Unemployment

America’s post-pandemic employment picture is an unsettling paradox. On the one hand, job totals are finally back above pre-pandemic highs — and unemployment rates skirt fifty-year lows. But at the same time, overall work rates are lower than they have been since the 1980s — and millions of workers who dropped out of the labor force during the Covid-19 lockdowns have yet to return. A peacetime labor shortage has erupted, yet vast numbers of men and women are still sitting on the sidelines of the economy. America is renowned for its work ethic — and rightly so. The average worker in the United States clocks more hours each year than those in Canada, Australia, Western Europe and now even Japan. But those are the work patterns of US men and women holding down a job.

Is low unemployment causing us more problems than we realise? The suggestion might seem absurd, offensive even. It’s reminiscent of the days of Mrs Thatcher’s supposedly ‘cruel’ monetarism, when we had three million unemployed. Some on the fringes liked to argue that unemployment was good for the economy because it made people work harder, being fearful for their jobs. Mass redundancies would not, of course, help the economy now or at any other time. If a million people were to lose their jobs, as happened in the early 1980s, that would be a million households suffering a collapse in the spending power. As well as a human tragedy, it would be an economic one, too. Many graduates are not doing graduate-level jobs But then who mentioned anyone losing their jobs?

October’s employment figures, according to the Chancellor Rishi Sunak are ‘testament to the success of the furlough scheme’. The other way of looking at the figures, released this morning, is that they show why the furlough scheme should have been wound up months ago, rather than at the end of September. The number of people on payroll in October rose by 160,000 to 29.3 million in spite of furlough ending. The unemployment rate fell by 0.5 per cent. The employment rate, at 75.4 per cent, is now just 1.1 percentage points lower than it was in the three months leading up to the pandemic. It is astonishing because at the moment the furlough scheme ended, it was still paying the wages of 1.14 million people.

The Bureau of Labor Statistics issued its August jobs report this morning and the numbers are pretty dismal. While the unemployment rate dropped 0.2 percent to 5.2 percent, the number of new jobs created was only 235,000, far below expectations of about 700,000. In June the number was 962,000 and in July a whopping 1.1 million. And the unemployment was not spread evenly across the population. Unemployment went down for adult men and whites, but black unemployment went up significantly, from 8.2 percent in July to 8.8 percent in August. The surge in the Delta variant of the coronavirus is widely thought responsible.

The latest employment figures, published this morning, confirm a remarkable aspect of the Covid pandemic: that it appears to have caused no more than a little bump in the jobs miracle of the past decade. That is in spite of the economy shrinking by nearly 10 per cent in 2020 — a performance that in the past would have led to millions out of work. In May the unemployment rate fell by 0.3 per cent to 4.7 per cent. By contrast, it reached over 8 per cent during and after the 2008 financial crash. But of course, the unemployment figures don’t tell the whole story — not when we have a furlough scheme in operation, something that was absent from previous economic crises. To put the situation into perspective, in May there were 1.

It wasn’t the exact same speech, but the words were familiar and the message was identical. President Biden addressed the disappointing April jobs report on Monday, just as he did on Friday. Economists had expected the economy to create as many as one million jobs in that month, but employers added just 266,000. Biden insists that everything will be all right. It takes time to recover from a once-in-a-century pandemic, he said, urging patience both days and no doubt sensing the political danger a slowing economy puts on his ambitious infrastructure package and other spending proposals. On Friday, the president asserted that his $1.9 trillion stimulus package was a long-term play: 'We never thought that after the first 50 or 60 days everything would be fine.