March Employment Numbers Won't Reflect Full Impact of COVID-19 Because BLS Survey Was For Pay Period Including March 12

Susan Jones | April 2, 2020 | 7:55am EDT
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The COVID-19 pandemic forces many business closures, including this one in New YOrk City. (Photo by Bill Tompkins/Getty Images)
The COVID-19 pandemic forces many business closures, including this one in New YOrk City. (Photo by Bill Tompkins/Getty Images)

( - The nation's unemployment rate has been either 3.5 percent or 3.6 percent -- a 50-year low -- for the past six months, but that is about to change because of the COVID-19 virus that has shut down large parts of the U.S. economy.

The regular report on the March employment numbers, which the Bureau of Labor Statistics is scheduled to release Friday, is sure to reflect a rise in the unemployment rate and a drop in the record number of employed Americans, but those changes won't tell the full story.

That's because the BLS's monthly employment numbers reflect the pay period that includes the 12th of the month--or March 12, in the case of the unemployment report due out on Friday.

The BLS notes, in the explaining its methodology for determining employment numbers, that: "Employment data refer to persons on establishment payrolls who worked or received pay for any part of the pay period that includes the 12th day of the month."

March 12, a Thursday, was one day before President Trump declared a national coronavirus emergency; and three days before the Centers for Disease Control and Prevention recommended that Americans avoid gatherings of 50 or more people, thus accelerating the economic squeeze.

A number of school systems announced plans to close on or around March 12; and a week later, on March 19, California Gov. Gavin Newsom announced the nation's first "stay at home" order, which most states have now done as well.

Therefore, the May unemployment report -- which will reference the week of April 12 -- is expected to reflect a more devastating picture than what BLS will release tomorrow.

According to BLS: "In order for catastrophic events to reduce the estimate of payroll employment, employees have to be out of work without pay for the entire pay period."

But if employees receive pay for any part of the pay period, even 1 hour, they are counted in the payroll employment figures.

In early March, the job losses caused by the emerging coronavirus were not as numerous as they were by late March, when many businesses were shut down by state and local governments.

According to BLS, each month, Census Bureau employees contact 60,000 eligible sample households and ask about the labor force activities (job-holding and job-seeking) or non-labor force status of the members of these households during the survey reference week (usually the week that includes the 12th of the month).

People are considered employed if they did any work at all, even part-time or temporary, for pay or profit during the survey reference week.

People are classified as unemployed if they do not have a job, but actively looked for work in the prior four weeks, and are currently available for work.

The labor force is made up of the employed and the unemployed.  The remainder -- those who have no job and are not looking for one -- are counted as “not in the labor force.”

This "not in the labor force" number reached a record high of 96,297,000 in August 2018, during President Trump's tenure, driven largely by Baby Boom retirees. BLS notes that many of those who are not in the labor force are retired, going to school, or have family responsibilities that keep them out of the labor force.

Watch for this number to rise even more in coming months, as massive business closures produced millions of people who have no job and are not looking for one because there are fewer places to look, with so many businesses closed, at least through April and maybe longer.

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