Friday, August 7, 2020

UNEMPLOYMENT | Rising Long-Term Unemployed in July

The official unemployment number (U-3) of 10.2 percent in July is down 0.9 of a percentage point from June.

But the  number of long-term unemployed (U-1) is growing as Covid-19 extends into another month, from 2.1 percent in June to 5.0 percent in July. These are likely to be people with fewer skills or opportunities, who are less able to adapt to a new economic situation. This damage to the labor market is hard to repair. 

The broadest published measure of unemployment (U-6) in July is still 16.5 percent, nearly double what it was in March.

Table A-15. Alternative measures of labor utilization

HOUSEHOLD DATA (https://www.bls.gov/news.release/empsit.t15.htm)

Measure

Seasonally adjusted, percent

July

2019

Mar.

2020

Apr.

2020

May

2020

June

2020

July

2020

U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force

1.3

1.2

1.1

1.4

2.1

5.0

U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force

1.7

2.4

13.2

11.6

8.9

8.1

U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)

3.7

4.4

14.7

13.3

11.1

10.2

U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers

3.9

4.7

15.1

13.6

11.5

10.6

U-5 Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force

4.5

5.2

16.0

14.6

12.5

11.3

U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force

6.9

8.7

22.8

21.2

18.0

16.5

Saturday, June 20, 2020

PERRY GERSHON—For the Suffolk Economy (NY-1)

The following statement is an endorsement by two economists of Perry Gershon as the best candidate to represent Suffolk County (NY-1) residents in the U.S. Congress. Dr. Frank P. Braconi served as Executive Director of the Citizens Housing and Planning Council of New York before serving as the chief economist for three New York City Comptrollers in 2006-2015. Dr. John Tepper Marlin was the chief economist for three New York City Comptrollers in 1992-2006. Before that he worked as an economist for three federal agencies and was subsequently senior economist for nearly four years at the Joint Economic Committee of the Congress.

We are have lived for decades in Suffolk County and got to know Perry Gershon during the past few years as he has been running for the Democratic nomination to represent NY-1 in the Congress.

Why do we economists support Perry to win back NY-1? Because Perry understands why Trump’s promises to make the economy work better have failed. Perry understands that Trump rammed through a tax cut that helped big corporations and their shareholders more than small businesses, and the cuts were paid for in part by capping the deductibility of state and local taxes. This hurt middle-class taxpayers in suburban areas like Suffolk County, which was suffering economically even before the pandemic hit.

Perry understands the disaster of Trump’s closing down the White House pandemic preparedness unit, a mistake for which Suffolk County paid a steep price. An unready Trump first postponed actions recommended by his advisers and then came up with some wildly improbable ideas about possible treatments for the disease. Perry understands that a major reason for unemployment levels not seen since the Great Depression is terrible leadership from the White House.

The foundations of economic prosperity are health, education and personal security. Trump has undermined all three, and Lee Zeldin has helped do this for Suffolk County: 
  • On the health front, he used economic arguments for many of his anti-environmental votes.  His voting record in his last full term was rated by environmental organizations as one of the three worst of Members of Congress from New York State. Zeldin and Trump have sought to undermine Obamacare. The number of uninsured Americans is rising during the Trump administration. Covid-19 has shown just how important it is that healthcare coverage extends to everyone. 
  • On education,Trump’s cap on the state and local tax deduction hurts the ability of local governments and school boards all across Suffolk County to seek improvements in educational funding. Twice in 2019 Zeldin has voted against repeal of this law.
  • On personal safety, Zeldin has also supported the right of those who would deny the right of women to make decisions about their own bodies. Perry is also staunchly in favor of gun safety, while Zeldin is not. Perry has acted on his outrage at the murder of George Floyd by joining several local protests. Zeldin is missing from them.
In return for his slavish following of the President’s bidding, what has Zeldin gotten for Suffolk County? In December 2019, Suffolk County lost jobs from a year earlier. Its job growth was in the lowest one-eighth of large U.S. counties.

Other counties that lost jobs, like Westchester, at least saw higher incomes than most other counties. Suffolk's income growth was just as bad as its poor job growth

As we come out of our lockdowns, we will need to rebuild our economy while maintaining our public health standards. Perry knows how that should be done. He has built four small businesses, one of which was a sports bar at age 23. The other three businesses were in commercial real estate lending. Perry combines the independence he gets from having succeeded in the private sector with a cooperative approach that means he can work with the many disparate groups that make up NY-1.

