{"id":44778,"date":"2020-04-23T13:53:46","date_gmt":"2020-04-23T03:53:46","guid":{"rendered":"https:\/\/billmitchell.org\/blog\/?p=44778"},"modified":"2020-04-23T13:53:46","modified_gmt":"2020-04-23T03:53:46","slug":"44778","status":"publish","type":"post","link":"https:\/\/billmitchell.org\/blog\/?p=44778","title":{"rendered":"Policy failure – Australian unemployment rate probably already around 10.9 per cent"},"content":{"rendered":"

\t\t\t\tThe Australian Bureau of Statistics has started publishing weekly employment data – Weekly Payroll Jobs and Wages in Australia, Week ending 4 April 2020<\/a> – which is drawn from a new series made available as a result of the Single Touch Payroll<\/em> data provided by the Australian Tax Office. For the first time, researchers like me can have up to date information as the economy cycles. Usually we get the labour force data some 5-6 weeks behind time and although a lot doesn’t necessarily happen in a month, this crisis is the exception – the whole box-and-dice is collapsing so quickly that we need weekly data, like is provided in the US through the Department of Employment’s unemployment claimants data to stay in touch with how things are tracking. But for now I estimate that the unemployment rate rose to around 10.9 per cent in the 3 weeks to April 4, 2020 (up from 5.2 per cent for the March data – which was surveyed in the early part of the month). In that time, unemployment has more than doubled and is around 1.5 million and rising. The conclusion from my analysis of the latest available data (released April 21, 2020) – is that some sectors in the Australian labour market have experienced a sudden and catastrophic contraction – like nothing we have ever seen in the data. Both employment losses and major wage cuts are underway and the policy response is totally inadequate for the task. A much larger fiscal intervention is required and it has to be directed at workers rather than firms. I will say more about those issues next week. But I am guessing that the Government’s response so far is less than half of what it should have been – it needs at least another $A200 billion.
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I also provide an update on the US situation which is getting worse by the week. While the Australian deterioration in employment is not dissimilar to what is happening in the US, the difference is that the welfare support in place is far superior than is being offered by the US government. And I would not want anyone to think that the Australian fiscal support is anywhere near large enough or properly targetted. So that puts the US situation in context (see below).<\/p>\n

Jobs collapse in Australia<\/h2>\n

Here is what has happened to total employment in Australia since January 4, 2020 (the ATO data starts at the beginning of the year). The index is based at 100 on March 14, 2020 which appears to be around the peak employment, although it was slowing since February 29, 2020.<\/p>\n

There has been a 6 per cent contraction since March 21, 2020 and almost all of that (4.5 per cent) happened in the week to April 4, 2020. I expect when we get the next release, the contraction will be even greater.<\/p>\n

The pattern is almost identical for males and females, so no gender discrimination is evident in the way the jobs are being shed.<\/p>\n

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What does this imply?<\/h2>\n

We can do some ‘back-of-the-envelope’ calculations with some assumptions to see what this might imply.<\/p>\n