Layoffs by companies are affecting Americans across the country. Victor Ho lost his internship with a leading makeup brand in New York, just two months after getting it. (May 7)
The U.S. economy lost 20.5 million jobs in April and the unemployment rate soared to 14.7% — both record highs — laying bare the starkest picture yet of the crippling gut punch delivered by the coronavirus pandemic.
In just a month, the historically dismal performance abruptly wipes out all of the nation’s job gains since the Great Recession of 2007-09.
Economists surveyed by Bloomberg forecast 22 million job losses and a 16% unemployment rate.
The reversal has been head-spinning: The jobless rate had touched a 50-year low of 3.5% in February before rising to 4.4% the following month amid the early effects of the crisis.
The share of Americans working or looking for jobs — which together make up the labor force — tumbled from 62.7% to 60.2%, lowest since 1973. Many people who lost jobs didn’t look for work because of fears of catching the virus while job hunting, caring for sick relatives or watching kids who were home now that schools are closed. Also, with much of the economy shuttered, there were few jobs available.
The decline kept the unemployment rate from rising even further.
April’s dramatic numbers reflect the nation’s emergency response to its worst health crisis in a century.
Most states shut down nonessential businesses and issued stay-at-home orders starting in mid-March to curtail the spread of the virus, closing restaurants, malls, movie theaters, offices and sports venues, and idling tens of millions of workers. Combined with a travel and tourism industry that largely ground to a halt, some 30% of America’s economy has evaporated, and the effects have rippled to white-collar businesses and their employees.
A ghastly employment report was widely anticipated after 22 million Americans filed initial claims for unemployment insurance in the weeks leading up to the mid-April jobs survey. Since then, another nine million workers have sought benefits, though they’ll likely be counted among May’s job losses.
Yet while first-time jobless claims represent the best real-time gauge of layoffs, the employment report offers a more accurate reading. Many people seeking jobless benefits during this crisis have been furloughed while others have had their hours reduced.
That suggested there may be fewer job losses than unemployment claims. At the same time, the Economic Policy Institute estimated that as many as 14 million workers couldn’t apply for benefits because of overwhelmed phone and computer systems, potentially swelling April’s payroll losses.
April’s net payroll losses reflect not just layoffs but also a plunge in hiring. Job openings have fallen 28% since early March, according to Glassdoor, the job search site.
While the numbers are staggering, the economy’s medium-term outlook is uncertain. More than 40 states have started allowing businesses to partially reopen despite a still-rising number of coronavirus cases. Assuming the pandemic eases by summer, economists expect a solid recovery in the second half of the year.
But lingering consumer caution and a possible second wave of the virus is likely to continue to crimp economic activity at least until a vaccine is available, possibly by early next year, economists say. Moody’s Analytics forecasts that unemployment will end 2020 at a still-elevated 9%.
A key measure to watch in Friday’s report is the share of job losses that are temporary, Goldman Sachs says. In March, nearly half were, suggesting those jobs could return fairly quickly as the economy reopens.
Michael Hurley, 33, of Havertown, Pennsylvania, temporarily lost his job as a quality standards manager for a marketing company in late March when the firm’s door-to-door consumer surveys were shut down.
He has applied for unemployment benefits but is still awaiting approval. Hurley’s fiancee, Shannon, is still working a second-grade teacher, but the couple has taken a big hit to their income. They’re buying lots of pasta and rice to stretch their food dollar and keeping the thermostat at 67 degrees.
If Hurley doesn’t receive jobless benefits by next week, he says he’ll have to look for a manual-labor job so the couple can pay rent and other bills.
“I am getting to the point where my funds are critically low,” he says.
Hurley graduated from college during the Great Recession in 2009, forcing him to take a job as a claims adjuster for an insurance company despite his business management degree. He says he worked hard to rise to a manager’s job at Walmart before landing his current position.
“I feel like I was starting to gain steam,” he says. Now, he worries another downturn could undo much of his accomplishments. “Did I just lose all the steam I was gaining?”
Hurley’s company has told him they expect to rehire him when the economy reopens. “They say they’re coming back but are they?” he says. “It’s a level of the unknown.”
Broader jobless measure soars
The 14.7% unemployment rate highlights only part of the economic carnage set offf by the outbreak. A broader measure of unemployment — that includes Americans working part-time even though they want full-time jobs, discouraged workers who have stopped looking and the unemployed – leaped from 8.7% to 22.8%, highest on record.
Read or Share this story: https://www.usatoday.com/story/money/2020/05/08/april-jobs-reports-20-5-m-become-unemployed-covid-19-spreads/3090664001/