Is it safe to go out?
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.

What are the symptoms of coronavirus?
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

How can I protect myself while flying?
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

Should I wear a mask?
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

What should I do if I feel sick?
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

The core unemployment rate also sidesteps the misclassification error that recently spawned understandable confusion and baseless conspiracy theories. Since March, some respondents to the household employment survey were misclassified as employed but absent, even though they were presumably temporarily laid off. Neither employed-but-absent nor temporarily unemployed workers count as unemployed in the core rate, so misclassification between those two categories doesn’t affect that rate.The main thing to consider is that the drop in the headline unemployment rate could give false hope, and lead to complacency about the labor market from public officials. Wild swings in temporary unemployment could continue pushing down the headline unemployment rate and obscure the rise in core unemployment.Jed Kolko is the chief economist at Indeed.com. You can follow him on Twitter.


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Debbie
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