Mnuchin Unemployment

Mnuchin says GOP plan for unemployment extension will be based on ‘70% wage replacement’ – CNBC

The Republican coronavirus relief plan will extend enhanced unemployment insurance “based on approximately 70% wage replacement,” Treasury Secretary Steven Mnuchin said Thursday. 

The Treasury secretary also said a payroll tax holiday, which President Donald Trump has repeatedly pushed for, “won’t be in the base bill.” The president appeared to concede defeat on the issue in a tweet Thursday and blamed Democrats for sinking the proposal (though many Republicans on Capitol Hill also oppose a payroll tax cut). 

Mnuchin spoke to CNBC about the state of negotiations hours after Senate Republicans and the Trump administration said they reached a tentative deal on legislation they say will serve as a starting point in talks with Democrats. Congress faces pressure to pass an aid package, as Covid-19 case and death counts rise around the country and the critical extra $600 per week unemployment benefit expires at the end of the month. 

But Republican plans to release their plan as soon as Thursday appeared to hit a snag as they tried to craft legislative text, further adding to doubts about Congress’ ability to provide immediate relief. Democrats hammered the GOP for a lack of urgency for a second straight day, and rejected the possibility of breaking a coronavirus package into more than one bill if lawmakers cannot reach a broad agreement in July. 

“This is a package. We cannot piecemeal this,” House Speaker Nancy Pelosi, D-Calif., told reporters at a news conference with Senate Minority Leader Chuck Schumer, D-N.Y. He added that “we’re not going to take care of one portion of suffering people and leave everyone else hanging.”

It is unclear how Republicans would structure the plan to provide 70% wage replacement. Lawmakers chose the $600 per week sum in the March rescue package because they decided outdated state unemployment systems could not handle processing payouts for 100% of a worker’s previous wages. 

As of Wednesday afternoon, the GOP was considering slashing the extra benefit from about $600 to $100 a week through the rest of the year, sources told CNBC. Negotiators had not made any final decisions at that time. 

Treasury Secretary Steven Mnuchin testifies before the House Small Business Committee at the U.S. Capitol on July 17, 2020 in Washington, DC.

Kevin Dietsch | Getty Images

Pelosi told reporters that she will push to continue the $600 weekly payment. 

“I go to the table with a commitment to the $600,” she said. 

Speaking to CNBC after Mnuchin’s comments, House Majority Leader Steny Hoyer, D-Md., said 70% wage replacement is not “the policy we ought to pursue.” He said that “if we’re going to ratchet that down, it ought to be over time.” But he added that “it’s not a dealbreaker.” 

The developing GOP bill is only one step in what could be an arduous process to pass a package to boost a health-care system and economy devastated by the pandemic. As Democrats and Republicans try to hash out a range of disagreements — and Republicans try to come to a consensus even among themselves — millions of Americans wait to see whether they will have enough money to pay for food and housing. 

Mnuchin spoke just before the Labor Department said initial jobless claims topped 1.4 million last week, the 18th straight week they totaled more than 1 million. 

Here are other provisions of the Republican plan, according to Mnuchin: 

  • $105 billion to help schools reopen, with funds partly dependent on schools reopening
  • A targeted additional round of the Paycheck Protection Program, with “second checks” for certain companies whose revenues are down more than 50%
  • $16 billion in new funding for coronavirus testing
  • Tax credits to encourage companies to hire workers 
  • More flexibility for state and local governments in how they spend federal relief, but no new aid 
  • Direct payments to individuals (though he did not specify the amount paid or eligibility)

Hoyer said not approving additional aid for states and municipalities jeopardizes jobs and essential services in areas where governments have lost significant revenue and incurred huge expenses because of the pandemic. Democrats included nearly $1 trillion for state and local governments in the $3 trillion rescue package the House approved in May. Republicans did not take it up in the Senate. 

The GOP will need Democrats to sign off on any plan, as they control the House and have the ability to block the Republican proposal in the Senate. 

Republicans want the package to cost roughly $1 trillion. Pelosi has called that level of spending insufficient to address the health and economic crisis created by the pandemic. 

Congress appears unlikely to meet a deadline to extend the $600 per week enhanced unemployment benefit passed in March, which expires at the end of the month. The weekly sum has helped to buoy tens of millions of jobless Americans while many businesses are closed to slow the outbreak’s spread. 

The scramble to pass more relief legislation comes as U.S. Covid-19 cases approach 4 million and deaths from the disease top 143,000, according to data compiled by Johns Hopkins University. Its unabated spread has forced many states to either pause or roll back their economic reopening plans. 

