MNI INTERVIEW: US Jobless Claims Overstate Unemployment: BLS

--Problem Will Likely Persist Through Pandemic, Official Says

By Brooke Migdon

     WASHINGTON (MNI) - U.S. weekly jobless claims reports will overstate

unemployment throughout the Covid-19 pandemic as social distancing rules hamper

data collection and some laid-off workers are allowed under emergency

legislation to draw benefits without being counted in the official unemployment

rate, a Labor Department official told MNI.

     The Bureau of Labor Statistics -- the department's statistical arm that

produces the monthly jobs report -- said the U.S. added 2.5 million jobs in May

and unemployment shrank to 13.3% despite data collected the same week showing

the number of people on jobless benefits climbed to 20 million. First-time

claims also neared 2.5 million in the week ended May 16, when data for the jobs

report was collected.

     Weekly continuing claims, counted by the Labor Department's Employment and

Training Administration, have historically tracked closely with the BLS measure

of monthly unemployment. But an emergency bill passed in March loosened

standards for benefits claimants this year, creating a gap in how each office

defines unemployment, said Patrick Carey, division chief of the BLS Local Area

Unemployment Statistics program.

     The Emergency Unemployment Insurance Stabilization and Access Act allows

states to suspend a requirement that claimants be "actively" searching for work,

Carey said. That differs from a BLS directive that workers must be seeking work

to be counted as unemployed unless their layoff is temporary.

     "There could be people receiving unemployment insurance reflected in the

jobless claims numbers that are not on temporary layoff, but are not fulfilling

the 'actively seeking work' criteria, so they would not be considered

unemployed," he said.

     --DATA INTEGRITY

     Nearly 5 million people have left the labor force since March, though

nearly 2 million people returned in May, the BLS reported last week.

     Analysts have said jobless claims may paint a worse picture of labor market

health because massive amounts of workers are returning to their jobs as states

reopen.

     The BLS jobs report has also suffered from data integrity issues since the

onset of the pandemic in March. Millions of unemployed workers have been

misclassified in the absence of in-person interviews and miscommunication among

data collectors, and that could be driving the two measures of unemployment

further apart, Carey said.

     Carey expects the disconnect between the measures of unemployment to begin

to correct itself once emergency measures are rolled back and data collectors

can interview respondents in-person.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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