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Unemployment in the U.S. this year might not match the 25% peak during the Great Depression of the 1930s, but it could come pretty close.
The coronavirus pandemic has already cost more than 30 million workers their jobs, at least temporarily, since the U.S. began shutting down large parts of the economy in mid-March. And job losses continue to pile up.
Read: 30 million Americans and counting have lost their jobs to the coronavirus
If none of these people returned to their jobs, it would mean about 18% of the pre-crisis labor force is out of work, economists estimate.
““The scale of initial jobless claims over the past six weeks suggest that the U.S. unemployment rate is rapidly approaching Great Depression levels,” said Scott Anderson, chief economist of Bank of the West.
Read:The unemployment checks still aren’t in the mail for millions of jobless workers
It’s by no means certain, however, that the government’s official unemployment rate in April will reach that high. The report is published next Friday.
See:MarketWatch Economic Calendar
Wall Street DJIA, -2.55% estimates for April unemployment run from a low of 12% to a high of 22%, with most above 15%. Why such a wide range? Chalk it up to the narrow approach taken by the government in measuring unemployment.
Workers who lost their job but haven’t searched for another, for instance, are typically not included in the labor force when the government calculates the jobless rate. The labor force began to shrink in March and is likely to contract again in April, holding the official increase in unemployment in check.
Nor are employees who aren’t working but are still being paid by their companies counted as unemployed. The Paycheck Protection Act is paying thousands of small businesses to keep workers on payrolls in exchange for forgivable loans to get them through the crisis.
Whatever the actual number, unemployment has clearly soared to the highest level since World War Two, easily topping the prior record of 10.8% in 1982.
What’s critical, analysts say, is that Washington step in again if necessary to enhance already expanded unemployment benefits and assistance to business to prevent most of the job losses from becoming long lasting. The higher unemployment goes, the longer it will take for the U.S. economy to recover and for millions of Americans to suffer.
Read: Why the U.S. economy’s recovery from the coronavirus is likely to be long and painful
“The importance of the peak unemployment rate is that it is the point from which we start our recovery,” said Joel Naroff of Naroff Economic Advisors. “The higher the peak, the longer the trek down the mountain.”
