The Unemployment Picture Is Worse Than You Think
Think tank Economic Policy Institute warns that the unemployment rates is actually far higher, and could escalate unless Congress takes action.
Despite the decline in the unemployment rate in May—from 14.7% in April to 13.3%—that bit of good news was more of a blip than a lasting trend. The outlook for the unemployed remains precarious.
That’s according to the Economic Policy Institute, an independent, nonprofit think tank that researches the impact of economic trends and policies on working people. The actual rate of May’s unemployment was a staggering 19.7%. What the official 21 million worker employment rate fails to include are the 4.9 million furloughed workers (misclassified as “employed, not at work”) and the 6.6 million who have dropped out of the labor force as a result of the virus. Add it all up and it means 32.5 million people are jobless—nearly one in five workers.
What’s more, there’s a sizable share of the workforce—10.7%—that’s out of work with no reasonable chance of returning to a prior job.
Those troubling employment trends strike all demographic groups, but are particularly noticeable among Blacks, Hispanics and women—especially Hispanic, Asian, and Black women. Also hit disproportionately hard are those with lower levels of education. Interestingly, though, even among those with advanced degrees, almost one in 10 are either unemployed or out of work as a result of the virus.
The pandemic is wreaking havoc with the next generation too, with more than a third of those in the 16–23 year-old age group being officially unemployed or out of work. Recent graduates are particularly vulnerable. Not only do they face limited job prospects but they’re also ineligible for unemployment insurance, even under the expansive definitions of the CARES Act.
These extraordinary challenges mandate Congressional action, says EPI. For starters, Congress needs to extend the unemployment provisions in the CARES Act, including extending the across-the-board $600 increase in weekly benefits.
Otherwise, warns EPI, the situation could get even worse: “If Congress doesn’t extend the extra $600 in weekly unemployment insurance payments, that will cost us 5.1 million jobs over the next year, and if it doesn’t provide fiscal aid to state and local governments to fill in their budget shortfalls, it will cost another 5.3 million jobs by the end of 2021.”