Jun 12, 2020 - Economy

The truth about the May jobs report

People wait in a long line to file for unemployment

Photo: Marcelo Hernandez/Getty Images

The responses of fewer than 41,000 people were used to determine a major part of last month's U.S. unemployment rate, the Bureau of Labor Statistics tells Axios.

Why it matters: That's the lowest number in modern history and is one of many unusual developments in government data collection that have affected important readings for months.

What it means: The surprises in May's nonfarm payrolls report, which found there were only 21 million unemployed while 30 million Americans were collecting unemployment insurance benefits, were largely the result of oddities in data collection.

  • A portion of the jobs report is determined by a household survey in which government workers interview people at their homes and determine whether any person over the age of 16 is "employed, unemployed, or not in the labor force" — the only three possible designations.

What's happening: The coronavirus pandemic has "depressed" survey responses since March, as BLS stopped conducting in-person meetings, restricting its ability to reach new households, Julie Hatch Maxfield, BLS associate commissioner for employment and unemployment statistics, tells Axios.

  • "The first month of the sample we get a lot of information and that sets up the whole thing going forward," she says.
  • This has taken the response rate from 82% in January to 73% in March to 67% in May.
  • "Response rates probably will be depressed even when interviewers go back into the field," Maxfield notes.

What else: In May, BLS identified 9 million people who had lost their jobs but were counted as "not in the labor force" rather than unemployed because they hadn't been searching for a job in the last four weeks due to the pandemic.

  • If those people were considered unemployed it would have taken the unemployment rate to 17.9%.
  • A similar calculation would have put the unemployment rate at 19.8% in April and 7.5% in March, BLS says in a report about the coronavirus pandemic's impact on its data.
  • A separate "misclassification error" categorized millions of workers who had been absent and likely lost their jobs as employed.
  • Additionally, workers who were paid by their employer for any part of the pay period including the 12th of the month were counted as employed, even if they weren't actually at their jobs.

The bottom line: We may never know how many people lost their jobs as a result of the coronavirus pandemic.

  • However, according to BLS, both the number of unemployment insurance claims and the number of unemployed people appear to have peaked in April and are declining.
Data: U.S. Department of Labor; Chart: Andrew Witherspoon/Axios
Data: U.S. Department of Labor; Chart: Andrew Witherspoon/Axios

Another 1.5 million Americans applied for first-time traditional unemployment insurance benefits last week, and 700,000 more applied for benefits under the Pandemic Unemployment Assistance (PUA) program.

  • Combined with a decline in the number of people in the U.S. who are receiving benefits, total claims have dropped to 35.4 million from 37.2 million last week.

Background: The CARES Act allowed millions of people who had been impacted by the coronavirus pandemic but previously would not have qualified for unemployment insurance — the self-employed, people who had quit their job, those who had offers of employment but had not yet started a job — to qualify for PUA benefits.

  • Tens of millions have been approved for benefits under PUA, but many are not considered unemployed by BLS standards.
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