Mnuchin noted that the administration would consider an additional relief package if the spending in the developing plan does not go far enough to combat the crisis. 

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extra Unemployment

That extra $600 unemployment benefit may end sooner than many think – CNBC

President Donald Trump discussed a proposed round of federal stimulus aid with House Minority Leader Kevin McCarthy, R-Calif., (left) and Senate Majority Leader Mitch McConnell, R-Ky., (center) in the Oval Office on Monday.

Photo by Doug Mills/Getty Images

Enhanced unemployment benefits are likely ending sooner than many may realize. That could impose financial hardship on millions of families come month’s end. 

The CARES Act, the federal coronavirus relief law enacted in March, gave an extra $600 a week in aid through July 31 to Americans receiving jobless benefits.

But, in all states, that subsidy will end this weekend — on July 25 or 26 — unless Congress passes legislation before then to extend the timeline, which looks increasingly unlikely.

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“I think people don’t recognize they won’t get the benefit the last week in July,” according to Michele Evermore, a senior policy analyst at the National Employment Law Project, who said many are likely relying on those payments for rent, mortgages and other end-of-month bills.

“I think it’ll come as an unwelcome shock,” she said.

Payments are ending about a week earlier than the CARES Act allows due to the administrative calendar that states use to pay benefits.

States pay aid according to the timeline of a “benefit week.”

All states have benefit weeks ending on a Saturday or Sunday. But July 31 falls on a Friday.

That means states must stop paying the $600 after this weekend in order to comply with the CARES Act, which requires the subsidy to end on or before July 31.  

Around 32 million Americans were collecting unemployment benefits as of June 27, according to the most recent data from the U.S. Labor Department.

They would continue to get standard state benefits, which averaged $383 a week in the first quarter of this year, according to the department. That amount would be a roughly 61% decrease in aid. 

‘Tough choices’

Meanwhile, federal lawmakers are debating the contours of another coronavirus relief package.

Democrats have called for an extension of the weekly $600 supplement for jobless workers. Republicans have signaled they want those payments to end.

It’s unclear what, if anything, would take their place if they disappear, but some Republicans have proposed a cash bonus for people who find new jobs or a reduced amount of aid.

Failure to pass legislation by this weekend would effectively mean the $600-a-week unemployment enhancement would lapse.

Every week they don’t get that payments after July 25 or 26 is a week where workers and their families will have to make tough choices.

Ernie Tedeschi

labor economist at Evercore ISI

House Minority Leader Kevin McCarthy, R-Calif., doesn’t expect legislation to pass until the first week of August, he told CNBC on Tuesday.

“Every week they don’t get that payments after July 25 or 26 is a week where workers and their families will have to make tough choices about what spending they’re going to cut, and that will have an effect on the economy and the recovery,” said Ernie Tedeschi, a labor economist at Evercore ISI.

Congress may make any federal unemployment aid included in the next bill retroactive, meaning recipients could receive back pay for weeks going back to the end of July or early August.

However, that could mean Americans must endure a few weeks of financial hardship before being made whole, Tedeschi said.

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benefits Unemployment

$600 Unemployment Benefits Are About To End, Hitting Households And The Economy : Coronavirus Live Updates – NPR

Treasury Secretary Steven Mnuchin has suggested that if federal jobless benefits are extended, it will be in a different form than the flat $600 per week.

Erin Scott/Pool/Getty Images

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Erin Scott/Pool/Getty Images

Treasury Secretary Steven Mnuchin has suggested that if federal jobless benefits are extended, it will be in a different form than the flat $600 per week.

Erin Scott/Pool/Getty Images

For Lorena Schneehagen, the additional $600 unemployment payment each week during the coronavirus pandemic has held her family’s expenses together.

She’s an out-of-work preschool teacher in Ann Arbor, Mich., whose son is about to start college.

“I need that to help pay his tuition,” Schneehagen said. “And for food and just to pay the general bills.”

Tens of millions of Americans who lost their jobs because of the pandemic are now in danger of having their incomes slashed for a second time. The supplemental unemployment benefits of $600 per week that Congress approved four months ago are set to expire at the end of this week in most states — threatening to hurt strapped households and the U.S. economy, as billions of dollars’ worth in spending suddenly comes to a halt.

Lawmakers Are Far Apart On A New Coronavirus Relief Bill. Here Are 5 Sticking Points

Economist: U.S. Workers, Economy Will Suffer With End Of Federal Pandemic Benefits

As Congress comes back into session this week, lawmakers will debate whether to extend the supplemental benefits, which have been a lifeline for more than 30 million people across the United States.

