The Atlanta metro area’s June unemployment rate of 8.6% doesn’t sound great on its face. In fact, it is the highest rate of all Georgia cities, and well above the state unemployment rate of 7.9%.
Looking at it another way, the 8.6% translates into 250,000 people out of work, more than all of the rest of Georgia combined. And while we fare better than hard-hit Boston (16.9%), New York/New Jersey (17%), Los Angeles (18%) and Chicago (15.6%), it hardly seems a point of pride.
Yet amid the region’s troubling unemployment, there is reason for optimism. First, it could be much worse. Current unemployment is high by recent standards, but not by historic ones. Georgia experienced much worse following the financial crisis of 2007-2008. For five years during the Great Recession, unemployment was higher than today – and in double digits between 2009 and 2011.
Credit: contributed
Credit: contributed
In terms of speed of recovery, it took 10 years for the Georgia employment situation to recover from the Great Recession, with the unemployment rate falling ever so slowly from 10% to 3%. Yet it took only two months for the state’s unemployment rate to drop from 12.6% in April 2020 to 7.6% in June 2020. What goes up can also quickly come down.
Fundamentally speaking, the economy is poised for a comeback. The current jobless rate is due to COVID-19 and the forced closure or slowdown of many businesses. Skilled people, factories, machinery – they are all there and ready. As soon as companies and people can get back to work, at least in theory, we should be back to business as usual.
This is not to say everything is rosy. Not by a long shot. Food and hospitality companies – everything from bars to cruises – have been already been hit heavily, resulting in furloughing and firing of many employees. Even worse, due to changes in consumer habits, income and threat of infection, some of these jobs might not be back for a long time, if ever.
The more disturbing prospect is that it won’t be just bars and cruise ships that sink in this economy. Companies of all kinds are in limbo, some of them relying on money from CARES Act to continue paying their employees. Surveys show that three-quarters of companies can cover less than two months of expenses. If business does not pick up soon and closures continue, half of the companies might not make it to Christmas.
While Congress can extend handouts via stimulus checks, extended unemployment benefits and PPP loans, that doesn’t bode well for the federal debt. The U.S. already pays $400 billion (or $2,600 per employed person) just to pay interest on the debt. That means if interest rates go up by 1 percentage point, an extra $260 billion will be instantly added in yearly interest payments (or $1,667 for everyone employed). Tomorrow’s taxpayers will have to pay back every cent (plus interest) that the government borrows today. Free money isn’t really free.
So Atlanta has a high rate by Georgia standards, but not by historic measures or compared to several other big U.S. metro areas. And as fast as the unemployment has risen, so, too, can it fall. And we are poised on some fronts for a return to normal business.
But the economic recovery, be it in Atlanta or the rest of the nation, depends on people returning to work. We hoped and believed we might defeat COVID-19 quickly, but with cases and deaths rising across the U.S. and in other countries, that does not seem to be the case.
That means for at least now we’ll have to learn to live and work with COVID – and try to stay focused on the most promising signs of Atlanta’s economy.
Zilvinas Silenas is president of the Atlanta-based Foundation for Economic Education, a non-profit organization that educates young people across the United States about economic principles and the entrepreneurial spirit.
