Last month’s analysis of the US labour force data – Tip of the iceberg – the US labour market catastrophe now playing out (April 6, 2020) – presaged what was to come. We now know more about the size of the iceberg. It is unimaginably large. Words fail really. This is one of those all-time historical events that make the severe crises of the past (early 1980s, 1990s, GFC – look like blips). On May 8, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – April 2020 – which shows that the US labour market has collapsed into territory never before recorded. And, given that the data released was drawn from samples that went up to April 12 (establishment survey) and April 18 (household survey), and so doesn’t fully capture the extent of the unfolding catastrophe. More recent data released by the US Department of Labor (unemployment insurance claimant data) shows the situation worsened in the last two weeks of April. In the last two weeks of April 2020, more than 9 million extra workers registered unemployment insurance claims. All the aggregates are demonstrating dramatic shifts to the point that graphs are becoming rather binary – the rest of history and now. The employment-population rate plunged 8.7 points to 51.3 per cent, which is the largest monthly fall since the sample began in January 1948. The U6 measure of broad labour underutilisation increased by 14 points to 22.8 per cent. This is the largest monthly rise in this measure since it was first published in January 1994. The situation will get worse. Its already catastrophic and it demonstrates a massive policy failure from the Federal government. Instead of directing trillions into the top-end-of-town, the US government should have guaranteed all incomes and introduced large-scale job creation programs and a Job Guarantee as an on-going safety net. Instead it is watching over people dying and people’s material prosperity being destroyed.

On April 3, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – March 2020 – which shows a deteriorating labour market situation due to the coronavirus crisis. However, as I explain below, the data released was drawn from samples that went up to March 12 (establishment survey) and March 14 (household survey), and so doesn’t fully capture the extent of the unfolding catastrophe. More recent data released by the US Department of Labor (unemployment insurance claimant data) doesn’t leave anything to doubt. In the last two weeks of March 2020, 9.955 million workers registered unemployment insurance claims (6.6 million in the last week). If we consider that shift, then the US unemployment rate would be around 9.8 per cent by the end of march and rising. All the aggregates are demonstrating dramatic shifts. The employment-population rate fell by 1.1 points to 60 per cent, which is the largest monthly fall since the sample began in January 1948. The U6 measure of broad labour underutilisation increased by 1.7 points to 8.7 per cent. This is the largest monthly rise in this measure since it was first published in January 1994. The situation will get worse.

On March 6, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – February 2020 – which reveals a mixed picture – payroll employment growth has maintained its momentum since December, adding a further 273 thousand jobs and the unemployment rate fell marginally (although steady at the one-decimal point level). But the employment-population ratio fell by 0.1 points and the Broad labour underutilisation ratio (U-6) rose in January by 0.1 point to 7 per cent because there were more underemployed workers. Further, while real wages grew marginally, they lag behind labour productivity growth, which means there is scope for faster wages growth without triggering inflationary impulses. And the polarisation between high-pay and low-pay continues. So getting workers into paid employment is one thing. Paying them decent wages and providing them with secure jobs is another. I conclude that there is still scope for expansion even though the unemployment rates are at levels not seen since the 1960s.

On February 7, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – January 2019 – which reveals a labour market was stronger in January by a considerable margin. Employment growth was robust and the participation rate rose by 0.2 points, which meant that the labour force change outstripped the net jobs added and unemployment rose as a consequence. But the employment-population ratio rose by 0.1 points. The Broad labour underutilisation ratio (U-6) remains high, and rose in January by 0.2 points, because there were more underemployed workers. An examination of the transition probabilities show that there is still strong growth into employment from those who were previously outside the labour force (in inactivity). The corresponding entry from outside the labour force into unemployment continues to fall. So the US labour market is absorbing new entrants straight into employment at increasing rates, which is a good sign. Overall, these appears to be excess capacity that can still be tapped if growth is strong enough. And while workers are still being absorbed into paid employment from outside the labour force is a sign of a strengthening labour market, as regular readers will know, I have documented the strong bias in the US to lower paid and precarious work. So getting workers into paid employment is one thing. Paying them decent wages and providing them with secure jobs is another.