“The extra $600 from the government has obviously helped me tremendously,” said bartender Courtney Woodruff, who lost her job at a Denver brewpub. “I don’t really spend a lot. My money is going towards rent and food right now.”

While ordinary unemployment benefits usually cover just a fraction of a worker’s lost wages, the additional $600 per week from the federal government was designed to fully replace the average worker’s missing paycheck.

'We Need Help': People At Higher Coronavirus Risk Fear Losing Federal Unemployment

“Honestly, that’s made it a lot less stressful to not have to be forced to go out and be in public with the virus,” said Stephen Pingle, who was laid off from his job installing Internet cable and security cameras in Nashville, Tenn.

Pingle has stopped spending on what he calls “frivolous” items and has tried to save as much as he can. He knows the supplemental benefits may run out soon.

“I’m trying not to worry too much about it,” he said. “But it’s hard to keep pushing it off, knowing that there’s potentially that massive of a financial hit coming.”

Money Is Flowing For Big Banks. For Unemployed Americans, It's About To Be Cut Off

If the hit comes, it will be felt not only by the unemployed but by grocers, landlords and the broader economy. Cutting off benefits to so many people at once would reduce their collective spending power by nearly $19 billion per week.

“However you slice these numbers, we’re talking about very large amounts that mean quite a bit to workers and to the macroeconomy,” said Ryan Nunn, who leads applied research at the Federal Reserve Bank of Minneapolis.

In an interview last week, Nunn said the extra jobless benefits have acted as an important crutch for the economy. Without them, the U.S. would likely have experienced more defaults on car loans and credit card bills and more people falling behind on their rent. That’s one reason congressional Democrats argue that the government should keep the $600-a-week payments flowing.

'Devastated': As Layoffs Keep Coming, Hopes Fade That Jobs Will Return Quickly

“We’re never going to have our economy come back unless we recognize that we must put money in the pockets of the American people,” House Speaker Nancy Pelosi, D-Calif., told reporters.

Some employers have complained that the generous jobless benefits make it hard for them to attract workers. Nunn said while ordinarily that would be a concern, there’s little danger of a worker shortage when unemployment is in the double digits and the virus itself is forcing new limits on economic activity.

Still, it’s a complaint that the Trump administration takes seriously.

“I’ve heard stories of where companies are trying to get people back to work and they won’t come because of the enhanced unemployment,” Treasury Secretary Steven Mnuchin told CNBC. He suggested that if federal jobless benefits are extended, it will be in a different form than the flat $600 per week.

Millions Of Americans Skip Payments As Tidal Wave Of Defaults And Evictions Looms

“We’ll fix that, and we’ll figure out an extension to it that works for companies and works for those people that will still be unemployed,” Mnuchin said.

Schneehagen, the Michigan preschool teacher, doesn’t expect to be called back to her old job anytime soon. Although the school has reopened, enrollment is down. Teachers who are working have had their hours cut, and the school is having to cut costs even on things like air conditioning during an unseasonably hot summer.

Schneehagen has started to explore alternative work as a nanny.

“I really think there’s going to be a crunch for jobs pretty soon,” she said. “There aren’t that many jobs out there. And there are going to be so many people looking in the next couple of weeks.”

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benefits Unemployment

This is the last week of $600 unemployment benefits – CNN

(CNN)The end is near for the $600 federal lifeline for millions of unemployed Americans — even though the economy is still far from recovered from the coronavirus pandemic and new layoffs are being announced regularly.

