Distress in the Labor Market 2020
October 5, 2020
The novel coronavirus (covid-19) crisis of 2020 has impacted sectors of the population differentially. In the two previous articles "The Current Labor Market" and "Labor Market Dynamics" the labor market as a whole was studied. However, the need to analyze its complexity from diverse perspectives was observed.
The overall market changed significantly during the last half of the XX century and first 20 years of the XXI (Graph 1). From 1948 to 1986 the percentage of the population 16 years old or older employed was on average 57%. Between 1987 and 2008 this percentage increased to 63% to drastically reverse to an average level of 59% between September of 2009 and September of 2020. It seems that all the improvements achieved in terms of participation during the approximately two decades of 1987-2008 were lost in the last 12 years. The "Great Recession" of 2008-2010 completely changed participation prospects leading to a contraction trend that seems almost impossible to reverse, in what could be denominated as an "Ice or Frozen Labor Market" leading many former and potential workers to be excluded. Now, during this deep "Covid-19 Recession" the speculation of a quick and swift recovery may be subsiding as the fiscal policy expansion engineered during the last two quarters came to a sudden stop. In fact, the fourth quarter, without substantial fiscal intervention, may see another economic contraction.
Job prospects remain depressed for large segments of the population. After the previous recession (2008-2010) employment, for September of each year, continuously declined from a high of 62.9% in 2007 to a low of 58.4% in 2011. Despite the massive fiscal and monetary stimulus of those years, it was only in 2012 when the contraction stopped (Graph 1). The current situation is quite different as we already see an improvement in the labor market when compared to the one observed between April and August of 2020. The questions that remain are how long the expansion is going to last, to what new level of participation or “ice” is going to lead and what segments of the population will be most severely affected, although without much analysis the answer to the last question is already evident, indeed, as usual, the most vulnerable.
The changes in the labor market have not only altered the percentage of the population employed but the composition of those employed (Graph 2) in different respects. For example, between 1948 and 1968, the average percentage of females employed (September of each month) was close to 18%, rising to 25% between 1969 and 1989, to 29% between 1990 and 2008 and declining to 28% between September of 2009 and September of 2020 lower than the 31% observed for males during the same period. The proportion of males employed is still slightly higher but there has been a significant change since the 1950’s and early 1960’s.
While in 1948 71% of all employees were male, in September of 2020 they accounted for 53%, which was the average from the 1991 to 2020.This implies that 47% of the employees have been, on average for September of each year, female during the same time span getting closer to equality in terms of number of employees. The problem of inequality in terms of job types, remuneration, employment security and other factors are now definitely an even more important matter and surely remain a subject for contention.
Table 1 compares the labor market situation for females and males between Septembers of 2019 and 2020. The population of females 16 years old or older is 134.7 million which is greater by nearly 9 million than the equivalent population of males and implying that this population cohort is 52% female and 48% male.
| Table 1 | |||||||||
| Labor Market (Population 16 years or older) | |||||||||
| September (Numbers in millions) | |||||||||
| 2019 | 2020 | 2020 - 2019 | 2020 / 2019 | Indicator | Male | Female | Male | Female | Male | Female | Male | Female |
| Total Population 16 years or older | 125.5 | 134.0 | 126.1 | 134.7 | 0.6 | 0.6 | 0.46% | 0.53% | |
| Employed | 83.7 | 74.8 | 78.7 | 68.9 | -5.1 | -5.9 | -6.1% | -7.9% | |
| Unemployed | 3.1 | 2.6 | 6.6 | 6.0 | 3.5 | 3.6 | 111.2% | 127.5% | |
| Labor Force = Employed + Unemployed | 86.9 | 77.2 | 85.2 | 74.9 | -1.6 | -2.3 | 1.9% | -3.0% | |
| Not in Labor Force | 38.7 | 56.8 | 95.5 | 40.9 | 2.2 | 3.0 | 5.7% | 5.3% | |
| Unemployment Rate = Unemployed / Labor Force | 3.6% | 3.1% | 7.7% | 8.0% | 4.1% | 4.9% | 115.2% | 155.6% | |
| Number of Jobs Lost | 5.5 | 6.3 | |||||||
| Source: Bureau of Labor Statistics, Current Population Survey and Economic no nonsense calculations. | Note 1: Data is seasonnally adjusted by the Bureau of Labor Statistics. | Note 2: Number of Jobs Lost and Population 16 years or older were calculated by Economic no nonsense. | |||||||
While the number of unemployed males increased by 111% the one for females rose by 128%. The covid-19 recession has been then especially harsh on females propelling the number of unemployed females from 2.6 million in September of 2019 to 6 million in September of 2020.
If the current situation is compared to the one observed at this time last year there are 5.5 million male and 6.1 million jobs lost for males and females respectively (Table 1). This calculation is conducted by assuming that if the participation and unemployment rates had remained stable while population grew 0.46% and 0.53%, then 84.1 million males and 75.2 million females would be employed instead of the current 78.7 million and 68.9 million respectively. The question is how many of these jobs, if any, will be recovered in the rest of 2020 and in the future. There is no question that many things will have to change in the more distant future in order to improve labor prospects' but in the immediate future, 2020 and 2021, aggressive fiscal and monetary measures must persist in order to contain a catastrophe.
Graph 3 shows how the deterioration of the labor market observed since 2000 has affected both females and males. The downward trend in number of people employed is affecting both segments of the population. In addition to slower economic growth other factors like a worsening "wage" and "job" distributions may be contributing to this declining ("icing") labor market. Allowing people to participate by being gainfully employed should be one of the goals of any civilized democratic society.
Additionally, this participation must be lacking discrimination in all of its forms. There has been an improvement over the past 70 years but the current distress could lead to a loss of many of those advances. What is at stake in the covid-19 crisis is not only a loss of economic output but a loss of confidence in the economic system as a more diverse an equal labor market has been stalled today and may continue this trend in the future without additional policy actions.
In fact, the differential effect of the coronavirus recession on the labor market in terms of race, age and national origin must be studied. However, the intuition is that any minority groups have borne a larger burden of the loss just as women have. Indeed, indicators like number of people employed, unemployment rates, jobs lost have deteriorated more and faster for women without yet taking into account others like compensation levels and types of jobs lost.
