U.S. shutdowns push jobless rate to 14.7%
WASHINGTON — The U.S. unemployment rate hit 14.7% in April, the highest rate since the Great Depression, as 20.5 million jobs vanished in the worst monthly loss on record. The figures are stark evidence of the damage the coronavirus has done to a now-shattered economy.
The losses, reported Friday by the Labor Department,
reflect what has become a severe recession caused by sudden business shutdowns in nearly every industry. Nearly all the job growth achieved during the 11-year recovery from the last recession has now been lost in one month.
“It’s devastating,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics. “There’s someone behind each of these numbers. It’s going to take years to recover from this. There’s a case to be made that a lot of these are temporary layoffs, so hopefully people can return to work quickly as we begin to reopen the economy — but there’s no guarantee in that.”
The collapse of the job
market has occurred with stunning speed. As recently as February, the unemployment rate was at a five-de- cade low of 3.5%, and employers had added jobs for a record 113 months. In March, the unemployment rate was just 4.4%
The jump in the jobless rate didn’t capture the full devastation wrought by the business shutdowns. The Labor Department said its survey-takers erroneously classified millions of Americans as employed in April even though their employers have closed down. These people should have been classified as on temporary layoff and therefore unemployed. If they had been counted correctly, the unemployment rate would have been nearly 20%, the government said.
President Donald Trump, who faces the prospect of high unemployment rates through the November elections, said the figures were “no surprise.”
“What I can do is I’ll bring it back,” Trump said. “Those jobs will all be back, and they’ll be back very soon. And next year we’ll have a phenomenal year.”
But Trump’s likely opponent in November’s election, former Vice President Joe Biden, said in remarks broadcast by NowThis News that the jobs report illustrated “an economic disaster” that was “made worse” in part by the White House’s slow and uneven response to the crisis earlier this year.
Economists increasingly worry that it will take years to recover all the jobs lost. The nonpartisan Congressional Budget Office expects the jobless rate to be 9.5% by the end of 2021.
The crisis hit harder for demographics including women and members of minority groups, after they had benefited from the previous tightening of the labor market.
The jobless rate among women jumped to 15.5% from 4%, compared with a 9-point increase among men, to 13%. Among black Americans, the unemployment rate was 16.7%; it was 18.9% for Hispanics and 14.2% for white Americans.
Research this week from economists at the ADP Research Institute, the University of Chicago and the Federal Reserve
found that workers earning less than $15 an hour account for more than one-third of the job losses, far beyond their share of the workforce.
“Low-wage workers are experiencing their own Great Depression right now,” said Ahu Yildirmaz, co-head of the ADP Research Institute, which focuses on the job and wage trends.
Many service jobs are impossible to do remotely and have been eliminated, and some workers have risked their health by staying on the job.
Ibelis Gonzalez worked as a server for Ruth’s Chris Steak House in Jersey City, N.J., until she was let go in March. She is hoping her job will return when the chain reopens, but she knows there are no guarantees, as patrons may be hesitant to dine out at first.
“We don’t know if they will have a skeleton staff,” said Gonzalez, who earned $600 to $800 a week, nearly all of it from tips. “People may not have the money to go out and have a $100 steak.”
She has been trying to file for unemployment but hasn’t been able to reach the state’s Department of Labor and Workforce Development.
“I’m not looking for a handout; I’m just looking for these benefits,” she said. “I don’t have a dollar to my name.”
White-collar and government jobs that typically prove resilient during downturns also were slashed, with firms shedding 2.1 million jobs, and state and local governments losing nearly 1 million. More state and local government jobs could be slashed in the coming weeks as officials deal with severe budget shortfalls.
In addition to the millions of newly unemployed, 5.1 million others had their hours reduced in April. That trend, too, means less income and less spending, perpetuating the economic downturn. A measure of what’s called underemployment — which counts the unemployed plus full-time workers who were reduced to part-time work — reached 22.8%, a record high.
Almost every industry was hit hard. Manufacturers cut 1.33 million positions and retailers 2.1 million. Even health care jobs fell by 1.44 million as non-covid visits and elective procedures dried up or offices closed.
In the five weeks covered by the U.S. jobs report for April, 26.5 million people applied for unemployment benefits.
The job loss reported Friday was a smaller figure because the two are measured differently: The government calculates job losses by surveying businesses and households. It’s a net figure that also counts the hiring that some companies, like Amazon and many grocery stores, have done. By contrast, total jobless claims are a measure of just the layoff side of the equation.
The government’s report noted that many people who lost jobs in April but didn’t look for another one weren’t even counted in the unemployment rate. They are captured in a separate index: The proportion of all working-age adults who are employed. This figure is now just 51.3%, the lowest proportion on record.
The data showed average hourly earnings rose a massive 4.7% from the previous month and 7.9% from a year earlier — more than double March’s pace — but those figures were skewed higher by the disproportionate loss of low-wage workers from payrolls, rather than any wage pressures boosting employee pay.
For the United States, a key question is where the job market goes from here. Applications for unemployment aid, while high, have declined for five straight weeks, a sign that the worst of the layoffs has passed. Still, few economists expect a rapid turnaround.
Erin Huyler runs a popular child care service in Key West, Fla., that was forced to close in mid-March. She’s not sure when it will be safe to reopen, especially since many of children she watches are the kids of travelers visiting from other states and nations.
Congress approved additional money for the unemployed and expanded the program so gig workers and the self-employed like Huyler could apply. But Huyler is indicative of the experience of millions still waiting for aid to arrive.
Huyler has yet to get a relief check or unemployment money, though she finally saw a deposit in her bank account for the Small Business Administration “emergency loan” she applied for weeks ago.
“That was helpful, but $1,000 is not a lot of money after seven weeks of unemployment,” she said.