In just two months, the coronavirus outbreak undid all the economic progress made since the 2008 financial crisis — including the lowest unemployment rate in 50 years.
The U.S. unemployment rate spiked from 4.4% in March to 14.7% in April, according to the Bureau of Labor Statistics, which is the highest level since the the Great Depression of the 1930s. The labor force participation rate fell 2.5 percentage points to 60.2% — the lowest rate in 33 years — while the employment-population ratio fell from 60% to 51.3% for its largest monthly decline since 1948.
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Nonfarm payrolls contracted by 20.5 million workers — significantly more than March’s contraction of 701,000 but less than forecasts for 22 million. Of the sectors comprising this figure, leisure and hospitality took a particularly large hit, with a workforce decline of 7.7 million or 47%. Restaurants made up 5.5 million of those jobs.
Education and health services jobs declined by 2.5 million, professional and business services 2.1 million, retail 2.1 million, and manufacturing 1.3 million.
"Many services sector activities, such as those related to leisure, entertainment, retail and travel, will not normalize quickly," Moody's analysts said in a note reported by CBS. "Despite the fiscal and monetary support measures, some establishments in these sectors may permanently close, leading to permanent job losses."
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Average hourly earnings rose $1.34 to $30.01, reflecting disproportionate cuts in low-wage jobs.
“The increases in average hourly earnings largely reflect the substantial job loss among lower-paid workers; this change, along with earnings increases, put upward pressure on the average hourly earnings estimates,” the BLS wrote in its report.
An increase in average weekly hours of 0.1 should be read with similar perspective.
“Given the large employment decline in March and the extreme job cuts in April, one must be cautious when interpreting the changes in average weekly hours for all private-sector workers,” Commissioner William Beach said in a statement. “While it is certainly true some employees worked additional hours in April, the majority of the increase in average weekly hours reflects the disproportionate number of workers with shorter workweeks who went off payrolls; their removal put upward pressure on the average hours estimate.”
These figures may not represent the whole story, though. U.S. unemployment reports only cover those looking for a job or temporarily laid off. Discouraged workers detached from the labor force are not included.
“Given the well-known problems in filing claims around the country, those workers classified as furloughed will face the permanent loss of a job, and the unique set of conditions around shelter-in-place orders and self-distancing will tend to produce an undercount of the unemployed,” Joseph Brusuelas, chief economist at RSM, said in a statement.
However significant these data points may seem, Brusuelas said they’re nothing compared to the weekly jobless claims report, which revealed 3.2 million new applications just last week.
“From our vantage point, this data is far more important than Friday’s jobs report,” Brusuelas said. “While that report for April will feature the single largest loss of employment and a record high in the unemployment rate since its beginning in 1948, the claims data strongly suggest that the U.S. has not yet observed a peak in job losses and the unemployment rate, and a likely decline in hours worked. That, unfortunately, lies ahead.”
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