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New data from the Bureau of Labor Statistics (BLS) show that the unemployment rate declined to 6.2 percent in February from its January level of 6.3 percent. However, the current unemployment rate remains quite high compared to its pre-pandemic level of 3.5 percent, with 4.3 million more unemployed workers than there were before the pandemic as well as 4.2 million fewer workers in the labor force.
In February, the economy added 379,000 jobs. The industry sector with the largest number of gains was leisure and hospitality. BLS notes that the gains in that sector were primarily driven by new jobs in food services and drinking places as pandemic-related restrictions eased in some parts of the country. In contrast, the number of government jobs declined driven primarily by losses at the state and local levels.
A large number of workers continue to file for unemployment compensation. In the week that ended on February 27, there were 745,000 new claims (such data are released on a weekly basis). That continues the trend of the past 27 weeks, during which claims have hovered between 700,000 and 1,000,000 per week.
Labor market conditions remain more difficult for Black and Hispanic workers. The unemployment rate for white and Asian workers is 1.7 and 1.0 percentage points higher than it was a year ago, respectively; meanwhile, the unemployment rate for Black and Hispanic workers is 3.1 and 2.5 percentage points higher, respectively.
Standard unemployment rates do not capture all of the negative effects that the coronavirus pandemic is having on the labor market. For example, the overall unemployment rate would be 7.3 percent if it included people who have stopped looking for work during the past four weeks. (The headline unemployment rate does not count those people as unemployed because they are considered outside of the labor force.) Including the 6.1 million people that are working part time despite desiring full-time work would bring the rate to 11.1 percent. In other words, one in nine American workers are currently affected by the ongoing downturn in the labor market, and not all of those individuals are included in the headline unemployment rate of 6.2 percent.
As the economy struggles and many people remain out of work, thefederal budget will be affected in a number of ways. Income and payroll tax receipts will be lower than would otherwise occur because fewer people are working. Also, payments for unemployment compensation and other safety net programs will remain relatively high, in part as a result of recent legislation to continue certain unemployment benefits. Enacted legislation to provide relief to individuals and businesses from the pandemic is projected to add about $3.5 trillion to the cumulative deficit from 2020 to 2030. However, there is no reasonable alternative — providing assistance to individuals who lose their jobs, especially during a global health crisis, can save the economy from suffering even further damage.
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