It’s no secret that numbers are going to be bad in the April jobs report on Friday, which provides the first comprehensive look at the state of employment since mid-March. The surge in initial unemployment insurance claims over the past month provides an indication of just how bad it is likely to be. Consensus estimates place the April unemployment rate between 16 percent and 18 percent, up from 4.4 percent in March.
However, the figures released on Friday will not fully capture the current state of U.S. employment. The BLS Household Survey and the concepts it uses to measure unemployment were not designed to perform during a pandemic. The BLS acknowledges these limitations and recently requested five questions be added to its monthly survey to better understand the employment impact of the coronavirus pandemic. We’ll have that additional BLS data for May in early June, but in the meantime, Morning Consult got a head start on asking those same questions.
This analysis fills in some of the gaps in Friday’s jobs report. It draws on the results from the five survey questions designed by the BLS and additional supplementary questions to better understand the impact of the coronavirus pandemic on employment. The findings shed light on workers’ ability to look for work and work from home, as well as the likelihood of laid off and furloughed workers returning to work once the economy reopens. The coronavirus has not only led to massive layoffs, it is responsible for a widespread loss of income, a decrease in productivity and high levels of job instability. It has also jeopardized the long-term health of the U.S. workforce.
The findings in this report are based on two separate surveys. The first survey was conducted April 28-29, and the second, with the supplementary BLS questions, was conducted April 29-May 1, 2020. Both surveys relied on a representative sample of 2,200 U.S. adults, weighted to match age, gender, educational attainment, and region. Each of the surveys’ margins of error is 2 percentage points.
Key Findings
Coronavirus drives down labor force participation: The coronavirus has prevented people from looking for work in the past four weeks, thereby exerting downward pressure on the unemployment rate and on labor turnover. In the April 29-May 1 survey, 28 percent of the population not in the labor force (i.e., not working and not looking for work) said that the coronavirus prevented them from looking for work in the past four weeks. If they were added back into the labor force, the unemployment rate would be much higher.
The number rises to 31 percent for those in the labor force and employed. These are workers who would normally be looking for more work or better paying work. (Both subsamples of the population have a margin of error of 3 points.)
Loss of income and hours more prevalent than layoffs: The increase in the unemployment rate significantly understates the effect of the coronavirus pandemic on employment conditions. In the April 28-29 survey, when asked how their employment situation had changed since Feb. 15, workers in the labor force (i.e., currently employed, without a job and looking for work or recently laid off or put on furlough), were three times as likely to say that they had lost pay or income as they were to have been laid off or lost a job (21 percent compared to 8 percent). In addition, 13 percent of respondents in the labor force have been put on temporary leave since Feb. 15.
The loss of pay or income is consistent with a widespread decrease in the number of hours worked per week. Forty-five percent of workers with jobs said that they are working fewer hours per week compared to the period before the coronavirus pandemic. Only 15 percent said they are working more hours. For workers who are paid by the hour, a decrease in the hours worked per week translates into a loss of pay or income.
Most part-time workers would like to work more hours, but there are large disparities across genders. The BLS defines part-time workers as anyone working under 35 hours per week. In total, 60 percent of 696 part-time workers said that they wanted to work more than 35 hours per week, with 66 percent of men and 54 percent of women. (This subsample has a margin of error of 4 points.)
Of the 419 people who said that they wanted to work more hours per week, the reasons for not being able to work full time also differed by gender: 41 percent of these men cited weak business conditions, compared to 24 percent of women. Women were more likely to say that they were unable to work more hours due to child care obligations than men (12 percent compared to 6 percent). (This subsample has a margin of error of 5 points.)
Employees of small businesses are more likely to see a loss of pay than those of larger businesses: Employees of small businesses (i.e., those with under 500 employees) are more likely to have experienced a loss of pay or income than those of larger companies. The data shows 28 percent of respondents working at small businesses reported losing pay or income since Feb. 15, compared to 14 percent at companies with more than 500 employees.
The percentages of being put on temporary leave or being laid off were not significantly different across these three categories. Thus, workers at smaller companies are being disproportionately affected by the current economic downturn.
This findings supports the approach in the Paycheck Protection Program, which targets firms with under 500 employees who laid off, put on furlough or decreased the hours or pay of their employees between Feb. 15 and April 26.
