The Economist marvels that the percentage of households that have had someone in the house lose their job last year is greater than the unemployment rate. They say the first number, 24%, shows “a lot of people directly affected by recession”. But is this true?
Let me start by giving the obvious disclaimer: the recession has been hard on people. Yessir. Nothing I say below should suggest otherwise.
Outside of recessions and booms, 1.3% of employed workers become unemployed every month (look at this neat graph). This means employed workers have about an 15% chance of being “affected” by unemployment in a year. There’s something like 1.22 workers per household so a household has about an 18% chance of being “affected” by unemployment in a year (I have to assume these proportions are the same whether or not the worker is the primary earner in the house). This is in “normal” times.
Survey error notwithstanding, it appears this recession is associated with a 6% increase in the number of households “affected” by unemployment. I don’t know if that’s a big number or not.
I do know that the separation rate is down in this recession (hire rates are down further, though).
I also know that lay-offs rates have only slightly increased in the last year or so.
The unemployment rate is high because the job finding rate is low not because the separation rate is high.