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Speaker 1: I tell you what's a surprise for me that day

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Speaker 1: I went to work. After two hours, they let um

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Speaker 1: know that we have to close the restaurant and going

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Speaker 1: to Human Reserve to receive a letter of later. Hello

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Speaker 1: and welcome to Stephanomics, the podcast that brings the global

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Speaker 1: economy to you. And that was Roy James talking about

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Speaker 1: his last shift on March nine at a restaurant inside

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Speaker 1: Miami International Airport, where he tended bar for the past

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Speaker 1: ten years after coming to the US from Cuba fifteen

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Speaker 1: years ago. More than thirty million Americans have far for

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Speaker 1: unemployment benefits in the past two months. Now. If you're

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Speaker 1: having trouble thinking about that very big number, try this.

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Speaker 1: It's the equivalent of wiping out all of the jobs

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Speaker 1: created in the US economy, since it's more than twenty

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Speaker 1: years of job gains gone in a matter of weeks.

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Speaker 1: As we record this, we're waiting for the official US

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Speaker 1: jobs report for April, but we already know it's going

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Speaker 1: to show a record breaking fall and employment. And we

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Speaker 1: also know that the parts of the workforce that had

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Speaker 1: only recently benefited from that long slow recovery after the

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Speaker 1: last recession are the parts that are now being hit. First,

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Speaker 1: our US economy reporter Katia Dmitrieva has been one of

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Speaker 1: several Bloomberg reporters who've been trying to put a face

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Speaker 1: and a voice on some of those numbers. I'll talk

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Speaker 1: to her in a minute, and I'm also going to

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Speaker 1: be hearing from our Eurozone economist Maheva Kuza about the

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Speaker 1: contrasting situation in Europe. Unemployment there hasn't risen as fast

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Speaker 1: as in the US, but as many as forty million

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Speaker 1: workers are now having their wages indirectly paid by the state. First, though,

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Speaker 1: let's hear a bit more from Roy James about what's

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Speaker 1: happened to him since he lost his job. He was

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Speaker 1: talking to Bloomberg reporter Jeff Green. I was trying to

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Speaker 1: apply online. The system was impossible, also ready out for

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Speaker 1: eleve of weeks, and I didn't see nothing yet and

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Speaker 1: not even information. Right now, I'm already okay my to

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Speaker 1: pay my rent. I get a deal for the first month,

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Speaker 1: but for the second months, I didn't get a deal.

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Speaker 1: I had to pay on my rank, my grand yesterday.

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Speaker 1: About the time everything's gonna go back to normal, we

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Speaker 1: we have to pay everything. But that at the same time,

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Speaker 1: and we if we're not received the help that we're

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Speaker 1: supposed to receive from the government, from where I'm gonna

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Speaker 1: get the money to pay all those twos? But the

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Speaker 1: people need to help and there are a lot of people. No,

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Speaker 1: we're not talking about a couple of homebreds talking about millions.

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Speaker 1: So that was Roy James in Florida. Well, Katia Dmitrieva

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Speaker 1: has been part of the same project. She's a US

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Speaker 1: economy reporter and she's with me. Now, Katia, give me

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Speaker 1: some of the background the story you were trying to

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Speaker 1: tell by talking to the seven people featured in this article,

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Speaker 1: because I know you were in a way you're trying

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Speaker 1: to draw a contrast between what they're experiencing now and

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Speaker 1: what these groups were enjoying in the labor market, the

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Speaker 1: conditions that they were seeing even as recently as just

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Speaker 1: a few months ago. Yeah, that was one of the

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Speaker 1: things we wanted to explore, is what the labor market

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Speaker 1: looks like right now and what it feels like for

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Speaker 1: people on the ground. The first entry point into this

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Speaker 1: was just putting a face behind the data and and

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Speaker 1: the second part is really just finding out what is

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Speaker 1: happening on the ground. One thing that we were really

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Speaker 1: curious about is what happens when people are looking for

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Speaker 1: a job right now, when they're when they're hunting, because

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Speaker 1: a few months ago, they would have been welcomed with

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Speaker 1: open arms by employers. Employers were desperate for workers, They

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Speaker 1: were willing to pay higher wages. They were willing to

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Speaker 1: offer benefits everything from childcare to maybe a bit more

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Speaker 1: um loose kind of hours if you want to stay

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Speaker 1: here your hours, for example, they were offering healthcare benefits

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Speaker 1: at a higher rate. And that's completely changed, and it

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Speaker 1: happened very very quickly. We've had a long jobs recovery

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Speaker 1: since the global financial crisis, some of these more marginalized

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Speaker 1: members of the labor market, minorities, women had really only

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Speaker 1: just been benefiting from that recovery the last few years.

