El Paso Unemployment Numbers For April Amid Covid-19: An Economic Catastrophe in the Making

The national unemployment rate stands officially at 14.7% according to the numbers released by the Labor Department for April 2020. That number both shows an unprecedented economic devastation because it shows the worst job losses in such a short time in recorded history and it also shows that the 14.7% is the worst percentage of job loss in decades.

The reality is that the actual unemployment rate is likely closer to 20% than the official number shows. Regardless, both the 14% and 20% are worse than the numbers that led to the Great Depression. The reason is that the 14.7% percent reflects the belief that 80% of the 20.5 million jobs lost will return once the economy is open again, which is a bad assumption to make.

The New York Times (May 8, 2020) quoted the Labor Department as stating that “nearly 80 percent of the unemployed said they had been temporarily laid off and expected to return” to work.

But that sentiment assumes that the economy will pop open. It assumes that businesses have financially weathered the economic downturn and that bills have been paid or will be paid. It assumes that consumers will flock to dine out and get entertained and that rents or mortgages are current and bills are paid enough to contemplate disposable income.

It assumes too much.

The problem for El Paso is not just the harsh reality of the economy, but the debt that the city has taken on to create the illusion of prosperity. Debt, like for a ballpark that is supposed to be paid for by hotel occupancy taxes which are obviously not enough considering travelers and tourists aren’t traveling because of the pandemic.

The controversy over the multi-purpose center has accrued additional debt. Funding for that debacle comes from monies levied in the Quality of Life projects voted by taxpayers. The taxpayers are supposed to pay for that debt.

To pay down the debt for the Quality of Life Projects, the taxpayers need jobs.

According to the Workforce Solutions Borderplex, a quasi-public job managing entity, El Paso’s total job losses are close to 40,000 jobs lost (38,104; May 4, 2020 press release). In comparison, the total job losses in January were 1,175. In March, the job losses were up to 15,399.

Clearly the job losses in El Paso are mounting. And with them are the unpaid bills, such as rent payments, that will trickle down through El Paso’s economy.

The question everyone should be asking themselves is whether the jobs are still there or will they become permanent job losses? Nationally there is optimism that the job losses are temporary. Locally, many believe so. But it may not be the case.

According to KVIA (April 22, 2020), the City of El Paso is bracing for a $100 million shortfall. City employees have been advised to expect salary cuts and some of them have expressed that layoffs are on the horizon.

The question that readers should be asking themselves is why. The city depends on taxes from properties and retail for much of its income. If the unemployment rate is a blip on the economy and many jobs are still waiting then why is the city concerned that taxes will not be paid?

It is likely that city officials understand that job losses will not suddenly return to normal soon. As such, rents will remain unpaid, foreclosures will increase and property values will depreciate because workers are without jobs.

City official know that the worst is yet to come and are preparing for it.

As readers contemplate this reality, it is important that they understand where the unemployment numbers are coming from for context. Its most recent CEO was Joyce Wilson, who was the city’s first city manager who engineered the public debt for things like the ballpark. The current CEO is Leila Melendez who worked closely with Joyce Wilson driving the use of debt to fund public projects.

According to the Borderplex’s 2019 annual report, in 2019, 19,522 job seekers were employed as the result of the work by the Borderplex. That is half of the agency’s own estimates of 40,000 jobs lost last month. For 2019, the agency operated on a budget of $49,624,823 and spent $44,514,768.

In other words, they spent $2,280.24 per employee who was placed at a job in 2019.

The non-profit has not disclosed how much they have in funds for 2020. But for them to place just 30,000 of the 40,000 unemployed into jobs would require a budget of $68,407,200.

Also and unfortunately, the 40,000 jobs lost does not represent the actual number of individuals without a job. For example, the number does not represent the informal economy (burrito lady, if you will), the undocumented workers and, most importantly, the underemployed or those who are on furlough status who expect their jobs to still be waiting for them when the benefits dry up.

Nationally the unemployment numbers are the worst they have ever been. Locally, the numbers show an economic catastrophe in the making. Unlike the United States government, El Paso officials have no way to print money.