Loss of demand for labor, inability to work from home drive changes in employment: The coronavirus is responsible for the majority of employment changes since Feb. 15, but other factors exacerbated the downturn.
Of the 854 people who have experienced a change in their employment situation since Feb.15, 59 percent cited the coronavirus and its effect on the business or their ability to perform their job. And 21 percent of respondents whose employment situation has changed said the business has fewer customers or orders, indicating that a drop in the demand drove those employment changes.
However, part of the effect of the coronavirus on employment is not the result of a lack of demand, but rather an inability of workers to supply labor in the current environment: 12 percent said that they cannot work at the office or job site and are unable to perform their jobs while working at home, while an additional 9 percent said that they needed to stay home to care for family members.
There is also evidence of a strong divide between parents and non-parents, with 13 percent of parents citing the need to stay home to care for family members and only 6 percent of non-parents. (The parent subsample carries a margin of error of 5 points; non-parents is 4 points.)
Half the workforce is now working from home, but with mixed productivity outcomes: 49 percent of people currently employed are now working from home, with 32 percent of the workforce making the transition since the onset of the coronavirus pandemic. The supplementary questions asked by the BLS produce similar results (47 percent of all employed persons), but it doesn’t distinguish between those who recently started working from home from those who worked from home prior to the coronavirus pandemic.
This distinction is important for understanding possible productivity losses from working from home. Indeed, there is a large gap in productivity between workers who recently began working from home and those who did so prior to the onset of the coronavirus pandemic. Of those who recently began working from home, 42 percent said that they are less productive over the past two months on a given day compared to 31 percent of those who were already working from home before the pandemic began.
Productivity is one of the single largest drivers of real wage gains over time so a loss in the productivity of labor would exert downward pressure on wages.
High level of job instability among those who are still working: 39 percent of those currently employed believe that their jobs will be affected in the next four weeks, and those concerns are highest among less educated workers. Among workers without a bachelor’s degree, 43 percent believe their jobs will be affected compared to 34 percent and 31 percent with bachelor’s degrees and postgraduate degrees, respectively.
These fears are in many ways justified as firms tend to lay off more junior and less-educated employees during a recession. The positions they tend to hold require less training, which means that businesses can more easily rehire these positions when the business outlook improves.
Nearly one-third of laid-off and furloughed workers remain attached to their previous employer: 29 percent of the 383 workers who have been laid off or put on temporary leave since Feb. 15 have subsequently been contacted by their prior employers and 67 percent believe they will be brought back or rehired.
Workers who remain attached to their employer are able to resume their prior work faster than new hires since they do not require the same degree of onboarding or training. One of the primary assumptions of those who believe that the U.S. economy will quickly rebound once many of the pandemic-related prohibitions are lifted is that workers will be able to return to their prior jobs. Thus, as the economic downturn continues, it will be important to monitor any developments in these figures.
Coronavirus jeopardizes Americans’ long-term health: 19 percent of Americans did not seek medical care for something other than the coronavirus due to the coronavirus pandemic, according to the supplementary BLS survey. A separate survey finds that this habit of deferring non-COVID-related medical care is likely to continue across a wide spectrum of provider settings. The long-term consequences of the economic shutdown on the U.S. labor force will take years to fully realize, but the scale of the deferral of care suggests that the economic effects of the coronavirus pandemic will persist well into the future.
John Leer leads Morning Consult’s global economic research, overseeing the company’s economic data collection, validation and analysis. He is an authority on the effects of consumer preferences, expectations and experiences on purchasing patterns, prices and employment.
John continues to advance scholarship in the field of economics, recently partnering with researchers at the Federal Reserve Bank of Cleveland to design a new approach to measuring consumers’ inflation expectations.
This novel approach, now known as the Indirect Consumer Inflation Expectations measure, leverages Morning Consult’s high-frequency survey data to capture unique insights into consumers’ expectations for future inflation.
Prior to Morning Consult, John worked for Promontory Financial Group, offering strategic solutions to financial services firms on matters including credit risk modeling and management, corporate governance, and compliance risk management.
He earned a bachelor’s degree in economics and philosophy with honors from Georgetown University and a master’s degree in economics and management studies (MEMS) from Humboldt University in Berlin.
His analysis has been cited in The New York Times, The Wall Street Journal, Reuters, The Washington Post, The Economist and more.
Follow him on Twitter @JohnCLeer. For speaking opportunities and booking requests, please email [email protected]