When reading statements of Donald Trump, e.g. this Tweet, there is a better employment rate than ever in the USA right now. But many news sources in Europe report, that there is mass unemployment. What is the actual state? Are there numbers that can be interpreted in the one or the other way?
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8Unemployment is at 13% which was the average of 2008. So high, but good for a record breaking global pandemic.– Paul DraperCommented Jul 5, 2020 at 23:04
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23@PaulDraper good for a record breaking global pandemic - Only true if you assume a pandemic must lead to massive unemployment. Many countries simply furloughed workers: they did not become unemployed.– Oscar BravoCommented Jul 6, 2020 at 8:33
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16@OscarBravo, that's not a distinction relevant to these numbers. According to the Bureau of Labor Statistics (the source of U.S. unemployment figures), furloughed employees are counted as unemployed, specifically "unemployed on temporary layoff". In fact, the vast majority of "unemployed" persons in the U.S. over the last few months were furloughed not terminated.– Paul DraperCommented Jul 6, 2020 at 9:52
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14@PaulDraper So the US furloughed the workers but left them in that big red spike of unemployed in the graph? I think we might have different interpretations of furloughed... In the UK, furloughed workers were paid 80% of their salary by the Govt. and did not become registered unemployed.– Oscar BravoCommented Jul 6, 2020 at 12:05
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20@OscarBravo Very different, in the US "furloughed" is usually "mandatory, temporary, unpaid leave". For federal furlough (e.g. during federal shutdown) usually workers are paid after for that time, but for a private furlough you're just...not paid.– user3067860Commented Jul 6, 2020 at 12:32
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3 Answers
Trump has indeed claimed something along the lines of "there is a better employment rate than ever in the USA right now". Now before the Covid-19 crisis, unemployment rate was at a low level. According to official sources, the U.S. Bureau of Labor Statistics, it was about 3.5% since September 2019, which was the lowest level in the 21st century. Looking at this website the last period with such a low unemployment rate was around 1970.
Only when the pandemic hit America, in March 2020, did the unemployment increase. And it's safe to say that there is a (for United States unprecedentedly) high unemployment rate right now:
Now, specifically about the Tweet you mention in the comments:
Greatest Top Five Monthly Jobs Gains in HISTORY. We are #1!
The Bureau of Labor Statistics is mentioned as source, so the graph is as credible as the one about unemployment rates. I would say that this is a clever way to frame the decrease in unemployment rate from 13.3% in May 2020 to 11.1% in June 2020. That is a lot less unemployment / more jobs than the month before, but the president doesn't claim the employment rate is better than ever. He's just showing some figures that cause him to make a good impression, as many politicians (and CEOs, and who not?) are wont to do.
answered Jul 5, 2020 at 12:34
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7The introduction "When did he make the statements you're referring to? Because before the Covid-19 crisis, unemployment rate was at a low level." seems disingenuous, since the OP gives a URL to the Trump tweet in question, which provides the timestamp: "4:31 PM · Jun 5, 2020." Therefore citing pre-COVID times isn't relevant.– agcCommented Jul 5, 2020 at 17:57
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7@agc well, the initial version didn't have any statements at all. I've edited it in after the OP provided it in a comment here. But it could use some rework, true. Commented Jul 5, 2020 at 18:07
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5@agc The tweet does provide a timestamp, but it doesn't make the claim that the question asks about.– reirabCommented Jul 6, 2020 at 4:43
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1It's sufficient to just say that the claim is actually something different than what the OP understood, without being snarky about it. Commented Jul 6, 2020 at 12:34
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That unemployment rate is not unprecedented in US history, it was higher during the Great Depression. But as far as I know unprecedented since then.– naschCommented Jul 7, 2020 at 22:48
There is mass unemployment. The unemployment rate is 11.1%, which is certainly quite high by US standards, as you can see from Glorfindel's source. 11.1% is higher than the peak unemployment rate during the Great Recession.
Trump's tweet contains this image:
The data in this image can indeed be true, but it doesn't mean there's low unemployment. That's because the US is coming off massive job losses leading to historically high unemployment. This is easiest to see with some numbers.
Scenario 1: Let's say the country only has 1000 workers, and has an unemployment rate of 5%. That means 50 workers are unemployed, the remaining 950 are employed. If the unemployment rate drops to 2% now, there are 20 unemployed workers, so this is equivalent to a jobs gain of 30.
Scenario 2: Let's say the country has 1000 workers, but has an unemployment rate of 10%. This means 100 workers are unemployed. If the unemployment rate drops to 5% now, there are 50 unemployed workers, so there is a jobs gain of 50.
Therefore if you plot only the jobs gains, you might be fooled into thinking the second scenario is better than the first one, but digging deeper you should see that it isn't - unemployment is higher in scenario 2 than scenario 1.
We are seeing something similar. US unemployment shot up to about 15% recently, so a drop back to 11.1% manifests itself as a large number of jobs gain. But the current 11.1% unemployment rate is still poor. Therefore you must be careful what question you're asking. If it is "is there mass unemployment in the US", the answer is yes. If it were instead "did the US job market improve in June 2020 by more than any other month in history in absolute numbers", the answer is again yes. If it were instead "did the US job market improve in June 2020 by more than any other month in history in percentage terms", it could well be no (I have not checked). The differences are subtle, but they're there.
Mass Unemployment
According to Wolf Street, the BLS numbers are highly misleading.
Essentially, there is a massive discrepancy between the unemployment numbers published by BLS vs. the unemployment claims reported by the DOL (Department of Labor). Either there is rampant employment fraud, and tens of millions of Americans are claiming unemployment benefits while holding down a job, or the BLS methodology is heavily flawed. Given that DOL data comes from actual claims, while BLS data comes from sampling phone surveys, you can draw your own conclusions about the reliability of the reports...
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13BLS is a division of DOL, so all the data you are referencing is DOL data. Commented Jul 7, 2020 at 9:31
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1@user4556274 Thanks, I was too lazy to look that up. Good ol' bureaucratic departmental walls... Commented Jul 7, 2020 at 17:37
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3Is Wolf Street considered a credible source? The website looks a little ... uh ... not? Commented Jul 7, 2020 at 21:04
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1@AzorAhai--hehim I looked for critical reviews of it and didn't find any with a modest effort. More importantly, I believe that all the numbers presented can be found in the DOL report linked under "week ended June 27". In particular, the 12.8 million PUA continuing claims appears at the bottom of page 7 of the report. If you find any discrepancies or unsourced data, I would be happy to reconsider. Commented Jul 7, 2020 at 23:13
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1This ridiculous answer makes some kind of implication that DOL is reliable and BLS is not, while as noted BLS is a division of DOL, and further BLS is the official source of labor statistics for the US government and the public.– qwrCommented Jul 8, 2020 at 18:09