The number of jobless people in the US rose by more than 20 million in April, something deemed worthy of a mention in the “and in other news” slot on the BBC’s evening TV bulletin.
Sure, it was the 75th anniversary of VE day and there were socially distanced street parties to cover and archive footage of crowds gathered in front of Buckingham Palace to treasure.
But hang on a minute. In the past, literary careers have been built on the sort of employment catastrophe that has just befallen the world’s biggest economy. It is worth recalling that the war commemorated last week had its roots in Germany’s 6-million long dole queues in the early 1930s.
It matters a lot that the official US unemployment rate rose by more than 10 percentage points to 14.7% in a single month, that the real level of joblessness is actually around 25% and is likely to reach 30% before it peaks.
Let’s start with the obvious. The April rise in unemployment was bigger than anything seen during the collapse of the US economy during the Great Depression, an economic tragedy that took several years to unfold. Inevitable once the decision was taken to shut down businesses in order to stop the Covid-19 virus from spreading, layoffs are hitting the poorest workers hardest. An employee in the bottom 20% of earners was four times as likely to lose their job last month as someone in the highest earning 20%.
As in the UK, shuttering businesses across the country is proving easier to do than reopening them. The number of airline passengers currently stands at 7% of last year’s level; in the states where restaurants have reopened for business the number of customers is around 10% of its pre-pandemic levels. The number of weekly jobless claims has come down from its peak but is still running at more than 3 million.
All of which suggests that unemployment is going to stay high for some time. The chances of the jobless rate being below 10% by the time Donald Trump stands for re-election in November look remote.
Unemployment – and the risk of being made unemployed – makes people miserable. There has been plenty of speculation in the past couple of months about whether the lockdown has been good for levels of wellbeing, but the survey evidence and the economic literature suggests it has not.
Here in the UK, the Office for National Statistics said the levels of people reporting high levels of anxiety more than doubled when the economy went into hibernation at the end of March. More than half the adult population – 25 million people – said they were worried about their health, the security of their job or having enough money to get by.
A separate coronavirus study from the Mental Health Foundation found that 34% of UK adults surveyed and in full-time work were concerned about losing their jobs; 20% of unemployed people surveyed said they had suicidal thoughts and feelings within the last two weeks; and 11% of unemployed people who have experienced stress during the pandemic said nothing had helped them to cope with the worry and anxiety.
There may well be people who are sailing through the lockdown untroubled, but they probably don’t include those who have lost their jobs, think they might be laid off once the government’s furlough scheme comes to an end, or feel responsible as the owner of a small business for the livelihoods of others. Not for them the luxury of working from home on full pay or retirement on an indexed-linked final salary pension.
What’s more, it is reasonable to expect similar levels of stress and despair to be prevalent on the other side of the Atlantic, where the welfare state is not known for its generosity. Indeed, the work of economists such as Danny Blanchflower and Andrew Oswald has highlighted how higher unemployment is the economic variable most strikingly linked to rising unhappiness, and the longer the spell of unemployment the greater the cost to personal wellbeing.
Academic interest in the impact of unemployment on physical and mental health picked up in the 1980s, when deep scars were left by workers enduring long spells of joblessness and in some cases losing touch with the labour market altogether.
A priority, therefore, is to prevent temporary layoffs becoming permanent, because that is the path to more poverty, more ill-health, more crime, more relationship breakups and more social alienation. Hence the current heightened interest in job guarantee schemes for the young and universal basic income for all to supplement strong doses of economic stimulus.
The textbook free-market solution to unemployment is that workers can always price themselves back into a job by being willing to take a pay cut. Fortunately, no government in the world believes this nonsense, and the story of the past couple of months has been frantic attempts to prevent a health emergency from morphing into an employment emergency.
Britain’s furlough scheme has been one response to this incipient crisis, but there has also been a response in the US, where Trump, keen not to become the new Herbert Hoover, has adopted a three-pronged approach. Firstly, the administration has provided an extra $600 (£474) a week in unemployment benefits until the end of July. Secondly, the president has pushed for a reopening of the economy on the grounds that the cure for Covid-19 should not be worse than the disease itself. Finally, he has sought to blame China for America’s problems, because this a lot easier than blaming himself.
What does that mean? It means the US has mass unemployment, an explosion of unhappiness, and a sabre-rattling populist leader willing to do anything to hold on to his job. Now, in other news …