Back after a hiatus to depressurize after 9 years as department chair. I switched roles slightly so I am now a research director with the new NCoBPA Institute for Policy & Business Analytics. I am looking forward to it, but I needed some time to step back after the long stint as chair.
The labor situation in the country is a source of constant attention, as it should be. We cannot afford to be wrong right now. The situation is dire for many households, and it is dire for the overall economy. Those that do not think so are likely auditioning to be an economic puppet for the White House. That’s puppet, not muppet. Muppet would be an upgrade in terms of coherent policy ideas.
Before we delve into the policy ideas too much, let’s get a lay of the land as it stands right how. We are going to even look over a longer time horizon than the initial unemployment claims and go back farther into history just to get a sense of how major current events really are. Let’s start with one of the more common metrics, the unemployment rate.
Looking at this it seems pretty clear recent data readings are unprecedented. From April 2020 to June 2020 we had unemployment rates of 9.1, 9.1, and 6.1. 9.1 is the highest reading going back to 1976, while 6.1 gets us the 6th highest reading. As the graph illustrates well, this takes us all the way back into the early 1980s to find the last time we were at these levels.
We will not go under the hood too much here but clearly even a quick recovery to lower unemployment numbers carries with it losses to households and the economy overall. These are not likely to be immediate and carry significant ongoing risks. We can see similar circumstances when we look at other measures such as employment.
Well that is a scary picture. Employment looks like a cliff for lemmings to just hurl themselves over into the abyss. Essentially employment in North Dakota dropped back to 2011 levels. You read that right. We lost about a decade’s worth of employment growth. While we might enjoy at least a reasonably though partial recovery these are still serious, significant losses to bear. The decade we lost was an incredibly important decade in North Dakota economic history with the takeoff of oil as a legitimate rival sector to agriculture. The situation with unemployment counts is the last measure to examine.
In what likely seems like a blink of the eye we went from less than 10,000 unemployed to over 30,000 unemployed. The concerns now have to be the speed at which people can get back to work before skill erosion occurs. This is even more difficult in an era of pandemic where workplace safety seems like a moving target and we are using technology to redefine how we perform work.
The big picture is this: lots of recent gains are gone. Is this a permanent loss? Not completely, but it seems likely to take some time before we get back to those peaks in a meaningful way. Fear is the enemy right now. People have concerns about how to go about their daily activities, and rightly so. This in turn creates problems for businesses and how they interact with workers, customers, suppliers, and so on.
There are no easy answers right now unfortunately. No policy is guaranteed to work though there are clearly preferred options. There needs to be incredible coordination at the federal and state level, between the private sector and the public sector. That is the only way for policy to have maximum effect.