On Friday, the U.S. Department of Labor is expected to release figures for April’s unemployment rate. The report is likely to show the devasting impact of the coronavirus lockdowns on the economy, with the unemployment rate estimated to be over 16% – a record low in U.S. history. Cornell experts are available to break down this week’s figures and help explain what a future recovery would look like. Erica Groshen is a senior extension faculty member at the Cornell University School of Industrial and Labor Relations. From 2013 to 2017, she served as the 14th Commissioner of the US Bureau of Labor Statistics. Groshen, who also served as Vice President of the Federal Reserve Bank of New York, has written extensively on how economies can recover from recessions.
Bio: https://www.ilr.cornell.edu/people/erica-groshen Groshen says:
“Friday’s numbers will shake markets with the broadest, most authoritative measure of the impact of the pandemic. They’ll allow historical comparability, likely showing that the pandemic’s effect on jobs is bigger than anything we’ve seen since the Great Depression. “How will this recession differ from the Great Depression? It’s important to keep in mind that after the 1929 stock market crash, we had 10 years of policy mistakes that prolonged and deepened the depression. While it’s unlikely we will make the exact same mistakes again, we could make new mistakes. Also, on this recession, there are many fewer agricultural and manufacturing jobs to be lost than in the Great Depression.
However, there are many more retail, leisure and hospitality, and health care jobs that have been lost. The latter may be surprising, but people aren’t going in for regular checkups, which impacts highly skilled workers. “The more that the pandemic changes firms’ business models, the more it will disrupt existing employment arrangements and slow the recovery. For example, if it is not safe to have nursing home, there will be more people dropping out of the labor force to care for loved ones at home. That would also mean fewer nursing home jobs. Pre-existing conditions may well be more disabling for workers. Some people who could get by before with a health issue in some workplace will have to exit the work force.
For example, if you are immuno-suppressed, you may no longer be able to hold jobs that could expose you to the corona virus. “How long with this last? Our economy is on life support now; we will be testing the waters in next few months to see if it can emerge safely from our policy-induced coma. “As Churchill said: ‘You never want to waste a good crisis.’ There are some big lessons to learn from this crisis. Going forward we will see tension between efforts to put out the fire, and those who focus on rewriting building codes. Many are grappling with allocating energy and resources – should they go to immediate needs or to deeper fixes that put a better model for our economy in place?” -- Michael Waldman, professor of management and economics, is an expert on industrial organization, labor economics, and organizational economics.
Bio: https://www.johnson.cornell.edu/faculty-research/faculty/mw46/ Waldman says:
“The unemployment numbers on Friday will show that the economy is already in a severe recession or worse. The stay-at-home orders across the country have devastated numerous industries, and the number of unemployed will grow over the next few months if the stay-at-home orders stay in place. “A number of states, however, have announced that the stay-at-home orders will end immediately or in the very near future. Unfortunately, although the stay-at-home orders caused employment to drop as if it fell off of a cliff, the recovery after these orders end is likely to be very slow. “The reasons are that many people will continue to stay at home because of fears of the virus and bankruptcies will hinder rapid employment. There will also be less local and state government spending as states adjust to lower revenues and added costs due to the virus. Consumer spending will also decrease due to wealth reductions and increased cautiousness. So, unless the federal government and the Fed respond with herculean efforts, I expect a long labor market recovery – even slower than what followed the Great Recession.”