What Kansans Need To Know About The Pandemic Unemployment Rate

By C. J. Janvoy, Kansas Reflector

February 24, 2021

Here’s a pop quiz, Kansas: How long do you need to collect unemployment if your job is never coming back?

If you don’t have an immediate need for the answer, you probably aren’t among the 60,200 Kansans who lost their (non-farm) jobs between December 2019 and December 2020. So, count your blessings.

If you are interested in the answer, you might a) have a loved one who’s lost their job; b) care about the Kansas economy; or c) be a member of the Kansas Legislature now trying to figure out what to do with the giant bills (HB2196 or SB177) that try to repair several aspects of the state’s unemployment system.

Which everyone agrees need fixing. We all now understand how broken it was before it buckled under the weight of the pandemic.

Before we get to the quiz, though, we need a little history. Until 2013, Kansans who’d lost their jobs could collect unemployment for 26 weeks. That year, with encouragement from the Kansas Chamber and others in the “God helps those who help themselves” school of economics, Gov. Sam Brownback reduced that lifeline to 16 weeks.

Last spring, with federal pandemic relief funds flowing, lawmakers temporarily extended it once again to 26 weeks.

Now, they’re proposing that the number of weeks a person can collect jobless benefits would depend on the state’s unemployment rate:

1. A maximum of 16 weeks if the Kansas unemployment rate is less than 5%;
2. A maximum of 20 weeks if the Kansas unemployment rate is at least 5% but less than 6%;
3. A maximum of 26 weeks if the Kansas unemployment rate is at least 6%.

Supporting this new/old math is once again the Kansas Chamber, based on the logic that “under a healthy economy, benefits are shortened since under full employment it is easier to find work.”

Which gets us to the quiz. How is it easier to find work if those jobs haven’t come back — and might not ever come back?

“Tying unemployment benefits to the unemployment rate is problematic,” explains Donna Ginther, a University of Kansas professor who has been giving me (and others) a crash course on economics.

The unemployment rate, Ginther says, is a bad measure of the economy overall.

“When the economy is bad, people get discouraged,” she says. “They may want to work but they stop looking. And so the narrowly defined unemployment rate does not capture those discouraged workers.”

But there’s another measure, which the Bureau of Labor Statistics calls the U-6 — total number of unemployed people, plus everyone “marginally attached to the labor force, plus total employed part time for economic reasons,” which provides a fuller view.

As of December, the Kansas unemployment rate was 3.8% — “full employment,” by Kansas Chamber standards, and better than the overall unemployment rate in the United States, which was 6.7%.

“This is typical of Kansas when there’s a downturn,” Ginther notes. “We don’t grow as fast and we don’t fall as hard.”

But, she says, the U-6 rate for Kansas, those “marginally attached” and “part-time for economic reasons,” was 10.3% at the end of 2020.

“It’s disingenuous to say that the Kansas economy is currently at full employment,” she says. “And the problem is that our economic activity is still low — about 30% of small businesses have closed since the pandemic started in Kansas. So the reason they may be out of the labor force is there may not be jobs for them to have.”

And it’s hard to imagine what the employment horizon looks like, post-pandemic. New restaurants will open. But other parts of the old world will just be gone.

“Think of hotels and business travel,” Ginther says. “Everybody’s been using Zoom for a year, so why fly staff all over the country and put them up in hotels, which costs thousands of dollars, when you can schedule a Zoom meeting? So, demand for hotels and hotel workers is never going to return to where it was.”

Another example is commercial real estate. More people will undoubtedly keep working from home, so there’s less need for people who clean and maintain office buildings.

“The Kansas policy was written without a pandemic in mind,” Ginther notes. “You don’t want people to be out of the labor force forever — you want to incentivize them to go back to work. But this isn’t a normal recession. This is a natural disaster that destroyed several businesses and employment opportunities across the country.”

Meanwhile, cutting people off early when you’re in a downturn just destabilizes the economy even more, Ginther says.

So the answer to the quiz is: The country’s economy is more complex than just the unemployment rate.

The quicker we all understand this, the better we’ll be at spotting politicians’ disingenuous claims about getting people back to work.