Jobless claims to Unemployment rate: Do they tell the whole story?
As of January 2021, the unemployment rate in the US has dropped to 6.4%, down 0.4% compared to the previous month, decreased to 10.1 million unemployed persons (U.S Bureau of Labor Statistics, 2021). Unemployment rate, released on the first Friday of every month, is the number of unemployed divided by the number of people in the labor force. This is not to be confused with the weekly jobless claim, which is the number of people who applied for unemployed insurance.
On February 20th, the Bureau of Labor Statistics released the latest weekly jobless claims which is 730,000, a sharp decrease from 111,000 from the previous week.
However, these improvements in labor markets are giving us the appearance that the economy is recovering in this time of COVID-19. These figures alone do not tell the whole story of how American workers are faring. “It’s only telling you about folks who are actively available and looking for work in the last four weeks or so”, said Rebecca Dixon, executive director of the National Employment Law Project.
A waitress takes customers' orders in the outdoor seating area of a restaurant on Jan. 28, 2021 in Los Angeles. Valerie Macon/AFP via Getty Images
Therefore, people who have given up on finding a job and those who had their hours cut, forced to work part-time, are not going to be counted in the so-called “economic recovery”. The most hurt are those Americans who are at lower end of the income scale, who are struggling to not be homeless. “We have a real risk that we’re going to have a country of two cities, ‘really a tale of two cities’ where people are going to be a permanent underclass and they’re never going to catch up and get to where they should be.”, David Rubenstein, co-founder of Carlyle group said.
As many economists argue that President Biden’s stimulus package of $1.9 trillion might be too big amid economic recovery and could spark a rebound in inflation, it is surely an immediate aid for American at the lower end. Janet Yellen, US Secretary of Treasury, said “We think it’s very important to have a big package that addresses the pain this has caused – 15 million Americans behind on their rent, 24 million adults and 12 million children who don’t have enough to eat, small businesses failing”.
While unemployment rate and initial jobless claims might fall, the economy is still not yet on the bright side. Despite the undoubtedly high economic risks after a big stimulus package, what Americans need right now is the aid to afford food and rent throughout this pandemic.