20.2 million jobs vanished in April, payroll survey says

Worse than it looks, company warns after reporting biggest-ever plunge

BALTIMORE — U.S. businesses cut an unprecedented 20.2 million jobs in April as the coronavirus outbreak closed the offices, factories, schools, construction sites and stores that propel the U.S. economy.

The Wednesday report from payroll company ADP showed the depth and scale of job losses that left no part of the world’s largest economy unscathed. The losses likely will continue through this month, with a recovery in hiring likely to begin in the months that follow, said Mark Zandi, chief economist at Moody’s Analytics.

“This is one for the record books,” Zandi said. “The good news is that we’re at the apex of the job loss.”

April’s job losses are the worst in the ADP report’s history, which began in 2002. The month’s job losses were more than twice those lost in the 2008-2009 recession, Ahu Yildirmaz, co-director of ADP, said in a news release.

Employment in March was revised down to a 149,000 decrease from a pre

viously reported 27,000 drop.

Despite the big number, these losses do not fully represent the economic damage of the pandemic, ADP said. The report uses data only through the 12th of the month, in keeping with the Bureau of Labor Statistics. More than 8 million Americans filed for unemployment in the weeks that followed.

Large businesses cut nearly 9 million jobs, while small employers — those with fewer than 50 employees — reduced employment by 6 million jobs, underscoring the dire situation for those enterprises. Midsize businesses shed 5.3 million workers.

Even though Zandi expects hiring to resume in June as states ease lockdowns, he cautioned that it will be a “slog” over several years to recover all the jobs lost in April.

The report is a harbinger of the Labor Department’s April jobs report on Friday and adds to evidence of the pandemic’s widespread economic devastation. The Labor Department’s figures are projected to show a record 21 million decline in total nonfarm payrolls and a jobless rate surging to 16%, up from 4.4% in March.

Services — including business and financial services, education, administrative jobs, and leisure and hospitality — saw the lion’s share of losses, shedding more than 16 million jobs in April. These losses were expected, as the service sector is most affected by the pandemic given the high number of public-facing positions that put workers in close contact with customers. But such jobs are also the axis of the U.S. economy, as the explosion of service sector positions fueled the decade of job growth enjoyed since the recession.

Since 2010, the United States added almost 19 million services jobs, with positions in areas such as hospitality and transportation increasing their share of the U.S. workforce. These now account for more than 80% of U.S. jobs.

Goods-producing jobs — including mining, construction and manufacturing — also were hit hard with 4.2 million such positions eliminated.

According to ADP, the leisure and hospitality sector shed 8.6 million workers last month. Trade, transportation and utilities let go 3.4 million people. Construction firms cut nearly 2.5 million jobs, while manufacturers let go of roughly 1.7 million people. The health care sector cut 1 million jobs, but education services eked out a gain of 28,000 as colleges and universities do not appear to have forced significant layoffs that could come later this year.

Meanwhile, franchise employment dropped by nearly 1.1 million in April, according to ADP.

Commerce Department data released last week revealed just how severe the downturn is becoming. Consumer and business spending nosedived in the first quarter, even with the economy shuttered for only half of March. Household spending tumbled 7.6%, and business investment sank 8.6%.

“Private payroll jobs are evaporating at a rate not seen since the Great Depression, and if the 20.2 million newly unemployed don’t quickly regain their jobs as the states start to open back up, then indeed it will be the second coming of the Great Depression,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in comments emailed Wednesday to The Washington Post.

“Whatever Washington is doing resting on their heels, the initial fiscal stimulus is not enough and the payroll protection plan did not keep thousands of companies from laying off workers,” Rupkey said.

Before April, the worst monthly decline in the ADP data was 835,000 jobs in February 2009, during the depths of the last recession.

“Unfortunately we should get comfortable with unprecedented pressure on the labor market despite pockets of the country reopening,” Mike Loewengart, managing director of investment strategy at E-Trade, said in comments emailed to the Post. “This pandemic has systemically changed the way we live and work.”

Many people still employed have had their hours reduced. Others have suffered pay cuts. Some who’ve lost jobs won’t have been able to look for work during widespread shutdowns and won’t even be counted as unemployed. A broader measure — the proportion of adults with jobs — could plunge to a record low.

“What we’re talking about here is pretty stunning,” said Diane Swonk, chief economist at Grant Thornton. “The shock is unique because the cause is unique. It’s such a different animal from anything that we’ve ever seen.”

Today, the Labor Department will release the latest weekly report on applications for unemployment benefits.

It likely will show that about 3.5 million people sought jobless aid last week. That would raise the total number of layoffs to nearly 34 million since the shutdowns began seven weeks ago.

That government figure is much larger than the expected April job loss 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, such as Amazon and many grocery stores, have done despite the widespread layoffs. By contrast, the total jobless claims is a cumulative figure that includes aid applications that began in March.

Still, the job loss for April may be much larger than expected, with most economists acknowledging that their usual models might not work as well in a collapsing job market. Swonk notes that several million people in the country illegallywho weren’t able to file for unemployment benefits were nevertheless probably laid off last month. Those job losses would be counted, though, in the government’s surveys. Swonk estimates that April’s job loss could be as high as 34 million.

Companies are still cutting jobs in a severe downturn, with the economy possibly shrinking at an unheard-of 40% annual rate in the AprilJune quarter. GE Aviation said it is cutting up to 13,000 jobs. Uber will shed 3,700 positions.

Amy Egert, a dental hygienist in Severn, Md., was laid off in mid-March. She was told she could return a month later, but she’s still waiting and it’s unclear when she will able to go back. She monitors Maryland statistics on coronavirus cases in hopes that the figures will show enough of a downward trend for her to work again.

“As I watch the numbers, it’s like, ‘OK, are we going to make it back by the end of May?’” Egert asked. “Is it going to be the first of June? Is it going to be mid-June?”

She is receiving the extra $600 in unemployment included in the government’s relief package but still wants to return.

“I’ve got diabetics out there that haven’t had their teeth cleaned,” Egert said. “They come every four months, and I’m thinking they’re going to be a mess.”