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Speaker 1: Are we seeing those groups being hit first by this

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Speaker 1: crisis to kind of first in, first out dynamic. The

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Speaker 1: March data does show a take up in the unemployment

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Speaker 1: rate for African Americans, for Hispanics, for women, but it

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Speaker 1: also shows a tick up in the unemployment just more broadly.

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Speaker 1: What we do know from the data is that they

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Speaker 1: are more likely to be let go first um they're

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Speaker 1: in industries that happened to be a bit more precarious,

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Speaker 1: and so they're more likely to be let go. And

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Speaker 1: also there are in industries that were most affected first,

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Speaker 1: so retail stores, restaurants, So this is um people over

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Speaker 1: the age of fifty five. There was this sort of

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Speaker 1: rise in the participation rate in labor market amongst that

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Speaker 1: amongst that group, and um, of course we know across

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Speaker 1: the country restaurants just shuttered in in droves, and the

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Speaker 1: same with retail stores. We had a bunch of closures.

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Speaker 1: These are also minimum wage jobs, and a large portion

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Speaker 1: of those uh folks for let go as well. Yes,

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Speaker 1: it's interesting not only that I was listening to some

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Speaker 1: of these interviews, and they do all seem to have

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Speaker 1: been surprised by losing their jobs. They had somehow thought

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Speaker 1: that it was going to be temporary, or that their

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Speaker 1: employers would try and hold keep them on. UM. And

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Speaker 1: you also had spoken, you and your colleagues to quite

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Speaker 1: a lot of young people. And we know historically that

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Speaker 1: young people can have the most lasting effects from a

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Speaker 1: recession if they lose their first job or are not

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Speaker 1: unable to get on the job's ladder at all after

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Speaker 1: leaving high school or college because of a recession. You

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Speaker 1: might think, well, that's just a few months delay, but

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Speaker 1: actually the numbers suggest people can have a permanent hit

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Speaker 1: to their income from missing out in that first step

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Speaker 1: in their career. And I think catchier. You and your

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Speaker 1: your colleagues interviewed a few people like that, including a

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Speaker 1: woman in Ohio, Danny or thiece who Viviana Further your

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Speaker 1: colleague met. Do you how much do you know about her?

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Speaker 1: What's what's her story? Yeah, Danny is a twenty five

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Speaker 1: year old in Cleveland, and she was furloughed from her

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Speaker 1: part time job as a teaching assistant at a Montessori school.

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Speaker 1: And it kind of shows this chain reaction that happens

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Speaker 1: because when she lost her job, she basically lost her

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Speaker 1: main source of income and how she was paying for

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Speaker 1: her school. And she was supposed to complete her associate's

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Speaker 1: degree this summer and that would have let her do

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Speaker 1: uh Montessori teacher training and then also transferred to a

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Speaker 1: b A. So the knock on effect of that job

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Speaker 1: loss means that she cannot complete her associate's degree, she

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Speaker 1: can't move on to do this really crucial teacher training,

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Speaker 1: and essentially she has delayed the start of her career.

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Speaker 1: So here's Dannie Ortiz now. But it was just so

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Speaker 1: out of nowhere. So it just happened so sudden, you know,

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Speaker 1: you didn't have time to prepare. It was like, Okay,

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Speaker 1: here's your last check, and you won't get four more

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Speaker 1: for the rest of the year. And at least for me,

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Speaker 1: I am okay money wise, but that's not gonna last forever.