The coronavirus relief program technically doesn’t expire until July 31, but this coming week will be the last for which benefits are paid — because payments are only provided for weeks ending on either Saturday or Sunday.
Jobless Americans will still get state unemployment benefits, but the sunset of the Congress’ $600 enhancement — part of the $2 trillion economic aid package passed in March — will leave more than 25 million people thousands of dollars poorer each month. And it will expose more of the real pain of mass unemployment, just as many states are reimposing shutdowns.
“These emergency unemployment benefits have been propping up families and propping up the economy now for several months, said Kali Grant, senior policy analyst at the Georgetown Center on Poverty & Inequality. “Ending the benefits prematurely will really set back any economic recovery that may have been on the way.”
Congressional lawmakers are beginning to work this week on the next economic stimulus package. But it’s unlikely they’ll agree on — much less approve — the next step to help unemployed Americans before the payments lapse.
The provision was controversial from the start, mainly because the $600 boost, when added to state benefits, is more than what two-thirds of workers made on the job, according to an estimate from University of Chicago researchers.
But lawmakers approved it in late March as part of a historic expansion of the nation’s unemployment program at a time when health officials didn’t want people out looking for work. The flat $600 payment was much easier for state agencies — which were already struggling as a flood of claims overwhelmed their antiquated technology — to implement.
Congress approved the boost for only four months, thinking that the economy would bounce back quickly once the coronavirus was vanquished and businesses reopened. For a while, that seemed to be the case — with employers hiring more than 7 million workers in May and June after shedding an unprecedented 20.5 million jobs in April.
Senate Republicans, who are expected to release their proposal this week, are generally loath to extend the full benefit. They feel it creates a disincentive for people to return to work, a concern echoed by some business owners. Instead, GOP lawmakers are considering scaling back the enhancement by several hundred dollars and creating a bonus for those who go back to work.
Democrats, on the other hand, want to continue the bigger benefit into 2021. The House included that provision in the $3 trillion coronavirus relief bill it passed in May.
“The right thing to do for families and the economy is extend supercharged unemployment benefits,” said Oregon Sen. Ron Wyden, a Democrat. “They have unquestionably kept the economy afloat.”

Blunting the impact

The augmented benefit has blunted the impact of the coronavirus-induced economic upheaval, which prompted the sharpest and swiftest loss of jobs on record in April. Still, 4.3 million homeowners missed their mortgage payments in May, the highest level since 2011, according to Black Knight, a mortgage data company.
And, the vast majority of food banks were still seeing a big jump in demand in early July, compared to a year ago, with 50% more people being served, on average, according to Feeding America, a network of food banks. Just under 30% were new clients.
The $600 payment provides more than $15 billion a week to 25 million Americans, according to an analysis by Andrew Stettner, senior fellow at The Century Foundation. Many are using it to cover their rent or mortgage, buy food and spend on other basic needs.
Shanga McNair of Jacksonville, Florida, is one of them. The veteran bartender lost her job at a brewhouse when the state shut down earlier this spring and then returned to work in early June at a jazz bar for about two shifts a week — down from her typical six. However, state officials closed the bars again in late June after coronavirus cases spiked, sending her back to unemployment. Her side jobs bartending at private parties and banquets have also dried up.
The $600 federal boost, on top of her $275 weekly state benefit, is less than she made while working. It barely pays her rent but has allowed her to keep up with her bills. The 40-year-old, who also visits a local food pantry occasionally to supplement her grocery shopping, figures that if Congress doesn’t extend the enhancement, she has three months to find a job before she’s evicted.
So far, she’s had no luck. McNair has sent scores of applications to restaurants, warehouses, customer service firms and offices, but they have yielded nothing. She even filled out an application while grabbing a bite at Popeye’s after seeing the manager working multiple jobs but was told there was a hiring freeze.
“I hate depending on the government, but everything is out of my control,” said McNair, who is putting two daughters through college and has never collected unemployment before. She has written to her elected representatives in both parties. “You can’t just pull the rug because it’s not over.”
Eliminating the federal benefit will reduce workers’ weekly unemployment payments by 50% to 85%, depending on their state, Stettner said.
As Congress debates what to do, more people are at risk of losing their jobs in fresh rounds of layoffs. United and American airlines have warned this month that tens of thousands of employees could be cut or furloughed this fall. JCPenney announced last week that it would cut 1,000 jobs from its executive and regional offices. Other retailers, including Brooks Brothers and Neiman Marcus, have filed for bankruptcy.
Also, the spike in coronavirus cases has prompted at least two dozen states to halt or reverse their reopening plans, which will also cost people their jobs. For instance, California last week ordered the shuttering of bars, movie theaters and indoor dining at restaurants statewide, as well as the closing of gyms, houses of worship, indoor malls, hair salons and some offices in many counties.
The impact is already showing up in the data. The states with the largest surge in coronavirus cases earlier this month also had the biggest increase in initial unemployment claims, according to William Rodgers III, chief economist at the Heldrich Center for Workforce Development at Rutgers University.
Some economists fear that the nascent jobs recovery will be derailed, sending even more people onto the unemployment rolls.
“Conditions in the labor market remain weak and the risk of mounting permanent job losses is high, especially if activity continues to be disrupted by repeated virus-related shutdowns,” said Rubeela Farooqi, chief US economist at High Frequency Economics.

