WASHINGTON — 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 here
In 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’tlooking 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.
Ripple effects
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 at Upwork, a website that connects businesses and freelancers. That dynamic may be different in the coronavirus recession, where the optimistic outlook is that many — but not all — jobs will bounce back.
The leisure and hospitality sectors could take longer to recover, as social distancing policies have destroyed companies’ business models.
Barbara Hull, 38, was a server at Caesar’s Palace in Las Vegas until March 18 when the lockdown began. “We all kind of knew it was coming,” she said.
“Financially, it’s scary for us [servers], because when we’re going back we don’t know what we’re going back to,” she said about the reopening of the economy. “The whole point of Vegas is to bring people together for this experience, and we don’t know how long it will take until we get back to that.”
She can’t imagine it will be the same experience with servers like herself wearing face masks, she said.
Economists also worry about whether consumers will feel comfortable going back to restaurants or traveling after restrictions lift. For people like Hull this could mean less work and much lower tips after the reopening. Cautious consumer behavior could delay an economic recovery.
“You’re going to see weaker demand for jobs that involve a lot of face-to-face interaction,” Ozimek said, adding that jobs that can be done remotely will be relatively safer throughout the crisis.
But experts also worry about a second wave of Covid-19 infections in the second half of the year. A resurgence in cases could steamroll a recovery.
It’s also a scary world for recent graduates looking for employment during the crisis.
Micaela Stoia, 22, from Oxnard, California, was furloughed from her job as a dog trainer at Petco when the lockdown started. She filed for unemployment benefits, but has yet to receive any money. Stoia studied political science in college and has aspirations to eventually work in government.
“By the time I’m 26 I will need a steady job with good benefits,” she said. “I have type I diabetes and I need those health benefits. I’ve been working toward that goal, but the pandemic has put everything on hold.”
“It’s a little hard to get started if I only have my degree and no experience,” she added. “Nobody is hiring for internships.”
Ozimek predicts state and local government jobs could be next in line for layoffs. Various municipalities have already had to lay off workers. Dayton, Ohio, for example, has furloughed a quarter of its workforce, and Detroit is looking to lay off part-time workers to fund its multimillion-dollar budget deficit.
Governments respond
Comparisons 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 weekfor 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.