The April unemployment rate rose to a record 14.7% and payrolls dropped by an unprecedented 20.5 million as the coronavirus pandemic hit the economy. April’s jobless rate eclipsed the previous record of 10.8% for data tracing back to 1948. It also approached the 25% rate economists estimate was hit during the Great Depression. Jeff Sparshott and Greg Ip here to take you through some of the numbers.
KEY THEMES
Hardest Hit
In recent years, the only jobs many unskilled workers could find that weren’t vulnerable to automation and outsourcing involved manual labor, personal contact and low pay. Now, even those safe havens are being blown apart. Of the 20.5 million jobs lost in April, the hardest hit occupations and sectors were the ones most exposed to sweeping social distancing measures, both government-ordered and personally adopted. They also pay less than average.
Leisure and hospitality lost 7.7 million jobs. Retail trade lost 2.1 million. This is an epic reversal of fortune for those at the bottom of the income ladder. They took a beating during the 2007-09 recession and its aftermath. That began to change in 2016 as unemployment marched toward its lowest since the 1960s. Employers, desperate for workers, boosted starting pay and hired long-shunned candidates such as those with criminal records. Now, those who until recently made their living at the bottom of the income ladder face the very real prospect of spending a long time not on the ladder at all. —Greg Ip
April’s rout wiped out a decade of job gains in a single month.
No broad sector was immune from job losses, even those on the front lines of the pandemic. Healthcare employment fell by 1.4 million in April, led by half a million jobs cut from dentists’ offices and nearly a quarter million cut from physicians’ offices. Hospitals and doctors’ offices began in mid-March to postpone procedures that could wait, voluntarily or under state and local mandates. The pause left hospitals better able to deal with an influx of coronavirus patients, a move that proved critical where outbreaks rapidly escalated. Elsewhere, however, hospitals emptied, and healthcare earnings plummeted with the drop in patients and revenue, Harriet Torry and Melanie Evans report.
The labor market is worse than the headline numbers suggest. Americans are only counted as unemployed if they are available for work, don’t have a job, and have actively looked for a job in the past four weeks or are waiting to be recalled. The problem? More than 6 million workers effectively dropped out of the labor force last month. That artificially lowered the headline unemployment rate and pushed down the labor-force participation rate.
A broader measure of unemployment and underemployment, known as the U-6, accounts for people who have stopped looking for work or who couldn’t find full-time jobs. That rocketed to 22.8%.
How bad is this on a historical scale? Modern unemployment data only go back to 1948. But separate Census Bureau calculations reaching back to 1900 show the historic scale of job losses.
If there’s one silver lining, it’s that almost all of last month’s layoffs were classified as temporary. That suggests companies are planning a comeback, and they should be able to hit the ground running with workers who don’t require interviews, training and other onboarding. “The 78% share of unemployed classified as ‘temporarily laid off’ at least gives some grounds for hope that a lot of jobs will come back, provided the lockdown does not last too long,” said Brian Coulton, chief economist at Fitch Ratings.
[wsj-responsive-sandbox id = "0" ]What Economists and Investors Are Saying
“While we are hopeful many will get back to work in the coming months, there will be severe scarring effects on the labour market for years to come.” —Paul Ashworth, Capital Economics
“The Covid-19 pandemic has simply pulverised the world’s largest economy.” —Ayush Ansal, Crimson Black Capital
“What we know is that this report almost certainly understates the tragedy has befallen the American labor force.” —Joseph Brusuelas, RSM US
“Even if some job losses are temporary, it will be a tough ask delivering the V-shape GDP recovery the optimists crave, and a W, U, or ‘swoosh’ shape seem likely.” —Neil Williams, Federated Hermes
“These job losses are driven entirely by the shutdown of the economy, not market fundamentals. This offers some hope that a labor market recovery could be swift if economic activity can resume in the near term.” —Beth Akers, Manhattan Institute
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