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Reasons Unemployment

3 Reasons Unemployment Could Stay High Through the End of 2020 – The Motley Fool

We Are Motley. A Message of Solidarity From The Motley Fool.

The U.S. has been grappling with double-digit unemployment since April. Here’s why that may continue all the way into 2021.

Maurie Backman

In April, the U.S. jobless rate hit 14.7% — the highest it’s been since the Great Depression. May’s numbers initially seemed more encouraging, dipping to 13.3%. But a deeper dive into that May data reveals that unemployment that month may have been underreported, and that the true jobless rate could really be closer to 16.3% — an uptick from April.

Still, as the economy opens up, many are hopeful that the jobless rate will slowly but surely decline so that it looks much less scary by the end of the year. But here are three reasons why we may be looking at double-digit unemployment well into 2021.

Man sitting on floor reading book

Image source: Getty Images.

1. The potential for a second wave of COVID-19 infections

While many states have eased stay-at-home restrictions, which paves the way for more businesses to open back up and add jobs, a number of states are already seeing spikes in infection rates. In fact, health experts have been warning since the start of the pandemic that reopening the country too soon could result in a second wave of COVID-19 that not only forces another great lockdown, but thwarts any hopes of a rapid economic recovery.

Even if only some states experience that second wave, the result could be that those who are currently jobless stay that way for the rest of the year. Worse yet, it could cause an uptick in new job loss, at least at a local level.

2. Incentives for jobless Americans to stay out of the workforce

Right now, Americans on unemployment benefits are entitled to an additional $600 federal weekly boost on top of their normal benefit. The purpose of that boost is to help laid-off workers replace as much as their income as possible. In fact, some low or even moderate wage-earners are receiving more money from unemployment than they did at their previous jobs.

That $600 weekly boost is currently set to expire on July 31st, but lawmakers have been fighting to extend it all the way until 2021, and there’s a good chance they’ll succeed, at least to some degree (meaning, there will be some amount of supplemental unemployment income on top of state-paid benefits). As such, out-of-work Americans may not rush to return to the labor force. Why would they, when they can earn a higher wage from the safety of home?

3. Child care constraints

Although some smaller child care centers have stayed in operation throughout the pandemic, and others are beginning to open their doors once again, it’s still unclear to as whether school will be back in session this fall. Since many people rely on schools to provide child care so they can work, it stands to reason that many may have no choice but to stay unemployed should schools remain shuttered, or open in a manner that’s not conducive to holding down a job.

There’s already talk that if schools reopen, it may involve scattered schedules and a mix of in-person and remote learning. That would, in turn, leave parents with full-time jobs unable to go back to those roles that can’t be done remotely.

It’s too soon to tell how unemployment levels will fare in the coming months, but we do know this: Right now, we’re deep in the throes of a full-blown recession, and until progress is made on the COVID-19 treatment or vaccine front, our opportunity to fully recover may be limited. As such, it’s not unreasonable to assume that we’ll still be grappling with high levels of unemployment by the time 2020 comes to a close.

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Here's Unemployment

Here’s why the real unemployment rate may be higher than reported – CNBC

Spencer Platt | Getty Images

The unemployment rate in the U.S. improved last month as millions of people returned to the workforce.

But the official 13.3% unemployment rate, while still high relative to any point since the Great Depression in the early 20th century, likely understates the economic damage wrought by the coronavirus pandemic.

The real unemployment rate is likely at least 16%, according to the federal government.

That would mean roughly 1 in 6 people can’t find work.

The Bureau of Labor Statistics, which published its monthly jobs report Friday morning, admitted the official unemployment rate may be low relative to reality due to an error in data collection.

Furloughed workers

Around 21 million Americans were unemployed as of mid-May, a reduction of 2.1 million people from a month earlier, according to BLS data.

The BLS determines how many people are unemployed based on a household survey. Survey interviewers misclassified several furloughed workers as being “absent from work due to ‘other reasons,'” according to the BLS.

That’s the same category of workers who’d be on vacation, for example.

16.3% unemployment rate

The overall unemployment rate would have been “about 3 percentage points higher than reported” if those individuals had been identified correctly, according to the agency. (The estimate isn’t seasonally adjusted.)

That would put the official unemployment rate at 16.3%.

The true rate could be higher still.

The unemployment rate doesn’t include the share of workers who may have dropped out of the workforce, perhaps due to feeling pessimistic about the chances of finding a job in the current economy. More than 6 million workers have dropped out of the labor force since February.

In fact, the unemployment rate is a much-higher 21.2% as judged by another metric.

