(Image: AP/J. Scott Applewhite)

You likely heard of the frightening unemployment number from the US on Friday their time: the unemployment rate rose to 14.7%, with 20.5 million jobs lost in April. Just two months ago, the unemployment rate was 3.5%, a 50-year low. The rise means the jobless rate is now worse than at any time since the Great Depression.

Except, it was worse. Much worse. And not just in an obscure way that’s only of interest to labour economists.

There was a mistake in the classification of some of the jobless, which meant the unemployment rate should have been 19.5% instead of 14.7%. The US Labor Department revealed in a note to the figures that its survey-takers erroneously classified millions of Americans as employed in April even though their employers had closed down.

“If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical April) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported,” the BLS said.

There’s no conspiracy here (though Wall Street did rise on the basis that 14.7% wasn’t quite as horrific as expected). It’s the kind of error that’s not unexpected when you leap from surveying for a tiny proportion of the workforce out of a job to tens of millions of unemployed in the space of two months.

The problem does point to a statistical challenge that we’ll face on Thursday when the April jobless numbers are published by the Australian Bureau of Statistics (ABS): how many people are technically unemployed versus how many are unemployed but still in a job courtesy of the JobKeeper program.

Other countries that have started wage subsidy programs face the same problem. In Ireland two jobless rates have been published. Excluding the pandemic payments, the jobless rate rose to 5.4% in April from 5.3% in March. Sounds like another Celtic Tiger miracle — except the number is actually 28.2% when you include those receiving emergency jobless benefits, the highest rate on record.

Ireland’s Central Statistical Office last month confirmed that people in receipt of Ireland’s wage support payment, the PUP, “do not meet the internationally agreed criteria to be considered as unemployed” and therefore can’t be counted in the usual seasonally adjusted rate.

The figure for Australia on Thursday will also adhere to the international definition of unemployment, which means workers on the JobKeeper payment won’t be counted, though the ABS is continuing to try to provide estimates of real joblessness. It’s something to note, but not to complain about — the government is absolutely right in trying to keep people in place employment-wise until we can fully emerge from the crisis.

The US figures indicate why the US Federal Reserve has repeatedly said that further fiscal stimulus may be needed. Late last week, high-profile retailer Neiman Marcus filed for bankruptcy — only the latest casualty of what is becoming an apocalypse for US retailers, and following clothing chain J Crew earlier in the week. US retail employment fell two million jobs to 13.5 million between March and April.

There’ll be US retail sales data out this week for April, which is expected to show an 11% fall in sales, on top of a 9% fall in March. Apple has just announced it will soon start reopening some stores, but there’s likely to be worse to come for American retailers, which will feed into further grim employment figures in the weeks ahead.