Unemployment….3 Things to Understand

Three Things to Understand About Unemployment Statistics | MyKCM

Brace yourselves, tomorrow morning the Bureau of Labor Statistics will release the latest Employment Situation Summary, which includes the most current unemployment rate. Be prepared for a horrific number. Many analysts believe unemployment could be greater than 20%. The numbers represent families all across the United States who are not sure when (or if) they will return to work. The emotional impact on these families is devastating.

However there are some small rays of light shining on this issue. Here are three:

1. The actual number of unemployed is less than many are reporting

The number of people unemployed is sometimes over-exaggerated. It seems that every newscaster talks about the 40+ million people “currently” unemployed. It is true that, over the last ten weeks, over 40.7 million people have applied for unemployment. It is also true, however, that many of those people have already returned to work or gotten a new job. The actual number of people currently unemployed is 21.1 million. While this is still a horrible number, it is about half of what is often being reported.Three Things to Understand About Unemployment Statistics | MyKCM

2. Of those still unemployed, most are temporary layoffs

Last month’s unemployment report indicates that 90% of those unemployed believe their status is temporary. Friday’s report will probably show a decline in that percentage as the original number was somewhat optimistic. However, a recent survey by the Federal Reserve Bank showed that employers believe over 75% of job losses are temporary layoffs and furloughs. This means 3 out of 4 people should be returning to work as the economy continues to recover.

3. Those on unemployment are receiving assistance

According to a recent study from the Becker Friedman Institute for Economics at the University of Chicago, 68% of those who are eligible for unemployment insurance receive benefits that exceed lost earnings, with 20% receiving benefits at least twice as large as their lost earnings. So yes, tomorrow’s report will be difficult to swallow. However, as our nation continues to reopen, many of the families who are impacted will be able to return to work.