By David Henderson
As a former senior economist at the Council of Economic Advisers, I get in the mail near the start of every month the Council’s report “Economic Indicators,” prepared for the Joint Economic Committee. I like old-fashioned hard copy, but it’s available to the public on line as a pdf.
It’s worth perusing once in a while, if only to check the data against your impressions. In my perusal of the latest report, published on April 6, what I found most interesting were the data on unemployment.
Some highlights for the March data:
Unemployment rate for blacks or African Americans: 6.9 percent.
Unemployment rate for whites: 3.6 percent.
Unemployment rate for Asians: 3.1 percent.
Unemployment rate for Hispanics or Latino ethnicity: 5.1 percent.
Unemployment rate for men 20 years and over: 3.7 percent.
Unemployment rate for women 20 years and over: 3.7 percent.
Unemployment rate for both sexes, 16-19 years: 13.5 percent.
Unemployment rate for married men, spouse present: 2.1 percent.
Unemployment rate for women who maintain families: 5.6 percent.
These are all strikingly low for the 21st century, even the teenage unemployment rate that, while high, is way lower than it has been in almost all months in the last 10 years. I put in italics the one I found most striking.
Also interesting was the duration of unemployment spells.
The average duration, while having come down from its 10-year peak of 39.4 weeks in 2012, is still high, at 24.1 weeks. Part of this decline is due to the growing economy, but I suspect that most of the decline since then is due to the expiration of the long-term unemployment insurance benefits, early in Obama’s second term, which gave people in some high-unemployment states benefits for up to 99 weeks, up from the normal 26 weeks. One indicator that the extension of unemployment benefits is one of the main causes is the difference between the number of people receiving unemployment benefits from state programs and the number receiving unemployment benefits from all government programs, including the federal extended benefit program.
The number of people receiving insurance benefits from state programs fell from 3.3 million in 2012 (this is the weekly average for the year) to 1.9 million in 2017. (It was up to 2.6 million in January 2018, but my guess is that much of that increase is due to layoffs of people who were hired for the Christmas season. I will be surprised if the average for 2018 turns out to be much higher than 2.0 million.) But take a look at the number of people receiving unemployment insurance benefits from all programs, including the federal extended benefit program. It fell from 6.0 million in 2012 (again, a weekly average) to 4.6 million in 2013, and 2.7 million in 2014. (The extended benefit program ended at the end of 2013, but in some states, depending on their state unemployment rate, the extended benefits were not relevant before then.) That suggests a strong role of extended benefits in causing a high average duration of unemployment spells. By 2017 and January 2018, it was virtually identical to the state number.
Other confirming evidence of the role of extended unemployment benefits is from the percent of duration spells of 27 weeks or more. It was a whopping 41.1 percent in 2012, but fell to 33.5 percent by 2014 and 28.1 percent in 2015.
The median duration is down to its pretty normal 9.1 weeks.
Note that there are two ways an unemployment spell can end: (1) the person gets a job or (2) the person drops out of the labor force.
I posted back in 2011 about the effect of extended benefits on unemployment.