This metric, which the BLS calls U-6, includes people “marginally attached to the labor force.” These are people who aren’t currently working or looking for work but are available for work, as well as part-time employees who want and are available for full-time work but have had to settle for part-time employment.

The U-6 metric doesn’t include the workers misclassified by the agency.

Of course, furloughed workers could be recalled back to work quickly, depending on the speed of the economic rebound as states begin to reopen certain business sectors. The unemployment rate would likely rebound faster in this eventuality than if the layoffs were permanent. 

The same misclassification phenomenon occurred in April, too — the official 14.7% unemployment rate would have been nearly 20% if furloughed workers had been identified correctly, the BLS said.

“BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue,” the agency said Friday in the jobs report.

“According to usual practice, the data from the household survey are accepted as recorded,” the agency said. “To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.”

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claims Unemployment

New US unemployment claims reached 1.9m last week despite rate of increase slowing – The Guardian

  • ‘The figures are so high that it’s hard to grasp the reality’
  • New filings down for ninth consecutive week

A volunteer, stacks boxes during a produce distribution in a mall parking lot in Des Moines, Iowa. Because of the Covid-19 pandemic, the unemployment rate in Iowa hit 1src.2% in May, the highest ever recorded in Iowa

A volunteer distributes produce in a mall parking lot in Des Moines, Iowa. Because of the Covid-19 pandemic, the unemployment rate in Iowa hit record 10.2% in May.
Photograph: Jack Kurtz/Zuma Wire/Rex/Shutterstock

Another 1.9 million Americans filed for unemployment benefits last week as the total number of claims passed 42 million since the coronavirus pandemic hit the US.

The pace of layoffs has slowed dramatically from its peak of 6.6m at the start of April as states start to relax quarantine orders and last week was the ninth consecutive week of declines. But the scale of layoffs remains staggeringly high. In the worst week of the last recession “just” 665,000 people filed for unemployment.

Jason Reed, professor of finance at the University of Notre Dame’s Mendoza College of Business, said the numbers may be coming down, but “this is unprecedented. The figures are so high that it’s hard to grasp the reality.”

unemployment claims graph

On Friday the labor department will release May’s monthly jobs report. Economists are predicting unemployment will rise to close to 20% from 14.7% in April and some 8m more jobs will have been lost after a combined drop of 21.4m in March and April.

At 20% the official tally would mean one in five Americans in the workforce are now out of work. The layoffs have disproportionately hit African Americans, Latinos and those without a college education.

On Wednesday ADP, the US’s largest payroll supplier, said private sector companies had shed 2.8m jobs in May, a huge number but far less than the 8m analysts had expected.

The news cheered Wall Street and was taken by some as a sign that people were now returning to work after the lockdowns. But the report also contained worrying signals about future losses. Losses in leisure and hospitality jobs dropped sharply to 105,000, down from 7.5m in April, but there were large job losses in trade and transport (down 826,000 jobs) and manufacturing (down 719,000 jobs). 

The Bureau of Labor Statistics is currently reassessing its measurements and Morgan Stanley economists warned this week that the “shadow” unemployment rate – which includes people not currently picked up by the official government figure – may be 25%.

“In reality, the shadow unemployment rate, which includes people absent from work for other reasons, is much higher,” Morgan Stanley wrote in a note.

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Historic Unemployment

Historic unemployment rate upends Trump’s reelection bid – ABC News

The record unemployment rate reported on Friday captured the pain of a nation where tens of millions of jobs suddenly vanished, devastating the economy and forcing President Donald Trump to overcome historic headwinds to win a second term.

Just a few short months ago, Trump planned to campaign for reelection on the back of a robust economy. That’s a distant memory after more than 20 million jobs were lost in April, leading to an unemployment rate of 14.7%, the highest since the Great Depression.

There’s no parallel in U.S. history for the suddenness or severity of the economic collapse, which is ravaging some states that are crucial to Trump’s victory. The president is now tasked with convincing voters that the catastrophic jobs losses were the result of the pandemic — not his management of the public health crisis. He also argues that he deserves another chance to rebuild what the virus destroyed.

“What I can do: I’ll bring it back,” Trump told Fox News on Friday. “It’s fully expected. There’s no surprise. Everybody knows that. Even the Democrats aren’t blaming me for that.”

Bringing back jobs quickly won’t be easy.

