Fear Of COVID Keeps The Unemployment Rate Artificially Low

Around 4 million adults aren’t looking for jobs, not because they’re scarce but because of worries about catching the coronavirus.

Fear of Getting or Spreading COVID

Officially the Unemployment rate is 6.0%. Practically speaking, it is much larger by several methods. 

Please consider The Other Reason the Labor Force Is Shrunken: Fear of COVID-19.

A U.S. Census survey conducted in the second half of March found that about 4.2 million adults aren’t working because they are afraid of getting or spreading the coronavirus.

Labor-force participation usually falls in recessions, as some people give up job hunting. But such discouraged workers accounted for just 3% of last year’s decline in workforce numbers, according to Labor Department data. This suggests that fear of the coronavirus might explain a lot of the remainder.

A handful of studies, including one by Austan Goolsbee and Chad Syverson of the University of Chicago, have used cellphone location data to track individuals’ travel patterns and found that voluntary behavior changes during the spring of 2020 drove the collapse in mobility more so than government-mandated shutdown orders did.

The precise effect of fear on the labor market isn’t clear because it isn’t something the government tracks. The Labor Department’s monthly jobs survey in March found that the pandemic had prevented 3.7 million people from looking for a job in the prior four weeks, but didn’t specify the reason.

The Labor Department survey results and the 4.2 million number cited by the Census survey aren’t directly comparable because of differences in questions asked, but both suggest that wariness about catching COVID-19 explains a substantial portion of the labor-force decline.

 

Unemployment Rate Calculation

The Unemployment rate is the number of people who are unemployed divided by the labor force. 

UR = (#Unemployed / Labor Force) * 100

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