Much has been made around Wall Street about the impact the Verizon strike will have on what is likely to be a woeful August jobs report.
The answer: Not much.
There are a couple reasons why the now-settled impasse at the telecom giant won’t be a scapegoat for a nonfarms payroll report that could well show a negative number.
First, it’s extremely difficult for striking workers to collect unemployment.
Each state has its own rules, but unless the strike turned into a lockout, or if it went on for a protracted period, picketers can’t get jobless benefits.
“I don’t think any of those things happened,” said George Wentworth, senior staff attorney at the National Employment Law Project. “I’m not aware of any states who actually paid benefits to Verizon workers. What happens is if they file claims they get counted as claims, but they’re not necessarily eligible workers.”
Some 45,000 Verizon workers went on strike Aug. 7 and returned after an agreement to return to work was reached Aug. 22.
In a state like New York, for example, the workers could have collected if the impasse went longer then seven weeks.
The Verizon strike may have temporarily inflated the jobless claims numbers the government puts out each Thursday, with estimates that about 12,500 Verizon workers submitted claims.
But the second reason they likely won’t do much for the official unemployment count is because of the way the government calculates unemployed.
The strikers probably were paid as the strike began, meaning that their impact on the payrolls count will be muted, according to Joseph LaVorgna, chief US economist at Deutsche Bank.
“We believe that the Verizon strike weighed on hiring but not by the full number of strikers because we are assuming that some of those strikers were actually paid on Sunday, Aug. 7, the day of the strike,” LaVorgna said in a note.
He estimates that the strikers may account for 25,000 of the jobs lost during the month.
Overall, LaVorgna is a bit below consensus, with projections of a net 50,000 growth in jobs, against expectations of 80,000. The unemployment rate is expected to hold steady at 9.1 percent, but that number is subject to distortions because of a shrinking potential labor force, or the amount of unemployed actually looking for work.
That consensus, though, has been coming down, with a rapidly growing number of economists expecting either negative or negligible job growth.
Goldman Sachs was the latest to cut its forecast, with an expectation of job growth at just 25,000.
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