Backdated statistics show that unemployment reached as high as 25% in 1933 during the Great Depression. A broader calculation of unemployment from April’s jobs report suggests the rate might be nearly that high now, as the 14.7% rate doesn’t include people who left the labor force or still consider themselves employed despite not working. But the efforts needed to contain the spread of the coronavirus have caused much more rapid job loss than during the 1930s.

“The last time we had unemployment rates in this neighborhood, it took us five years to get there,” said Erica Groshen, an economist at Cornell University and former commissioner of the U.S. Bureau of Labor Statistics. “This time, we will have achieved that in two months.”

The suddenness of the crisis has been a shock to Americans, who will be looking for reassurance from Trump.

“The White House can make the point that the collapse was not the result of economic policies but an unprecedented global pandemic,” said Kevin Madden, a Republican strategist who was a senior adviser on Mitt Romney’s 2012 presidential campaign. “But they need to look forward, too: Present a detailed roadmap, restore people’s confidence and pledge to work with Democrats and Republicans alike.”

Many of the layoffs are classified as temporary, which means workers could get recalled as the outbreak subsides and the unemployment rate would fall. But it’s unlikely to immediately return to the 3.5% that Trump was celebrating, as consumer spending might be slow to recover and businesses and workers adjust to changes forced by the disease.

Until recently, the Trump campaign planned to use the spring to hammer its Democratic opponent with negative ads while touting the president’s handling of a strong economy. But after the pandemic ignited on American shores, the reelection team has grown increasingly worried about the president’s standing in a series of key battleground states including Michigan, Wisconsin and Florida.

Kevin Pierce’s experience is a warning to Trump. The 24-year-old was a restaurant marketer in Miami who received zero state or federal benefits after a byzantine application process.

“Two applications, and I still have no idea what’s going on,” he said, arguing that Trump and Florida Gov. Ron DeSantis should be punished at the polls. “They both just seem to not care about what’s going on and strictly want to build themselves up. I think it’s on Trump. His administration didn’t take the proper steps.”

But Jeremy Anders, a barber who hasn’t been able to cut hair since March because of Pennsylvania’s shutdown orders, said he will still vote for Trump in November.

“He’s made mistakes and I think he’s too much of an egotist, but I’m still going to vote for him,” said Anders, 36, who lives in the small town of Martinsburg.

The urgency to restart the economy has fueled Trump’s push to reopen locked-down states, even though some in his inner circle express worry because the national infection rates, if the New York City area is removed, continue to rise. There has also been debate about supporting a federal bailout of state and local governments, which account for about 20 million jobs, and, if they don’t receive funding, will surely have to cut workers.

“It was under President Trump’s leadership that the economy reached unprecedented heights in the first place, and he is the best choice to help us rebuild the economy again,” said campaign spokeswoman Sarah Matthews.

History suggests Trump faces hurdles ahead.

The president in office during the onset of Great Depression, Herbert Hoover, was routed in his 1932 reelection bid. Voters also cast out other recent incumbents who presided over sluggish economies, including Jimmy Carter and George H.W. Bush, while Barack Obama was elected in 2008 after Republicans took the brunt of the blame for the collapse of the financial markets that fall.

If that happens again, the GOP isn’t just worried about keeping the White House. Voters who reject Trump may also turn against Republican candidates for Congress. That’s especially concerning for Sen. Cory Gardner of Colorado, which has been trending Democratic in recent years, and could cause problems for GOP Sens. Susan Collins of Maine, Thom Tills of North Carolina and Martha McSally in Arizona, where close presidential races are expected.

For his part, Joe Biden, the presumptive Democratic presidential nominee, has ramped up the intensity of his economic pitch amid the pandemic slowdown. Reacting to the jobs report, he used an online address to blister Trump for economic “failings that have been present since Day One but are coming into sharp relief in the current crisis.”

Though typically overshadowed by Trump’s megaphone, Biden argues the administration offers a false choice between reopening the economy and limiting the casualties of the coronavirus. The balance, Biden says, is a national plan for testing and tracing. And he cast Trump as caring only about the wealthiest Americans, evidenced by Republicans’ nearly $2 trillion tax cut in 2017 and the president’s emphasis on the stock market as “the only metric he values.”

“Conventional wisdom would say ‘It’s the economy, stupid,'” said Adrienne Elrod, a Democratic strategist who was senior adviser to Hillary Clinton’s 2016 campaign. “If good, a president gets reelected. If not, he loses,”


Boak reported from Baltimore. Barrow reported from Atlanta. Associated Press writers Tamara Lush in St. Petersburg, Fla., Marc Levy in Harrisburg, Pa. and Alan Fram in Washington contributed to this report.