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Speaker 1: It's gonna last me at least two more months. Maybe

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Speaker 1: this summer I was supposed to take the Monastori training

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Speaker 1: and so that I could have my own classroom in

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Speaker 1: two years. But you know that all changed. Um so

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Speaker 1: just like just like career wise, like I've had to

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Speaker 1: reconsider things, not just schooling, but like the training that

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Speaker 1: I wanted to do this year. To me, it sounded

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Speaker 1: a lot like what happened to um millennials when they

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Speaker 1: graduated into the recession in two thousand and eight, two nine,

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Speaker 1: as far as two and they were faced with a

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Speaker 1: few jobs and the jobs that they were able to get,

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Speaker 1: the power was really with the employer. They could they

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Speaker 1: could pay them what they wanted, um, often not not

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Speaker 1: the best benefits. So basically the polar opposite of of

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Speaker 1: what we were seeing up until a couple of months ago. UM.

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Speaker 1: The point you made actually about the surprise that these

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Speaker 1: folks had when they lost their jobs. I think it's

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Speaker 1: really important because the economic expansion completely changed the dynamic

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Speaker 1: of the workforce. You went from something that Danny Ortiz

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Speaker 1: is probably gonna face now, graduating into a market that

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Speaker 1: maybe doesn't want her um, And instead they were going

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Speaker 1: into a market where people were desperate for workers, all

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Speaker 1: kinds of workers, people without a college degree, people who

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Speaker 1: had some college um, people who didn't even want to

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Speaker 1: go to college. UM, African Americans who, like I mentioned,

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Speaker 1: their unemployment rate went down. Jobs were offered to them.

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Speaker 1: So it's it's worth emphasizing how surprising it was because

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Speaker 1: employers were really bending over backwards up until a few

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Speaker 1: months ago to keep people on hand. Katia, Finally, was

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Speaker 1: anything surprising to you in the report voting that you

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Speaker 1: did in the last week or recently? You know, it

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Speaker 1: was the main takeaway bin for you. I think one

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Speaker 1: of the more interesting parts in the reporting and in

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Speaker 1: speaking with some of these people that are in this

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Speaker 1: story is just how finding out just how precarious the

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Speaker 1: labor market was for them even before the coronavirus. You know,

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Speaker 1: I think I think we often talk about the coronavirus

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Speaker 1: as this black swan event that caused a lot of

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Speaker 1: these issues, But the reality is that as as good

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Speaker 1: as the gains were beforehand, you know, wages did rise

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Speaker 1: and people were able to find jobs easier, but a

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Speaker 1: lot of the protections weren't in place either, and the

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Speaker 1: wages often didn't compensate people for the kind of for

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Speaker 1: the kind of work they were doing. So, if anything,

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Speaker 1: I think that's the question going forward is after all

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Speaker 1: of this is over, when the economy quote unquote reopens,

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Speaker 1: when people start going back to work, what will the

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Speaker 1: brief worth look like? Basically, um, maybe people will get

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Speaker 1: that kind of stability where they can't just be let

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Speaker 1: go at a moment's notice and lose their healthcare and benefits,

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Speaker 1: or will it be eroded further, which is what we

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Speaker 1: saw in the two thousand eight financial crisis. So I

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Speaker 1: think that's a big question going forward, and there's definitely

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Speaker 1: one that we're going to be talking about a lot.

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Speaker 1: And you here asked across the world now, not just

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Speaker 1: in the U. S. Catier Dmitrieva, thank you very much

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Speaker 1: thanks so much so, the International Labor Organization estimated this

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Speaker 1: week that working out as worldwide would be at least

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Speaker 1: ten percent lower this quarter than before the pandemic started,

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Speaker 1: which is the equivalent of three hundred and five million

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Speaker 1: full time jobs. Now, countries probably don't have a choice

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Speaker 1: about whether to have that kind of decline in an

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Speaker 1: employment in their countries if they want to contain the virus,

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Speaker 1: but the decisions that governments take can affect whether people

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Speaker 1: at the sharp end of that decline can formally stay

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Speaker 1: in their jobs during this time, earning wages rather than

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Speaker 1: joining the ranks of the unemployed. In the US, as

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Speaker 1: we've heard, unemployment has already sowed and that could yet

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Speaker 1: happen across Europe. But we've also seen governments step in

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Speaker 1: to cover wages directly, to the point where now a

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Speaker 1: mind boggling number of people are getting their wages indirectly

