With shops and factories closed nationwide due to the coronavirus pandemic, nearly all of the jobs created in the US economy in the last decade were wiped out in a single month.
An unprecedented 20.5 million jobs were destroyed in April in the world’s largest economy, driving the unemployment rate to 14.7 percent from 4.4 percent in March, the Labor Department said in its monthly report, the first to capture the impact of a full month of the lockdowns.
The United States is home to the world’s largest and deadliest coronavirus outbreak, with more than 75,000 fatalities and 1.2 million cases reported as of Thursday, according to Johns Hopkins University.
The economic damage from the lockdowns to contain the virus has been swift and stunning, despite nearly $3 trillion in financial aid approved by Congress. And there is a growing fear that the temporary layoffs will become permanent since some companies won’t survive.
The plunge in nonfarm payroll employment last month was the largest ever recorded since 1939, while the jobless rate saw its highest and biggest increase since 1948, the report said.
And the job losses in March were worse than initially reported, falling 870,000 even though the business closures happened mostly in the second half of the month.
Employment fell sharply in all major industry sectors.
Leisure and hospitality was the first sector hit and the one bearing the brunt of the impact of the lockdowns, posting a loss of 7.7 million jobs — nearly equivalent to the 8.6 million total jobs lost in the two years of the global financial crisis, while manufacturing lost 1.3 million positions.
Taken together, 21.4 million jobs were destroyed in March and April, nearly equal to the 23 million positions created in the economy’s long expansion from February 2010 to February 2020.
As bad as the data was, the real picture likely is much worse. The Labor Department noted the unemployment rate would have been closer to 20 percent but some workers were misclassified as employed when they actually had been laid off.
– Not a good future –
The pandemic has caused many employees to leave the workforce altogether, while others have been forced from full-time jobs into part-time work.
The measure of the labor force as a share of the total population sunk to 51.3 percent, its lowest in history, meaning nearly half of working-age Americans are not employed.
The number of people not in the labor force who currently want a job nearly doubled to 9.9 million.
Minorities were hit particularly hard: African American unemployment spiked to 16.7 percent from 6.7 percent in March, while the rate for Hispanics was 18.9 percent, more than triple last month.
President Donald Trump said Friday the numbers were expected, and promised: “I’ll bring it back.”
“Our country is warriors and maybe now more than ever because they are going back to work,” he said on Fox News.
But 57-year-old Sandra Mahesh, who recently lost her job in Maryland and had her unemployment benefits cut off, is not hopeful.
“I don’t see a good future with America right now,” she told AFP.
– Low-wage destruction –
The report showed rising average wages, a seeming contradiction given the massive destruction of jobs, but economists say it is merely another sign of catastrophe.
“In April, the job losses were disproportionately concentrated in relatively low-wage sectors like leisure and recreation,” Ian Shepherdson of Pantheon Macroeconomics said in an analysis.
“The disappearance of these people from the sample drove up the average level of earnings for the people who remained in employment, but it does not mean that underlying wage growth is rising.”
A University of Chicago study based on the huge ADP private payrolls database found that low-wage workers saw employment decline by 35 percent, a rate three times as high as the nine percent decline seen by top earners.
Job losses at the bottom of the wage scale account for one third of the total decline, the authors found.
“The beginning of this likely ‘Pandemic Recession’ is unprecedented,” co-author John Grigsby said on Twitter. “Labor market declines (are) concentrated among low income workers and small firms, precisely those that are unlikely to have savings to smooth over shock.”