U.S. jobless rate likely much higher than 14.7%, Labor Department says

SAN FRANCISCO (Reuters) – Millions of U.S. residents were counted as employed in April despite having no job, suggesting April’s true unemployment rate was closer to 20%, much higher than the official 14.7% reported, the Labor Department said Friday.

The jobless rate should have included people on temporary unpaid leave, furloughed because of the coronavirus pandemic, the government said.

But responses to the survey by which the data was collected show 11.5 million people were categorized as employed but absent from work because of vacation, parental leave or other reasons, but including 8.1 million absent for “unspecified” reasons, a group that usually numbers about 620,000.

“One assumption might be that these additional 7.5 million workers …should have been classified as unemployed on temporary layoff,” a note attached to the government’s jobs report Friday said.

If they had been classified as such, the note said, the jobless rate would have come in at 19.5%.

The jobs report probably also undercounted the unemployment rate in a second way – by missing people who wanted work but weren’t looking for it because of near-ubiquitous stay-at-home orders to slow the spread of COVID-19.

The Labor Department excludes people who are not in an active job search from its count of the unemployed, classifying them instead as out of the workforce.

But in April, 9.9 million people who were not in the labor force – one in every 10 – also said they wanted a job, the highest number since the Labor Department began keeping track.

“The large increase in the want a job category reflects the impact of the pandemic on the job market, as mandatory business closures, stay-at-home orders, and concerns about the coronavirus kept many individuals from engaging in labor market activity in April,” the Labor Department said.

Adding those people to the survey’s finding of 23.1 million people unemployed in April would represent 19.8% of the labor force plus those who want a job, the Labor Department said.