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Speaker 1: paid by the state. Our Eurozone economist may Vakuza, who

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Speaker 1: has been on the program before, has been looking at

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Speaker 1: the numbers. May ver, good to have you back. How

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Speaker 1: many people across the Eurozone are currently being paid by

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Speaker 1: the state by your calculation, So looking just at the

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Speaker 1: four biggest countries so Founds, Germany, Italian, Spain. It's about

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Speaker 1: thirty million people who have found for those short term

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Speaker 1: employment schemes, the partial unemployment schemes where they are still

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Speaker 1: employed by a company but there's no activity and their

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Speaker 1: wages are paid bases states. And what does that meant?

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Speaker 1: I mean you look at what the equivalent might have

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Speaker 1: been in terms of the unemployment rate if you hadn't

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Speaker 1: seen governments introduced those wage support schemes quite early on,

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Speaker 1: at the same time as lockdowns began. So at the moment,

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Speaker 1: are about ten million unemployed across your economies as Big four.

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Speaker 1: If you had thirty million people who are now short

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Speaker 1: term in the short term and employment schemes, that would

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Speaker 1: mean forty million unemployed. It would multiply the unemployment rate

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Speaker 1: by by about four so to about thirty percent. If

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Speaker 1: you had on top of that those the other workers

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Speaker 1: that can't go into the unemployment, the short term unemployment,

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Speaker 1: you could get easier each forty percent unemployment rate at

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Speaker 1: the at the peak of the of the down, so

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Speaker 1: around now start of me it's probably the big for

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Speaker 1: tip percent from eight percent in February. We're recording this

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Speaker 1: before we've got the April employment numbers for the US,

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Speaker 1: but most forecasters are expecting well over twenty million decline

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Speaker 1: in employment and potentially an unemployment rate in the US

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Speaker 1: heading to over the next few weeks if it's not

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Speaker 1: there already. So what you're saying is it could be.

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Speaker 1: It could have been maybe even double that in Europe

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Speaker 1: if you've not had this support programs in place, But

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Speaker 1: now it's going to be maybe in the region of

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Speaker 1: twelve or fourteen percent, depending on depending on what happens. Yeah,

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Speaker 1: that's about where is it. That's that's a sort of

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Speaker 1: runch at the moment. It's difficult to know how much.

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Speaker 1: In fact, so if you look at a much unemployment

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Speaker 1: rate in your area, it has increased only marginally. And

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Speaker 1: the main reason from seven points hip percent for your

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Speaker 1: areas or to seven points opposite, I think. And the

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Speaker 1: main reason is that um to be registered as unemployed

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Speaker 1: according to the high definition, you have to be not working,

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Speaker 1: you have to be actively looking for a job, and

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Speaker 1: you have to be available to start a job. And

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Speaker 1: because people are in lockdowns, they're not necessarily available to

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Speaker 1: start a job because they can't move. So the headline

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Speaker 1: unemployment rate won't tell you the full extent of the impact.

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Speaker 1: But when you look at claimant numbers, so people who

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Speaker 1: have failed to get the unemployment benefits, then you can

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Speaker 1: see some increase. In Spain, for instance, that is reason

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Speaker 1: too um more or less where it was at the

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Speaker 1: end of twenty sixteen, so quite a lot. In France

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Speaker 1: it has increased as well, but still it hasn't increased

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Speaker 1: as much as you could have expected. And you can

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Speaker 1: see as well in the administrative data. In Spain, for instance,

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Speaker 1: about nine hundred thousand people have lost their jobs due

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Speaker 1: to the pandemic, so between mid March the end of

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Speaker 1: paper um, most of them almost eight hundred thousand are

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Speaker 1: temporary workers and very few permanent workers. And in contrast,

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Speaker 1: you have had an increased in the short term and

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Speaker 1: employed so these followed workers schemes of about three million

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Speaker 1: in Spain, so you can see that there is still

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Speaker 1: an impact on the labor market. It's not necessarily something

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Speaker 1: you can see very well in the data yet, because

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Speaker 1: of these problems of connecting the statistics during the lockdowns,

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Speaker 1: but the impact is a lot smaller than it would

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Speaker 1: have been without the fellowed workers schemes, and we've seen

