The US economy lost 20.5 million jobs in a single month, an unprecedented loss far worse than any seen in the nation’s history. The coronavirus pandemic has dealt a major blow to the labor market which was flourishing just a few months ago, with the rate of unemployment near a 50-year low.
- The losses dwarf the worst recorded monthly job loss in history of 1.9 million in 1945 following the end of WWII.
- 23% of respondents to a ZipRecruiter survey reported hours or wages cut between February and mid-April, with the average pay cut at 57%.
- It’s worth noting that 83% of layoffs came from furloughed workers who will likely be able to return to work after lockdown procedures are lifted.
- “Real” unemployment, including those not seeking work and the underemployed, rose to 22.8%
The rate of unemployment in April reached 14.7% according to the Labor Department, and has likely climbed higher since then. The “real” unemployment rate, which accounts for underemployed and those not registered as seeking employment, rose to 22.8% in April. Millions of Americans are unable to seek work at the moment due to the coronavirus lockdown procedures. Labor participation fell to 60.7%, the lowest since 1973.
20.5 million people lost their jobs in a single month, with low income earners suffering in particular. By comparison, 8.7 million people lost their jobs in the Great Recession, with unemployment peaking at 10% in October 2008. The report does not reflect the millions of Americans who have lost hours or seen a major pay cut at work due in April, despite one survey showing average pay cuts of 57% among 23% of workers.
— Bill McBride (@calculatedrisk) May 8, 2020
Leisure and hospitality industry lost the most jobs with 7.7 million layoffs, most of which were in restaurants, diners, and similar establishments. Education and health services lost 2.5 million jobs, while 2.1 million jobs were shed in professional and business services. Manufacturing fell by 1.1 million positions, along with the “other services” category. Construction fell by 975,000 jobs, and transportation and warehousing fell by 584,000.
Job Losses Affect Low Income and Minorities The Most
Goodwill chief executive Steve Preston pointed out that low-income earners are the most seriously affected, saying “They have no resources. It takes time to get unemployment, if they qualify for unemployment,” Mr. Preston said, referring to financial benefits that states offer to those out of work. He added most people coming to Goodwill for help are seeking support filing for unemployment benefits.
Fed Chairman Jerome Powell released a statement on April 29 regarding the “We were hearing from a minority low and moderate income and minority communities that this was the best labor market they’d seen in their lifetime,” Jerome H. Powell, the Fed chair, said at his April 29 news conference. “It is heartbreaking, frankly to see that all threatened now.”
Shorter Than Previous Recessions
While this recession is worse than predecessors, it’s also likely to be more short-lived.
Former Bureau of Labor Statistics commissioner Erica Groshen pointed out that 83% of layoffs were likely temporary and affected workers on furloughs rather than those being laid off for good. “The more that workers have a connection to their previous employer, then the more rapidly we can start up jobs again,” said Erica Groshen, former commissioner of the under President Obama.
Gold prices have ticked downward following the release of the April jobs report, holding above $1,700. Spot gold last traded at $1,716.35/oz, up 0.07% with a high of $1,722.90/oz and a low of $1,707.70/oz. The strong rebound in the US stock market is likely offsetting upward momentum from the news of the collapsing labor market.