National unemployment rate reaches more than 19%

The U.S. Bureau of Labor Statistics released “The Employment Situation — April 2020” Friday stating the seasonally adjusted national unemployment rate was 14.7%. But on page three of the report, the agency explains that due to the unique nature of the coronavirus, “the overall unemployment rate would have been almost 5 percentage points higher than reported on a not-seasonally adjusted basis.” The not-seasonally adjusted unemployment rate for April is 14.4%, so adding “almost 5%” brings the rate to 19%.

The unemployment rate is derived from the household survey. Individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the reference week, April 12-18. BLS says there was apparently some confusion in the classification of some workers. Workers who were classified as employed but absent from work were to be classified as unemployed, but apparently many were classified as employed.

Here is the relevant section from the BLS report:

“In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (April 12 through April 18). Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff. In April, there was an extremely large increase in the number of persons classified as unemployed on temporary layoff.

But there was also a large increase in the number of workers who were classified as employed but absent from work. As was the case in March, special instructions sent to household survey interviewers called for all employed people absent from work due to coronavirus-related business closures to be classified as unemployed on temporary layoff. However, it’s apparent that not all such workers were so classified.

If the workers who were recorded as employed but absent from work due to “other reasons” — over and above the number absent for other reasons in a typical April — had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported (on a not seasonally adjusted basis). But according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.”

In April, the labor force participation rate decreased by 2.5 percentage points over the month to 60.2%. That is the lowest since January 1973 when it was 60%. More than 6 million people dropped out of the labor force and just 51.3% of people are actually working.

North Carolina’s employment figures from BLS for will be released May 22. The Division of Employment Security reports 1,085,276 workers have filed initial claims from March 15-May 7 and that 470,677 claimants have been paid. DES hasn’t released any estimates of people who have tried to file a claim but couldn’t get through to the call center or navigate the online process.

Don Carrington is an investigative reporter for Carolina Journal, a publication of the John Locke Foundation. Before joining JLF 25 years ago, he worked for more than eight years with the Employment Security Commission, with the last five as deputy director of the Labor Market Information Division.