Financial Focus: So how many jobs have we really lost?

By Professor Anthony Rivieccio MBA PFA

If you heard the Jobs report and the stock market last Friday, you would have thought we were just about all the way back!. President Trump held a press conference shortly thereafter and said the report was ” stupendous”. In May, the economy ADDED 2.5 million jobs. Unemployment tracked in at under 14 percentage.

The “doom and gloom” experts thought it was going to be 20 percent. After all, in April it was reported by the Bureau of Labor Statistics that the US lost 20 million jobs.

So how was the Government wrong? Were the numbers tampered with?

Most believe that the people that work for BLS are honest, trustworthy public employees and would not have changed anything on purpose — but what if the rules changed?

After all, what does ” reclassification” mean?

Recent reports, from financial news outlets like “Market Insider” points out that the unemployment rate would have been 20% higher, if there weren’t some “adjustments.”

So, what were those adjustments when a person who was technically employed but absent from work as being out of a job?

  • What is considered a “temporary” job?
  • How does the state Department of Labor know for sure that the jobs lost will be offered back?
  • How does an unemployment claim all of a sudden count a “furlough” as job loss?

But the “Market Insider” report offers a big hint. “In May, the industries with the biggest job gains were leisure and hospitality, retail, and education and health services – mostly low-wage and low-hours service sectors.”

Really? They were open? They were thriving? Of course, not. They were all closed. So, who got paid and who did not work?

The Payroll Protection program (PPP), the government loan/ grant program has come into play. After all, businesses can only get the loan if they put their workers back on payroll. If they apply 75 percent of the money to payroll, then it is a grant — FREE money. The PPP bump goosed the May unemployment report statistics.

Governor Andrew M. Cuomo’s NY PAUSE stay-at-home order due to the coronavirus has crippled the state’s economy. Credit: Mike Groll/Office of Governor Andrew M. Cuomo.

But will these jobs be permanent? Will our economy start humming again? There will be no doubt ( in our opinion) that we could be looking at , at least six months from now, barring any other American crises. And yes we also could be looking at a transformation as we also believe labor’s 15 percent payroll will be based on “stay at home” jobs.

Government — between handling the “economic stimulus” program, “business loans” and “2019 tax season” — has done a great job under these historic circumstances. But, truly, this will not be enough. We need massive consumer spending. But even that will be a slow process as it will be hard to spend on anything other than basic necessities as one wears a mask and gloves.

Hey, I wonder if the nation’s economists are counting the mask makers?

Professor Anthony Rivieccio, MBA PFA, is the founder and CEO of The Financial Advisors Group, celebrating its 24th year as a fee-only financial planning firm specializing in solving one’s financial problems. Mr.  Rivieccio is an Adjunct Professor of Business, Finance & Accounting at the City University of New York and Monroe College. You can reach Anthony at 347.575.5045.

Print Friendly, PDF & Email