US unemployment surges to Depression-era level
Eleven-year rise from 2008 financial crisis levels undone in one month by virus
The coronavirus crisis has sent US unemployment surging to 14.7 percent, a level not seen since the Depression, when President Franklin D. Roosevelt was assuring Americans the only thing to fear was fear itself.
And because of government errors and the particular way the Labor Department measures the job market, the true picture is even worse. By some calculations, the unemployment rate stands at 23.6 percent, not far from the Depression peak of nearly 25 perecnt. Some 20.5 million jobs vanished in April in the worst monthly loss on record, triggered by coastto-coast shutdowns of factories, stores, offices and businesses.
The collapse is certain to intensify the push-pull across the US over how and when to ease stayat-home restrictions. And it robs President Donald Trump of the ability to point to a strong economy as he runs for re-election.
“The jobs report from hell is here,” said Sal Guatieri, senior economist at BMO Capital Markets, “one never seen before and unlikely to be seen again barring another pandemic or a meteor hitting the Earth.” Worldwide, the virus has infected at least 3.9 million people and killed over 276,000, including more than 77,000 in the US, according to a tally by Johns Hopkins University. White House officials announced that Vice President Mike Pence’s press secretary had the virus (the second person at the complex known to have tested postive this week) and said safety protocols were being stepped up. The unemployment report indicated that the vast majority of those laid off in April — roughly 75 percent — consider their job loss temporary, a result of businesses forced to close suddenly, but that hope to reopen and recall staff. Whether most of those workers can return, though, will be determined by how well policymakers, businesses and the public deal with the crisis. Economists worry it will take years to recover.
The meltdown has occurred with startling speed. In February, unemployment was at a 50-year low of 3.5 percent, and the economy had added jobs every month for a record 9 and a half years. In March, it was 4.4 percent. “In just two months the unemployment rate has gone from the lowest rate in 50 years to the highest in almost 90 years,” said Gus Faucher, chief economist at PNC Financial.
Nearly all the job growth achieved during the 11-year recovery from the 2008 financial crash has been lost in one month. Leslie Calhoun lost his job cleaning casinos in Atlantic City after 20 years. He, his wife, their two daughters and his sister-inlaw are surviving on his wife’s paycheck from a medical facility as he wrestles with an unemployment system that has paid him nothing since he applied in March. “The bills are piling up,” he said. “We’re eating a lot of ramen noodles and hot dogs. What I wouldn’t give for a nice meal of baked chicken and steak, some fresh vegetables.”
Trump, who faces the prospect of high unemployment rates before the November election, said the figures were “no surprise” and that he was in “no rush” to raise another financial rescue bill. An emerging Democratic aid package is expected to include eye-popping sums, centered on nearly $1 trillion, that states and cities are seeking to prevent mass layoffs as governments reel from the one-two punch of pandemic costs and dismal tax receipts in the shuttered economy.
The Congressional Budget Office has said the jobless rate will still be 9.5 percent by the end of 2021.
As bad as the numbers are, they don’t capture the full magnitude of the devastation.
In a sort of footnote, the Labor Department acknowledged that its survey-takers erroneously classified millions of Americans as employed in April even though their employers had closed down. If they had been counted correctly, unemployment would have been nearly 20 percent.
Also, people who are out of work but aren’t actually looking for a new job are not officially counted as unemployed. An estimated 6.4 million people met that description last month, probably because they saw little prospect of finding work given the shutdowns. Counting them as unemployed would push the rate up further, to almost 24 percent, according to calculations by economist Heidi Shierholz of the Economic Policy Institute.
Though some businesses are beginning to reopen in certain states, many are still largely shuttered. The government is dispensing nearly $3 trillion to help households and businesses pull through, including $1,200-per-person relief checks and an extra $600 in weekly unemployment benefits.
Trump has pushed aggressively to get businesses up and running again amid warnings from health experts that easing up too soon could lead to a second wave of infections.
Critics of the coronavirus response have included Dr.
Rick Bright, who was ousted from a government research agency after raising concerns over use of an unproven drug touted by the president as a cure. Federal investigators found “reasonable grounds” that he was punished for speaking out and should be reinstated, his lawyers said.
As Election Day nears, Trump will be judged on how he handles both economic and health crises. Just months ago, his campaign planned to hammer its Democratic opponent this spring with negative ads while touting the strong economy. But since the outbreak, the re-election team has grown increasingly worried about Trump’s standing in key states such as Michigan, Wisconsin and Florida. Over 20 percent of Michigan’s workers are unemployed. Former Vice President Joe Biden, meanwhile, has seized on the crisis as part of his overall attempt to cast Trump as caring only about the wealthiest Americans.
In Europe, this week the Bank of England projected that Britain will see its biggest annual economic decline since 1706. Unemployment in the 19-country eurozone is expected to surpass 10 percent in coming months as more people are laid off. That figure is expected to remain lower than the US rate, in part because millions of workers in places such as France and Germany are staying on payrolls with the help of government aid that covers much of their salaries. Over the past seven weeks, an estimated 33.5 million Americans have filed for unemployment benefits. Friday’s job-loss report is based on a mid-April survey of businesses and households and takes into account the hiring surge at companies like Amazon and many grocery stores. Minorities and poor people have suffered the most from the shutdown. Job losses were especially severe among Latinos, whose unemployment rate leaped to 18.9 percent from 6 percent in March. The African-American rate jumped to 16.7 percent, while for whites it rose to 14.2 percent.
FASTFACT
Over the past seven weeks, an estimated 33.5 million Americans have filed for unemployment benefits.