Jobless Numbers Reports Mislead Readers

On today’s New York Times web page, the lead article, “Coronavirus Live Updates: New U.S. Jobless Claims Bring 9-Week total to Over 38 Million”  misleads the reader because of several “facts” that are not in evidence in the article.

The Times accurately reports that more 38 million Americans have filed claims for unemployment compensation, this does not mean that 38 million people are actually collecting unemployment insurance disbursements, or that 38 million people are actually out of work.

There are two reasons for these discrepancies. In the first case, everyone who applies for unemployment insurance does not actually receive unemployment compensation because some workers aren’t qualified for those benefits. They may not have worked in that job long enough to qualify. If you’re hired on Monday, and fired on Friday, you are not going to be qualified for unemployment insurance. If you are fired for cause there is a waiting period before you can apply for unemployment benefits…and some people are rehired by the same firm or a competitor shortly after they apply for benefits. These variables are never cited in the statistics.

That’s the second problem with this headline: while 38 million people may have filed for unemployment, we don’t know how many of those people have already found work again…because the Department of Labor isn’t reporting that statistic, possibly because no one has asked. Now that we are between nine and 12 weeks since the effects of the pandemic have affected job markets, there are some jurisdictions where workers are already starting to run out of their benefits, such as Florida, where workers are eligible for a maximum of 12 weeks of unemployment coverage at a MAXIMUM compensation of $275 per week. New York offers 26 weeks (extended to 39 weeks during the current emergency up to a maximum of $504 per week.

Another factor affecting the accuracy of these unemployment statistics, and their comparative relevance, is that independent contractors and other self-employed workers are now eligible for unemployment compensation in most, if not all, jurisdictions…but these workers are  not usually eligible for unemployment compensation which means that we are counting people as unemployed who have never been counted as unemployed before.

There are pluses and minuses to allowing 1099 workers to collect unemployment. The main pluses are that they are a special class of disenfranchised workers who, through a legal stratagem are denied legal protections available to other workers. Since they pay 100% of the payroll taxes on their incomes, they may have been paying Unemployment Insurance premiums in their payroll taxes….but have not been receiving unemployment benefits. because they are not employees. The negative is that small business owners, as self-employed people, now qualify for unemployment compensation, increasing the apparent number of people who are “unemployed” and opening the door for double-dipping as small businesses apply for federal relief programs while their owners are applying for unemployment compensation.

No one who has had their legitimate incomes disrupted by the COVID-19 outbreak should be denied financial support. (Obviously, we are not going to include people from the illegal economy….yet.) That would be both inhumane and stupid, inhumane because they have families that depend upon them for food, clothing, and shelter, and stupid because the whole point of the massive federal assistance program is to get the economy rolling again, which requires that consumers go out and buy stuff. However, this largess also means that comparative “before and after” employment statistics are largely useless for evaluating the actual effects of the coronavirus on the economy and the American electorate that lives in that economy.

During economic downturns such as this one, employers characteristically use the recession as an excuse for discarding less efficient, less adept, and especially older workers  while, at the same time, actively seeking younger, more productive, and more innovative workers to replace them with. Some companies still have labor contracts that require employers to discharge employees on the “last in, first out” paradigm, which protects older workers with seniority from layoffs, but most of those contracts have “catastrophe” clauses that enable employers to disregard “last in – first out” rules in catastrophic circumstances.

Pandemics are catastrophic circumstances.We are most definitely in what any reasonable person would call a “catastrophic” situation, so the old rules don’t apply, even to the extent that the eviscerated labor union movement might demand if the unions were stronger. Unions, fo course, are strategically weakened when massive layoffs occur. You can’t strike when you are no longer employed by the company you want to strike against.

Jobless claims are always suspect because of the manner in which the claims are reported. Unemployment compensation systems are managed by the states, not the federal government, and each state has its own protocols that define who is eligible, the applicable waiting periods, and numbers of people who are actually receiving unemployment payments. The federal government is currently providing a $600 weekly emolument on top of the state stipends, which vary from state to state, so the Federal government should know how many people are actually receiving compensation….but, once again, those numbers aren’t being reported.

This discrepancy between jobless applications and actual disbursements would, if it were widely known, reveal another dirty fact about unemployment compensation: the amount of compensation you get, and the number of weeks you are eligible to collect for varies from state to state.

Any honest analysis of this situation has to include this increasing tendency toward the politicization of the news. Higher unemployment numbers would seem to benefit the Democratic party in the November election…unless the “recovery” takes hold early enough to result in a precipitous drop in unemployment rates, which would ultimately benefit the Republican party in November. Since the Republicans are now clearly in charge of collecting and reporting the statistics, it would be very surprising if the statistics did not show significant improvement in the month before the election.

Watch and learn.