We support Perry because we think Suffolk County has tremendous economic potential that is not being tapped. The nation is hurting, but Suffolk County taxpayers are hurting more than most. Perry can make the best case to expose the failures of our Tea Party Congressman and go on to make a difference in Washington, D.C. by representing small businesses and middle-class taxpayers in Suffolk County.

Friday, June 5, 2020

STATE UNEMPLOYMENT | April 2020, ranked

June 5, 2020—We are in uncharted territory, so it's worth looking at every piece of data that can help us understand what is happening. The markets were happily shocked by the drop to a 13.3 percent unemployment rate this morning, although if the status of some misclassified workers were corrected the percentage unemployed would rise to 16.3 percent. But at 13.3 percent the U-6 rate was above 20 percent, and some of the people who would have been among the May U-3 unemployed were located for the time being among the U-6 unemployed.

What are the major shocks that the United States is suffering through? Here are three:
  • The coronavirus, which is poorly understood,
  • The economy, which was been largely shut down by the Covid-19 virus, and 
  • The relationship of governments at the federal, state, city and town level to the public that they serve, when nerves on both sides are frayed.
The following rank of unemployment rates by state may help separate out the different strands of distress. Minnesota's April unemployment rate, for example, ranks second-lowest among all the states (DC is included here as a state). Its economic stress should be relatively low. It is therefore surprising that this is where George Floyd was murdered.

One sorting factor among the states is relative density. Connecticut and Minnesota have a relatively low density. Another factor is the importance of tourism and travel. Nevada and Hawaii are greatly affected by the loss of tourism and air travel. Michigan is affected by the stay-at-home guidelines.

New York is an interesting case. Because New York City is a tourist and immigration destination, it was the first to be affected in a major way by the coronavirus. It is densely populated downstate and relatively sparsely populated upstate. 








State
April 2020(P)
rate
Rank

State
April 2020(P)
rate
Rank
Connecticut
7.91

Florida
12.925
Minnesota
8.12

Oklahoma
13.728
Nebraska
8.33

Wisconsin
14.129
North Dakota
8.54

Oregon
14.230
Wyoming
9.25

Delaware
14.331
Missouri
9.76

Louisiana
14.532
Utah
9.76

New York
14.532
Maryland
9.98

Tennessee
14.734
Arkansas
10.29

Massachusetts
15.135
Iowa
10.29

Pennsylvania
15.135
South Dakota
10.29

West Virginia
15.237
Maine
10.612

New Jersey
15.338
Virginia
10.612

Kentucky
15.439
District of Columbia
11.114

Mississippi
15.439
Kansas
11.215

Washington
15.439
Colorado
11.316

California
15.542
Montana
11.316

Vermont
15.643
New Mexico
11.316

New Hampshire
16.344
Idaho
11.519

Illinois
16.445
Georgia
11.920

Ohio
16.846
South Carolina
12.121

Indiana
16.947
North Carolina
12.222

Rhode Island
17.048
Arizona
12.623

Hawaii
22.349
Texas
12.824

Michigan
22.750
Alabama
12.925

Nevada
28.251
Alaska
12.925




(p) Preliminary
Note: Rates shown are a percentage of the labor force. Data refer to place of residence. Estimates for the current month are subject to revision the following month. Source: https://www.bls.gov/web/laus/laumstrk.htm

UNEMPLOYMENT | Local Rates Higher

June 5, 2020—New Yorkers have a feel for these things and they are surprised at a reported U.S. unemployment rate of 13.3 percent. Economic analysts surveyed by Dow Jones expected nonfarm payrolls to decrease by 8.3 million while their average estimate of the May unemployment rate was 20.5 percent.

The BLS actually reported this morning a 2.5 million increase in payrolls, the largest increase on record.

One explanation is that in New York City the unemployment rate might be much higher. Using a simple forecasting model based on April and prior months, the New York City unemployment rate for May would be above 20 percent, i.e., 21.6 percent.

Here are the May numbers for New York City and neighboring counties, as projected from prior months. All of these actual BLS numbers for May will not appear until close to the date when the national unemployment rate for June is released.

Unemployment Rates - U.S. and Local, May 2020

U.S. Rate, %
Projected Local Rate, %
New York City
13.7
21.6
Nassau Co.
13.7
15.1
Suffolk Co.
13.7
15.7
Westchester Co.
13.7
14.1
Source: May unemployment rate from BLS. Projected
May local rates by CityEconomist.

For the future, New York City may outperform the rest of the country because it has been through the coronavirus mill earlier. It has just had its first day since March 12 without a confirmed coronavirus death.

(Hat tip to Dr. Jurgen Brauer, Geoffrey Hilton and Dr. Farid Heydarpour for assistance with the interpretation of the data.)