With much of the American economy in self-imposed shutdown to prevent the spread of coronavirus, April's colossal surge in unemployment delivered a historic blow to workers.
The US economy lost 20.5 million jobs in April, the Bureau of Labor Statistics said Friday by far the most sudden and largest decline since the government began tracking the data in 1939.Those losses follow steep cutbacks in March as well, when employers slashed 870,000 jobs. Those two months amount to layoffs so severe, they more than double the 8.7 million jobs lost during the financial crisis.For many Americans who lost their jobs and their homes in the 2008 financial crisis, this moment reopens old wounds. It took years to rebound from those setbacks. When the economy eventually did crawl back, US employers added 22.8 million jobs over 10 years ,a victory for all those who had weathered the Great Recession.Now, the coronavirus pandemic stings not only because of the public health crisis it has inflicted ,but also because it wiped out nearly that whole decade of job gains in just two months.
The unemployment rate soared to 14.7% in April, its highest level since the BLS started recording the monthly rate in 1948. The last time American joblessness was that severe was the Great Depression: The unemployment rate peaked at 24.9% in 1933, according to historical annual estimates from the BLS.
By all accounts, it's been a devastating two months for American workers.
How we got hereIn late March, state and local governments enacted stay-at-home orders to slow the spread of the coronavirus. Businesses suddenly closed en masse, laying off or furloughing millions of workers.The government's jobs report shows some of the steepest job losses in leisure and hospitality, which lost 7.7 million jobs, and retail, which lost 2.1 million jobs.Even as hospitals struggled to serve an influx in patients, health care workers suffered layoffs, too, with outpatient services like physicians and dentists' offices cutting 1.2 million jobs in April.Food and beverage stores, which have also been essential during the crisis, lost 42,000 jobs.And as terrible as those numbers are, they don't tell the full story.The jobs numbers come from a survey of employers, and do not include independent contractors like Uber and Lyft drivers in the gig economy.Likewise, the unemployment rate, which comes from a survey of households, probably undercounts the number of jobless Americans, too.
People are only counted as "unemployed" by the BLS when they have been out of work but actively searched for a new job in the prior four weeks. Or, if they were a "temporary layoff" with the expectation of being rehired within six months. About 18 million people were counted as "unemployed on temporary layoff" in April, up from just 1.8 million the month before.
But with much of the country still under stay-at-home orders, many laid off workers weren't looking for new jobs in April. Instead of being counted as "unemployed," those people were categorized as having dropped out of the labor force. The employment-population ratio, which measures the share of the US population over age 16 with a job, rate shrank to 51.3% in April, down from 60% in March.Economists expect many people will be able to find work again as businesses gradually reopen, but it could take months or even years for the job market to return to its pre-pandemic strength.
Governments respondComparisons to the Great Depression may seem dire, and although the coronavirus jobs crisis is historically deep, economists don't predict it will be as severe as the economic downturn in the 1930s. The Great Depression lasted for 12 years, and the US lacked a social safety net at that time.In the current crisis, the government acted quickly to expand unemployment benefits, extend funding to businesses and send out stimulus checks to individuals earning less than $99,000 a year. Although those programs have been far from perfect, they nevertheless provide much needed relief to some workers and employers.In response to the pandemic, Congress expanded unemployment benefits to include an additional $600 per week for up to four months.
It also expanded who can file for unemployment benefits to include contractors, the self-employed and workers in the gig economy. But many states have struggled to keep up with the sudden onslaught in unemployment claims.New York Gov. Andrew Cuomo said in April that the state hired an additional 1,000 people just to process claims. In neighboring New Jersey, Gov. Phil Murphy was looking for volunteers who know the decades-old computer programming language COBOL because many of the state's systems still run on older mainframes.And the backlog hasn't helped people get their benefits payments in a timely manner. In late April, Florida reported that the state had paid out less than a quarter of claims filed since mid-March, for example.It will take time for the US labor market to recover from this unprecedented hit. Federal Reserve Chairman Jerome Powell said last week that it would be a while until America gets back to its historically low February unemployment figure.
Tami Luhby and Katie Lobosco contributed to this report.