More than 1 in 3 Joplin workers could be affected by unemployment at the peak of the economic crisis triggered by the coronavirus, according to one forecast that uses a broader definition of unemployment.
Although businesses are reopening locally, statewide and around the country, millions of workers have simply left the workforce, having given up on finding a job, often because they think no work is available for them. When they are counted, the number of unemployed is actually much higher than the official figure.
“They are not even trying anymore,” said Doug Milnes, a certified financial analyst and head of marketing for the company that released the latest unemployment forecast. “A phrase people use is discouraged worker.”
When discouraged workers and the underemployed are included in the unemployment rate, Milnes said Missouri’s true unemployment rate could hit 31%, and Joplin’s could hit 34% at the peak.
The forecast was compiled by MoneyGeek, a private, for-profit company based in San Francisco that bills itself as a financial technology company providing content and tools to help people make financial decisions.
The company provided an earlier forecast last month, projecting 26% unemployment for Joplin and 27% statewide, using traditional definitions of unemployed, but Milnes said its latest analysis shows things could be worse at the peak, which he said is expected sometime in the next 12 months.
Unemployment is a calculation of those workers who are considered to still be in the labor force, which includes those who are working as well as those who are out of work but actively looking for a job. This is sometimes called the “official” unemployment rate. In Missouri, that hit 9.7% in April, up from 4.5% in March and 3.5% in January and February, according to the Missouri Department of Higher Education and Workforce Development. That increase of more than 6 points was the largest jump ever recorded for the state.
The latest figures available for the Joplin Metropolitan Area (Jasper and Newton counties) are for March, when unemployment hit 4.1%, up from 3.2% in February and 3.8% in January. April figures are not yet available for the metro area. Those will be released June 3 for Joplin, and May figures will be released July 1.
For the United States, official unemployment hit 14.7% in April, up from 4.4% in March, and 3.6 and 3.5%, respectively, for January and February, according to the Bureau of Labor Statistics, part of the U.S. Department of Labor.
But that’s not the whole picture.
“There is this other set of folks who have rapidly left the workforce,” Milnes said of discouraged workers, who are not considered part of the labor force and therefore aren’t counted in the official rate. “They aren’t looking for work.”
When they are counted in this broader definition of unemployment, it is usually much higher. In April, for example, when the BLS calculated the official unemployment rate at 14.7%, it also released several other figures, including those who are discouraged, those who are part-time workers who want full-time jobs, and that unemployment figure was put at 22.8%. Part-time workers who want full-time jobs are also not counted as unemployed.
Milnes said the number of dispirited workers right now who have given up looking for work, believing there are no jobs out there, has been climbing, as opposed to a period when the economy is robust, jobs are plentiful, and people are encouraged to join the labor force and look for work.
“In a two-month period — April and May — 8 million people have decided not to be in the workforce,” Milnes said.
Using the broader definition, the number of people who may be unemployed in Missouri at the peak will actually hit 962,400, according to MoneyGeek, and in the Joplin metro area it will be 28,700.
Milnes said MoneyGeek’s model is determined by aggregating and averaging the estimates of top economists, including those with the Federal Reserve, weighing the impact across various sectors, such as retail and hospitality, that will feel the effects differently, and then transferring that data to metro areas such as Joplin.
He said Joplin’s unemployment estimate continues to be affected by economic sectors struggling with recovery: “We continue to see losses in retail trade that are impacting Joplin, in trade and transportation.”
Health care is another area being affected.
Using the broader definition, Joplin’s unemployment rate, if the latest forecast is on target, would be about four times worse than it was during the Great Recession, when it peaked at 8.7% in 2009 and again in 2010.
Highs and lows
Unemployment has been between 2.7% and 3.1% during the past two years for the Joplin metropolitan area of Jasper and Newton counties; in fact, the 2.7% unemployment rate in the summer of 2018 was a record low, meaning Joplin could go from a record low to a likely record high in a three-year period.