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Speaker 1: that also in the US. We see it everywhere. Actually,

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Speaker 1: this gap between a number of people losing their jobs

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Speaker 1: and the number of people who you see joining unemployment

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Speaker 1: roles for exactly that reason. I think it's it's about

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Speaker 1: forty or fifty of people losing their jobs in the

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Speaker 1: US are not necessarily joining the formally unemployed. People outside

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Speaker 1: the Europe might say, well, this isn't so different. You know,

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Speaker 1: we think of Europe as being a place of big

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Speaker 1: government and they already have lots of people working in

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Speaker 1: the public sector. Um, maybe this isn't such a psychological

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Speaker 1: shift for European governments. But I mean, what do you

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Speaker 1: think is the implications of the government having intervened this

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Speaker 1: heavily in the labor market? I mean, is it going

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Speaker 1: to be hard to unwind? And is it going to

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Speaker 1: be impossibly expensive even for these notoriously big spending European government.

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Speaker 1: So I don't think it's going to be helped to unwind.

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Speaker 1: When activity returns, those workers will go back to work,

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Speaker 1: And in a way, it's actually that should be easier

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Speaker 1: to unwind than normal unemployment, than people moving onto the

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Speaker 1: unemployment benefits and then they have to find a new job.

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Speaker 1: Those workers they still have a job, they are still

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Speaker 1: linked to a company. It's just that there's no activity

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Speaker 1: for this company at the moment. So I think it

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Speaker 1: should be relatively straightforward for um those workers to go

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Speaker 1: back to their normal activity and go back to their

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Speaker 1: employers pay roll rather than being paid by the States.

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Speaker 1: So I'm not too worried about the difficulty in unwinding.

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Speaker 1: But it is clear that the programs have been generally

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Speaker 1: made more generous, more easy to access, and most most

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Speaker 1: governments initially had said it would be for March and April,

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Speaker 1: but now they have to increase, and they have started

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Speaker 1: increasing um or extending to May as well, of course,

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Speaker 1: because the lugduns are still in place and they're only

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Speaker 1: going to be gradually removed, so it's going to cost more,

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Speaker 1: but it will come to an end when activity resumes

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Speaker 1: and returns. They will go back to work. But is

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Speaker 1: it is it worth the money? Do you think? You

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Speaker 1: make the good point that is the European Commission has

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Speaker 1: helped to provide a backup so that country which perhaps

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Speaker 1: didn't feel they had the fiscal capacity the budget to

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Speaker 1: do this could could do it. As far as your concern,

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Speaker 1: just this, these tens of billions, money well spent. In

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Speaker 1: many countries, it's not much more expensive than people claiming

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Speaker 1: unemployment benefits. In Spain, for instance, it is exactly the

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Speaker 1: same money that people will receive as unemployment benefits. So

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Speaker 1: if those workers would have been fired and moved to

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Speaker 1: the to the claiman account, then you know it's it's

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Speaker 1: the same amount, and at least they are keeping a

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Speaker 1: direct link to the labor market and you're not destroying

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Speaker 1: it's quite a un it's an investment. It's it's a

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Speaker 1: productive capacity that's matching between workers and firms, and when

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Speaker 1: you lose them, you have to spend more effort, more

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Speaker 1: time finding the right people and training them. So I

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Speaker 1: think it's money well spent. Difinity maybe because I thank

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Speaker 1: you very much. It's great to talk to you again.

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Speaker 1: Thank you so thanks for listening to Stephanomics. We'll be

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Speaker 1: back next week with more about the way COVID nineteen

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Speaker 1: is turning the world economy upside down. Remember you can

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Speaker 1: always find us on the Bloomberg Terminal, website, app or

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Speaker 1: wherever you get your podcasts. And for more news and

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Speaker 1: analysis from Bloomberg Economics, follow at Economics on Twitter. This

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Speaker 1: episode was produced by Magnus Hendrickson, with special thanks to

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Speaker 1: Roy James, Danny Orkiece, Jeff Green, Viviana Hertadol Kidmitrieva, and

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Speaker 1: Mava Kusan. Scott Lanman is the executive producer of Stephanomics

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Speaker 1: and the head of Bloomberg Podcast is Francesca Levi.