The coronavirus pandemic destroyed 20.5 million U.S. jobs in April, driving the unemployment rate to a post Word War Two high of 14.7% as the country faced its biggest economic crisis in almost a century. The trail of job losses was heaviest at restaurants, retailers and hotels, but every major industry suffered. The health-care sector even lost nearly 1.5 million jobs amid the worst health crisis in American history, according to the Labor Department data released Friday morning.
The unemployment rate leaped to 14.7% from a 50-year low of just 3.5% two months ago, but the share of idled workers is much higher. If millions of Americans who have been furloughed and expect to return to their jobs are counted, the Bureau of Labor Statistics said the jobless rate would have almost 5 percentage points higher at nearly 20%. A broader measure of unemployment that includes discouraged job seekers and other people on the fringes of the labor market skyrocketed to a record 22.8% in April, painting an even grimmer picture.
In seven weeks since the virus shut down much of the U.S. economy, more than 33 million people have applied for unemployment benefits. The numbers are still growing by several million a week. A smattering of people have been returning to work over the past few weeks as states slowly reopen their economies, but not enough to put an appreciable dent in record unemployment. Before the April employment report was published, premarket trading pointed to a higher opening for the U.S. stock market as the loss of jobs was a bit less the 22.1 million forecast of economists surveyed by MarketWatch. Hotels and restaurants were ravaged by fear of the virus and the resulting shutdowns. They cut 7.6 million jobs, at least temporarily, as Americans stayed home. Most retailers were also slammed, especially those without a strong online presence, as walk-in traffic dried up. Retail employment fell by 2.1 million. The health-care industry, where employment has been growing for decades, was a surprising victim as well. Nearly 1.5 million jobs in the medical profession were scrubbed as dental and doctor offices closed, patients avoided hospitals and elective procedures were put off. Manufacturers, meanwhile, loss 1.3 million jobs and construction companies slashed employment by almost 1 million.
In an odd quirk, the average of amount of money workers earn per hour surged by $1.34 to $30.01. The 4.7% spike reflects a greater percentage of job losses among lower-wage workers than higher-earning ones pushing up the average. The pandemic has been especially harmful to Americans of modest means, particularly those who work in service-oriented industries. Although the April employment report paints an ugly portrait of the U.S. labor market, the devastation runs even deeper than the official statistics show. For one thing, some of the people who are still getting paid by their companies but aren’t working probably were not included in the jobless rate. Others have stopped looking for work and dropped out of the labor force because there are no jobs. They would not be counted in the official jobless rate, either. And with many companies closed or going out of business, the response rate to the government’s survey was lower than usual.
A better illustration of the havoc is evident in the so-called U6 unemployment rate that tries to capture a fuller scope of who’s working and who’s not. After sinking to the lowest level on record low of 6.7% at the end of last year, the rate soared to nearly 23% in April. That suggests one in four Americans is either unemployed or underemployed — a number that harkens back to the Great Depression some 90 years ago. Although the government didn’t compile full records back then, economic historians estimate unemployment peaked at 25% in 1933. Job losses from the pandemic totalled nearly 21.3 million in March and April. Employment fell by a revised 807,000 in March instead of the 701,000. The U.S. has already sunk into a deep recession. Many states are trying to restart their economies with the encouragement of the Trump administration to try to limit the damage and prevent the job losses from becoming permanent.
Yet these efforts could founder if the coronavirus begins to spread rapidly again. The lack of a vaccine or other treatments could also force Americans to practice social distancing for the foreseeable future. Such a major change in behaviour would slow a U.S. recovery by making it hard for many businesses in key parts of the economy such as travel, leisure, sports and entertainment to return to normal. “The jobs report from hell is here — one never seen before and unlikely to be seen again barring another pandemic or meteor hitting the earth,’ said senior economist Sal Guatieri of BMO Capital Markets. The Dow Jones Industrial Average and S&P 500 rose in early Friday trades as the job losses were less than expected. Stocks have rallied in fits and starts over the past week on the hopes that the economy will continue to reopen. Many states have slowly begun to relax restrictions.
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