Unemployment hits 14.7% in April as labor market loses 20.5M jobs

WASHINGTON — The U.S. economy suffered its biggest labor market shock on record last month, as government figures released Friday showed the COVID19 pandemic erased 20.5 million jobs and sent the nation’s unemployment rate to 14.7%, the highest since at least the 1940s.

As recently as February, the United States had enjoyed record economic expansion and the lowest unemployment in half a century, 3.5%.

“In just two months the unemployment rate has gone from the lowest rate in 50 years to the highest rate in almost 90 years,” said Gus Faucher, chief economist at PNC Financial.

President Donald Trump regularly trumpeted the pre-pandemic economy. On Friday, he talked about that as in the past.

“We had the greatest economy in the history of the world,” he said at a White House meeting with Republican lawmakers. Mr. Trump went on to say that “we’re going to have a phenomenal year next year. … I think it’s going to come back blazing, because there’s tremendous pent-up demand.”

The unemployment report indicated that the vast majority of those

laid off in April — roughly 75% — consider their job loss temporary, a result of businesses that were forced to close suddenly but hope to reopen and recall their staffs.

Whether most of those workers can return anytime soon, though, will be determined by how well policymakers, businesses and the public deal with the health crisis. Economists worry it will take years to recover all the jobs lost.

Mr. Trump, who faces the prospect of high unemployment rates through the November election, said the figures were “no surprise” and later added that he’s in “no rush” to negotiate another financial rescue bill.

Although 18 million of the 23 million total unemployed in April said they were on a temporary layoff, many of those furloughs appear not to have a definite end date, and more could become permanent as the effect of the pandemic continues to spread.

J. Crew, the preppy clothing seller, and Neiman Marcus, the upscale department store chain, filed for bankruptcy this week. And there have been many other smaller, less visible cases of companies pushed over the edge by COVID-19, including movie theaters, aviation services, auto supply manufacturers and restaurants. Payroll employment at eating and drinking places was down by 5.5 million in April, more than a quarter of all job losses last month.

Economists at Stanford and the University of Chicago, drawing on a survey of businesses and historical data, estimated that 42% of pandemic-induced layoffs will end up being permanent. With more than 33 million people who have filed for unemployment benefits in the last seven weeks, that’s about 14 million who may have to find new work.

Since businesses began to shut down because of the pandemic in March, when the unemployment rate was 4.4%, large-scale layoffs have affected every sector of the economy. Restaurants, retailers, health services, manufacturers and local governments all made big job cuts in April. And unemployment rates rose sharply higher, especially for Latinos, blacks, teenagers, part-time workers and those without any college education.

That’s one reason why economists expect the recovery to be a slog. “Unfortunately, the people most at risk are the ones who had just gotten back to reasonable employment,” said Carl Tannenbaum, executive vice president at Northern Trust in Chicago. He noted that it took a decade of job gains and economic growth for disadvantaged workers to finally make meaningful gains.

April’s official unemployment rate was by far the highest since record-keeping began in 1948, and the amount of job losses last month is unparalleled, wiping out nearly all of the gains in the last decade. A broader government measure of joblessness that includes involuntary parttime workers reached 22.8% last month.