Small Business Layoffs Jump 1,000% in March; St Louis Fed Estimating 47 Million People Laid Off By End Of Second Quarter

Small business layoffs jump 1,000% in March

Layoffs at small business spiked 1,021% in March, compared to the month before, according to payroll provider Gusto.

April is expected to be much worse with economists forecasting unemployment at as much as 15% or more.

St Louis Fed Estimating 47 Million People Laid Off By End Of Second Quarter

Calculating Second-Quarter Unemployment Rate

These two numbers were obtained by applying different methodologies and classifications to two different datasets. This means that while there may be significant overlap, each measure will also be capturing some aspects that the other ignores.

For this reason, we simply took the average of those two numbers as a point estimate for the total number of workers who will be laid off during the second quarter. This resulted in 47.05 million people being laid off during this period.

Summing to the initial number of unemployed in February, this resulted in a total number of unemployed persons of 52.81 million. Given the assumption of a constant labor force, this resulted in an unemployment rate of 32.1%.

  1. Civilian labor force in February 2020 = 164.5 million (BLS via FRED)

  2. Unemployment rate in February 2020 = 3.5% (BLS via FRED)

  3. Unemployed persons in February 2020 = 5.76 million (#1 * #2)

  4. Workers in occupations with high risk of layoff = 66.8 million (Gascon blog post)

  5. Workers in high contact-intensive occupations = 27.3 million (Famiglietti/Leibovici/Santacreu blog post)

  6. Estimated layoffs in second quarter 2020 = 47.05 million (Average of #4 and #5)

  7. Unemployed persons in second quarter 2020 = 52.81 million (#3 + #6)

  8. Unemployment rate in second quarter 2020 = 32.1% (#7 / #1)