The shape(s) of a crisis

By Ella Koeze

Six months after the first coronavirus shutdowns went into effect across the United States, unemployment data is painting a picture of how quickly — or not — the economy is recovering from pandemic job losses.

Before the coronavirus spread widely, about 6 million people were unemployed in the United States. Soon after the pandemic hit, that number swelled rapidly. The unemployment rate in April was the highest it had been since the Great Depression.

But while the most recent jobs report showed continued gains, there are still about twice as many people out of work now than before the pandemic.

Looking beyond the overall number can provide a view of the dynamics shifting beneath the surface. Comparing the number of workers who were temporarily laid off to the total who were permanently let go each month, for example, reveals the potentially lasting consequences of the crisis.

Early in the pandemic, employers thought the virus’ effect on business would be short-lived and that they would be able to bring back their workers within a few months. Now, despite consistent monthly gains in jobs, the number of job losses that are permanent is increasing as the virus shows few signs of going away soon.

The official number of unemployed people tells only part of the story. The government uses an arguably narrow definition of unemployment for its statistics, counting only those who are temporarily laid off or who have looked for work in the past four weeks. People who are not working and haven’t actively sought work in the last month, even if they want jobs, are considered out of the labor force and are not counted.

The trajectory for the group of people who are out of the labor force but still want a job was very similar to that of workers who are officially classified as unemployed — swelling numbers in April and a slow decline since. But once again, looking within categories reveals more concerning trends.

Within the category of people who are not in the labor force but want a job, there is a group of just over 1 million people who say the reason they are not currently seeking work is because of family or transportation issues — a number that has fallen only slightly since the crisis began.

With a large number of schools switching to remote learning and many child care programs shut down, some parents have had to make a choice between working a job and caring for children. Others may not want to go back to work in person for fear of endangering someone at home who is at a high risk for complications from the virus.

Typically, the number for this group varies throughout the year, often rising when children are out of school. That was the case this year, too — though at an unusually high level. And if the number stays elevated through the fall, it will be another sign of the challenges of getting people back to work as the virus continues to circulate.

Economists sometimes discuss recoveries in terms of line graphs that look like letters — V or W or K — depending on how quick and sustained they are. Whether they resemble letters or vaselike shapes, recoveries are often more multifaceted than a single form can fully depict.

Taken together, these indicators offer more nuanced shapes for visualizing the recovery, one that is not uniform and that is continuing to evolve. While the total number of unemployed is slowly shrinking, a growing number of people are becoming permanently unemployed. And the tally of people who aren’t looking for work because of family or transportation issues is staying much more consistent.

None of these shapes are inevitable. While it is unclear if Congress will pass another stimulus package anytime soon, more federal help could increase the speed of the recovery. Reducing community spread of the virus — whether via a vaccine or mitigation measures — and providing more options for child care could help bring people back into the labor force.

Not all areas of the economy were hit equally hard. The construction sector was down just over 1 million jobs in April from where it had been in February and has gained back all but roughly 400,000 of those jobs. The leisure and hospitality industry, on the other hand, lost over 8 million jobs in the same time and is still close to 4 million jobs below prepandemic levels.

Jobs numbers could worsen, especially if cases rise significantly, or restaurants or other types of businesses are forced to shut their doors as the weather gets colder.

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