April 2020 job report: unemployment rises after colossal layoffs in April

Travis Medlock, owner of the Little Shop of Ramen, looks over a row of empty stools inside his restaurant in Mariposa, California, on April 29. During the coronavirus pandemic, Medlock now only takes orders to go.

These losses also follow steep cuts in March, when employers cut 870,000 jobs. Those two months amount to such serious layoffs that more than double the 8.7 million jobs lost during the financial crisis.

For many Americans who lost their jobs and homes during the 2008 financial crisis, this moment reopens old wounds. It took years to rebound from those setbacks. When the economy finally turned back, US employers added 22.8 million jobs in 10 years, a win for anyone who had survived the Great Recession.

Now, the coronavirus pandemic stings not only because of the public health crisis it has caused – but also because it has wiped out almost the entire decade of earnings in just two months.

The unemployment rate climbed to 14.7% in April, its highest level since the BLS started recording monthly rate in 1948. The last time that American unemployment was so severe was the Great Depression: the unemployment rate hit 24.9% in 1933, according to BLS annual historical estimates.

By all accounts, it has been a devastating two months for American workers.

How we got here

In late March, state and local governments issued residence orders at home to slow the spread of coronavirus. Companies suddenly shut down en masse, laying off or laying off millions of workers.

The government job 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 .

Although hospitals have struggled to provide an influx of patients, health workers have also suffered layoffs, with outpatient services such as medical and dental offices cutting 1,2 million jobs in April.

Food and drink stores, also essential during the crisis, lost 42,000 jobs.

And as terrible as those numbers, they don’t tell the full story.

The job numbers come from a survey conducted by employers and do not include independent contractors such as Uber and Lyft drivers in the concert economy.

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Likewise, the unemployment rate, which stems from a survey of households, is likely to also underlie the number of Americans out of work.

People are counted as “unemployed” by the BLS when they have been out of work but have actively sought a new job in the previous four weeks. Or if they were a “temporary layoff” with the expectation of being reinstated within six months. About 18 million people were counted as “unemployed in the event of a temporary layoff” in April, compared to just 1.8 million the previous month.

But with much of the country still under house orders, many laid-off workers were not looking for new jobs in April. Instead of being considered “unemployed”, these people were classified as abandoned by the workforce. The employment-to-population ratio, which measures the percentage of the American population over 16 with a job, fell to 51.3% in April, down from 60% in March.

Economists predict that many people will be able to find jobs as companies reopen gradually, but it may take months or even years for the job market to return to its pre-pandemic strength.

Chain effect

Historically, the most disruptive aspect of recessions has been that jobs disappear and it takes years for companies to create new ones, said Adam Ozimek, chief economist of Upwork, a website that connects companies and freelancers. That dynamic may be different in the coronavirus recession, in which the optimistic outlook is that many, but not all, jobs will resume.

The leisure and hospitality sectors may take longer to recover, as policies of social distancing have destroyed the business models of companies.

Barbara Hull, 38, was a server at Caesar’s Palace in Las Vegas until March 18 when the blockade began. “We all knew it would happen,” he said.

“Financially, it’s scary for us [servers], because when we return we don’t know what we will return to, “he said about the reopening of the economy.” The central point of Las Vegas is to bring people together for this experience, and we don’t know how long it will take before we go back to that. “

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She can’t imagine that it will be the same experience with servers like her wearing masks, she said.

Economists also worry if consumers will feel comfortable returning to the restaurant or traveling after the restrictions are lifted. For people like Hull this could mean less work and much lower tips after reopening. Prudent consumer behavior could delay an economic recovery.

“You will see a weaker demand for jobs involving many face-to-face interactions,” said Ozimek, adding that jobs that can be done remotely will be relatively safer during the crisis.

But experts also worry about a second wave of Covid-19 infections in the second half of the year. A recovery in some cases could favor a recovery.

It is also a frightening world for recent graduates looking for work during the crisis.

Micaela Stoia, 22, of Oxnard, California, was fired from her job as a dog trainer in Petco when the blockade started. He has applied for unemployment benefits, but has not yet received any money. Stoia studied political science in college and has aspirations to eventually work in government.

“At 26, I will need stable work with good benefits,” he said. “I have type I diabetes and I need those health benefits. I worked to achieve this, but the pandemic has put everything on hold.”

“It is a little difficult to start if I only have my degree and no experience,” he added. “Nobody is hiring for internship.”

Ozimek predicts that state and local government jobs may be close to layoff. Several municipalities have already had to lay off workers. Dayton, Ohio, for example, created a quarter of its workforce and Detroit is trying to lay off part-time workers finance its multimillion-dollar budget deficit.

Governments respond

Comparisons to the Great Depression may seem terrible, and although the crisis of coronavirus work is historically profound, economists don’t predict it will be as serious as the economic recession of the 1930s. The Great Depression lasted for 12 years and the United States lacked a social safety net at the time.
In the current crisis, the government has acted swiftly to expand unemployment benefits, extend business finance and send stimulus checks to people who earn less than $ 99,000 a year. Although these programs have been far from perfect, they still 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 apply for unemployment benefits to include contractors, self-employed workers and workers in the concert economy. But many states have struggled to keep up with the sudden onslaught in unemployment claims.

New York Governor Andrew Cuomo said in April that the state had hired another 1,000 people just to process the requests. In nearby New Jersey, Governor Phil Murphy was looking for volunteers who knew the decades-old COBOL computer programming language because many state systems still run on older mainframes.
And the backlog did not help people get benefits payments in a timely manner. In late April, Florida reported that the state had paid less than a quarter of complaints filed since mid-March, for example.
It will take some time for the American job market to recover from this unprecedented success. Federal Reserve Chairman Jerome Powell said last week that it will take some time for America to return to its historic February unemployment rate.

– Tami Luhby and Katie Lobosco contributed to this report.

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