Unemployment benefits surge to historic highs -- Can it recover?

in economy •  2 months ago 

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Last year, unemployment was a boring thing to talk about.

Today...
Look at these two tweets:

https://twitter.com/lenkiefer/status/1245702858449784832

That is not a joke. It is real.

No one alive has every seen anything like it before.
Should we freak out?

No.

Why would unemployment jump up like that?

When employers had to close so that people would practice social distancing they had to make a decision.

Can I afford to pay my employees while they are not working?

For many, the answer is no.

Can I ask them to go without pay while they are not working, but keep them on as employees?

For many employers, this would obviously hurt the employees.

So, they chose a third option.

If I lay off my employees, they will be able to at least collect unemployment insurance.
So that is what a lot of employers did, perhaps reluctantly.

After all, if you let an employee go, and then later things return to normal, and you try to hire her back, that employee may have found a better job in the meantime.

This helps to explain why so many people claimed unemployment over the last two weeks. It might be helpful to know that employers and employees contribute to unemployment insurance while they are working. A little money from every paycheck goes to fund this program. In other words, that money is in an insurance plan, so it belongs to the employees.

No one should feel bad for claiming unemployment right now.

Often a person will feel ashamed for having lost a job, even if it was not his fault.

I don't like for people to be ashamed in any case. But we take pride in our work, and not finding a market for our skills and talents can be as embarrassing as getting dumped by a lover.

However, as the rate of technological innovation remains very high, structural unemployment becomes more common.

Arnold Kling, in Specialization and Trade chapter 9, makes a good case for this being the new normal. Employment in a world of rapid innovation is more like serial monogamy than lifelong marriage. Each of us will have many jobs, even multiple different careers.

So, I frequently recommend to people that as soon as they graduate and get a job they should start preparing for their next job. If you can develop cutting edge skills at work, great. But otherwise, each person needs to be developing new skills while not at work. I recommend reading a book every other week as a place to start.

Audiobooks count.

Public libraries provide access to thousands of audiobooks downloadable to your phone for free. Librivox also offers free audiobooks that are in the common domain. Don't discount learning in the humanities. Writing is a valuable skill and will be for the foreseeable future. Keeping a blog, or submitting op-eds to periodicals are good ways to improve writing skills, and to participate in the public conversation.

When the current situation abates, most of the people recently unemployed will find ready work quite quickly. Students planning to graduate might face a delay in getting a job, but the jobs will come back.

What we are unsure of right now is whether things will bounce back to where they left off, or whether there will be some permanent loss. Most of the jobs involved in making things, especially essential goods and services, have not gone away. But jobs in hospitality and services have hurt many people.

Will people be comfortable flying internationally? Will people want to stay in hotels or at an AirBNB not knowing who was there last, and whether that person was healthy? Will people go to restaurants or will they be afraid? We will have to see.

People are still eating, maybe more frugally than before. That could mean that collectively we have saved a lot of resources in the meantime and so we will all have somewhat greater wealth.

Perhaps the research being done now to find treatments for COVID-19 will have spillover effects and lead to a great many technological advances. Humans are adaptive, innovative, and resilient.

In the meantime, focus on the work you have in front of you. Keep after it!

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