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Unemployment Worst

We Now Have the Worst Unemployment Rate Since the Great Depression – Slate

Man looking at his phone

A man stands in front of the closed offices of the New York State Department of Labor on Thursday in Brooklyn.

Stephanie Keith/Getty Images

Thanks to the coronavirus crisis, the United States is now facing its highest unemployment rate since the Great Depression.

The economy shed 20.5 million jobs in April, and the official unemployment rate rose to 14.7 percent—its highest peak since the government began tracking the modern data series in 1948, the Bureau of Labor Statistics reported on Friday.

A chart showing the U.S. unemployment rate since 1948.

The Federal Reserve Bank of St. Louis

April’s numbers are more on par with the 1931 unemployment rate, based on data drawn from the Historical Statistics of the United States.1 For the moment, we’re living in Hooverville.

A bar graph showing the U.S. unemployment rate from 1925 through 1948.

Jordan Weissmann/Slate

But today’s headline figure may understate the actual extent of joblessness at the moment. In an FAQ accompanying today’s report, the BLS explained that due to a data-collection mistake, up to 8.1 million Americans may have been categorized as employed but not at work, when they likely should have been classified as unemployed or on a temporary layoff. If you factor those individuals in, the April unemployment rate would jump to about 19.5 percent, the government’s statisticians wrote. That would place us roughly in 1932–33 territory.

A bar graph showing the unemployment rate from 1925–48 and the rate in April 2src2src.

Jordan Weissmann/Slate

If all this weren’t depressing enough for you, remember: Millions more Americans have filed unemployment claims since the middle of last month, when this data was actually collected. The picture we’re looking at now is still relatively bright compared with the current reality.

One notable thing about April’s job losses was that they occurred across virtually all industries. The largest chunk by far was in leisure and hospitality (including hotels and restaurants), which saw payrolls decline by more than 7.6 million, or more than one-third of the total. Retail contributed another 2.1 million. But basically every corner of the labor market—from construction to manufacturing to health care to professional services like law—saw declines. There were a handful of subsectors that saw small increases, but the only big gains were supercenters and warehouse clubs (think Walmart, Target, and Costco). We’re not looking at a few industries that have frozen up, but really a whole economy.

It’s not exactly a shock that we’re facing mass unemployment at a moment when entire states and industries are effectively shut down. But the new jobless figures do suggest that the government’s coronavirus response has fallen short in at least one key way. Much of the economic relief bill Congress passed in March, the CARES Act, was designed to keep workers attached to their jobs where possible. The fact that we are now staring at Great Depression–like unemployment numbers anyway should be regarded as a failure. Yes, it’s likely that even more people would be out of work were it not for efforts like the Paycheck Protection Program. And it’s possible that there has been some rehiring as businesses have received their government aid. But the continued flood of unemployment claims suggest that things are, if anything, getting worse rather than better.

The one reason these figures are not a complete catastrophe is that Congress created extremely generous $600-per-week federal unemployment benefits. As a result of those, many Americans will receive more in government aid each week than they were earning at their jobs. States have had difficulty coping with the avalanche of claims, and many people have had to wait weeks to receive their money, if they haven’t been prevented from applying entirely by crashing websites. But as of April 18, almost 19 million Americans at least had their applications processed. Hopefully most of the jobless are actually receiving some substantial help by now.

The federal unemployment benefits are only scheduled to last through the end of July, however. If they expire and people still aren’t ready for a return to work (or shopping or eating out), families are going to find themselves in increasingly desperate financial situations, and the economy will likely sink further into trouble.

In the end, this is just one month’s jobs report. What made the Great Depression the Great Depression was the yearslong slog through economic devastation. The question for us is whether the government can finally contain this virus and engineer a reasonably fast economic recovery. Unfortunately, it’s not at all clear that it will. Republicans in Congress currently don’t appear to have much appetite to pass further significant relief or stimulus measures, such as fiscal aid to states, extended federal unemployment benefits, or a bigger, better wage subsidy program to keep people connected to their work. Meanwhile, the White House seems to be betting its response on Jared Kushner’s ability to speed up the development of a vaccine, which … God help us. If none of this changes soon, there’s a good chance we really will be headed for a long depression of our own.

For more on the impact of the coronavirus, listen to the Political Gabfest.

1This data series counts Americans who were put to work through New Deal programs like the Works Progress Administration as employed. Some conservative historians count them as unemployed, basically because it helps them paint Franklin D. Roosevelt’s efforts to combat the Depression as a failure.

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