The Scariest Job Chart Ever
The unemployment rate for May unexpectedly fell to 13.3% in May.
This surprised pretty much everyone, with the consensus being an increase to nearly 20%:
The U.S. labor market snapped back to life in May, restoring a chunk of the jobs it lost in the first two months of the coronavirus pandemic while facing big obstacles in the months ahead.
After two months of carnage, employers added 2.5 million jobs last month, the most jobs added in a single month on records dating from 1948. The jobless rate fell to 13.3% from April’s 14.7%, a post-World War II high.
Employment remained down by nearly 20 million jobs, or 13%, since February, the month before the pandemic prompted states to shut down huge segments of their economies. By comparison, the U.S. shed about 9 million jobs between December 2007 and February 2010, a period that covered the recession caused by the financial crisis.
It should be noted that the unemployment rate would have risen to over 16% but for a statistical artifact:
When the U.S. government’s official jobs report for May came out on Friday, it included a note at the bottom saying there had been a major “error” indicating that the unemployment rate likely should be higher than the widely reported 13.3 percent rate.
The special note said that if this “misclassification error” had not occurred, the “overall unemployment rate would have been about 3 percentage points higher than reported,” meaning the unemployment rate would be about 16.3 percent for May.
The Bureau of Labor Statistics, the agency that puts out the monthly jobs reports, said it was working to fix the problem.
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Some took this as a sign that President Trump or one of his staffers may have tinkered with the data to make it look better, especially since most forecasters predicted the unemployment rate would be close to 20 percent in May, up from 14.7 percent in April. But economists and former BLS leaders from across the political spectrum strongly dismissed that idea.
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Economists say the BLS was trying to be as transparent as possible about how hard it is to collect real-time data during a pandemic. The BLS admitted that some people who should have been classified as “temporarily unemployed” during the shutdown were instead misclassified as employed but “absent” from work for “other reasons.”
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The “other reason” category is normally used for people on vacation, serving jury duty or taking leave to care for a child or relative. These are typically situations where the worker decides to take leave. But in this unusual pandemic circumstance, the “other reason” category was applied to some people staying at home and waiting to be called back.
This problem started in March when there was a big jump in people claiming they were temporarily “absent” from work for “other reasons.” The BLS noticed this and flagged it right away. In March, the BLS said the unemployment rate likely should have been 5.4 percent, instead of the official 4.4 percent rate. In April, the BLS said the real unemployment rate was likely about 19.7 percent, not 14.7 percent.