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A pandemic that shakes the economy 5:48
Editor's Note: Claudia Sahm is the director of macroeconomic policy for the Washington Center for Equitable Growth. Kate Bahn is director of labor market policy at the Washington Center for Equitable Growth. The opinions expressed in this comment are exclusive to the authors.
(CNN) - Last Friday, the Bureau of Labor Statistics announced that the unemployment rate rose to 4.4% in March, from 3.5% in February. In addition, it reported that 701,000 jobs were lost.
That may sound terrible, but due to the timing of the government poll, the report actually paints a much more optimistic picture than reality. Earlier in the week, we learned that another 6.6 million people applied for unemployment benefits, bringing the total to nearly 10 million in the last two weeks of March and signaling an unprecedented job collapse.
The latest unemployment rate reminds us that our job market was relatively strong just before Donald Trump declared a national emergency on March 13. March 13 was also the last day people were asked, in the job report released Friday, if they were working.
We are now in recession.
As we know? The millions of workers who applied for unemployment benefits told us so. Past experience also tells us. Since the 1970s, a half-point increase in the three-month average unemployment rate, relative to its low in the previous year, has occurred in the first months of each recession. This indicator is known as the "Sahm rule".
According to our estimates, using recent applications for unemployment benefits, the unemployment rate on March 27 was 7%, double the jump reported by the Bureau of Labor Statistics on Friday. This is a huge one month increase.
Averaging our 7% unemployment estimate for March with official January and February rates implies a reading of the Sahm rule that is more than double the level at the start of past recessions.
The layoffs will continue until the pandemic is under control and it is safe to reopen businesses and leave our homes again. The treatment required to keep Americans healthy and "flatten the curve" has meant putting the economy in a coma. How quickly we can revive the economy depends on how quickly our healthcare professionals can beat this virus.
READ: How to reactivate the economy after the coronavirus? German experts have a plan
But policy makers must also do their part. Although the Federal Reserve has taken many steps to keep markets running, and Congress approved a $ 2.2 trillion aid package, more needs to be done. As the economy falls apart, jobs and businesses struggle to stay afloat, Congress must spend more money on unemployment insurance and the Supplemental Nutrition Assistance Program, and it must make benefits more generous and accessible to all. . Small businesses also need more support to buffer millions of more lost jobs, or we risk emerging from this crisis with new levels of corporate concentration.
We must strengthen our social safety net. Workers and their families must be kept insured, regardless of whether they can work, with full paychecks and full grocery carts. Policymakers can and should do better.
Government decision makers must commit to moving fast and staying on course. We know that distributing additional financial support, support that automatically turns on in a crisis and does not turn off until the economy recovers, works.
Policy makers must also address the inequality that has made our economy so fragile in the first instance. Continuous and in-depth support for our most vulnerable workers and small businesses, an ongoing program to ensure paid sick leave, and generous workplace protections combined with labor standards for those on the front lines of this crisis are the building blocks we need to ensure sustained recovery.
The reality is that we are now in a recession, and we must ask the government to do more. We cannot afford to wait.
Recession