The Household Survey in Friday’s Jobs Report showed that 3 million Americans lost their jobs last month and, unlike the Initial Claims data, seasonal adjustment factors do not overstate the problem. Unadjusted, the number was -2,850,000; seasonally adjusted it was -2,987,000. Yes, the headline -701,000 Establishment Survey “jobs lost” was not as bad, but we’ll stick with the Household Survey for this note because the data is far more granular.
Four data points to consider:
#1: March Job Losses by educational attainment (workers +24 years old):
- Less than a high school degree: -534,000 positions lost from the prior month
- Only a high school degree: -1,299,000
- Some college or an associate’s degree: -196,000
- Bachelor’s degree or higher: +264,000
Takeaway: last month’s US job losses were entirely in positions occupied by workers without a 4-year college degree. Yes, unemployment for college educated workers rose last month (to 2.5% from 1.9% in February). That is because the size of the college-educated workforce continued to increase in March (+593,000) rather than shrink, the opposite of what happened in the non-4-year college worker cohorts (1.6 million fewer potential workers in March versus February due to lower workforce participation).
#2: African American job losses and unemployment, which academic literature shows is an important leading indicator of broader trends:
- March job losses: 522,000
- Current unemployment rate: 6.7%, versus 5.8% in February and an average of 6.1% last year.
- Current participation rate (employed or looking for work as a percent of the total cohort population): 62.0% versus 63.1% in February and a 62.4% average for 2019.
Takeaway: at one level this is bad news, for all the obvious reasons, but at least the March data shows African American workers were not in the aggregate “first fired” as they have been in prior recessions. Last year the ratio of their unemployment rate to the national average was 1.7x (6.1%/3.7%). For March, that ratio fell to 1.5x.
#3: A few other statistics worth a mention:
- Last month saw 1.0 million more workers “on temporary layoff” than the month before, or a third of the total increase in unemployment.
- The March unemployment rate for part-time workers (17% of the total workforce) rose last month to 6.1%, the highest level since April 2013.
- By comparison, the unemployment rate for full-time workers rose to 4.1%; the last time it was that high was in September 2017.
Takeaway: since the March Jobs Report only includes survey data collected through March 13th, we’re able to see that a large part of the first round of job contraction has been structured as “temporary layoffs” and cutbacks to part time payrolls. If the US economy can restart fairly quickly, this pool of labor should be ready and available to resume work.
#4: A look at U-6 unemployment rates, which are something akin to “real feel” temperatures in weather reporting. U-6 is the most expansive definition of joblessness in the Bureau of Labor Statistics’ framework and includes marginally attached workers/those working part time but wanting full-time employment:
- U-6 unemployment rose to 8.7% in March from 7.0% in February, 1.7-point increase.
- For comparison, U-3 (headline) unemployment rose by 0.9 points last month (to 4.4% from 3.5%).
- Important: that 1.7-point increase for March is the largest month-to-month change in the history of the data series (back to 1994). By comparison, the U-3 data does have similar instances of a 0.9-point increase (January 1975, select months shortly after World War II).
Takeaway: we’ll be watching the U-6 data over the next several months as much as the headline numbers because they give a more complete picture of the entire US labor market and this month’s record increase shows the magnitude of the COVID-19 shock to US labor markets.