(Photo by Noam Galai/Getty Images)
The United States Department of Labor reported a sobering, disheartening—yet expected—rise in unemployment not seen since the Great Depression in the April jobs report. Roughly 20.5 million Americans lost their jobs last month. The unemployment rate, which was at about 3.5% in February, now stands at an uncomfortably high 14.7%. The number of Americans, in their prime-working years holding a job, fell to only 69.7%. This hasn’t been seen since November 1975.
The continued job-loss catastrophe plagued all sectors. Jobs in the leisure and hospitality industries were hit the hardest with 7.6 million job losses. This was followed by retail and health, each losing 2.1 million. Manufacturing, once the backbone of the U.S., lost 1.3 million jobs. Government workers weren't immune to the negative impact, as 980,000 workers lost their jobs.
According to the Associated Press, “The jump in the unemployment rate didn’t capture the full devastation wrought by the business shutdowns. The Labor Department said its survey-takers erroneously classified millions of Americans as employed in April even though their employers have closed down. These people should have been classified as on temporary layoff and therefore unemployed. If they had been counted correctly, the unemployment rate would have been nearly 20%, the government said.”
The Labor Department has another substantial quirk in its reporting. The April unemployment numbers are based only up to about April 12. It's obvious that the economy has deteriorated since then, which would result in even more people losing their jobs.
The numbers also ignore people who have finished collecting unemployment benefits, but didn’t find a new job. These folks disappear from the data. They also don't count people who’ve simply given up looking for a job and are not counted in the unemployment reports.
It's not just that people lost their jobs. About 5.1 million workers had their hours reduced. Due to underemployment, a metric that portrays the unemployed, plus full-time workers forced into part-time work, hit a 22.8% record high.
It's astonishing to note—and hard to recall—that the U.S. had 113 months of consecutive uninterrupted job growth. At the start of 2020, in the January jobs report, I reported, “The U.S. economy added 225,000 jobs in January shattering forecasters’ expectations. Wages for workers increased 3.1% from last year at this time and unemployment remained steady at 3.6%. The three-month moving average for jobs created was 211,000, indicating a strong consistent trend. January marks over 100 consecutive months of uninterrupted job gains.”
The massive job losses create a slippery slope. When people aren't working, they spend less money on purchasing goods and services. With less money circulating into the economy, businesses do not fare well. With their declining fortunes, they’ll lay off workers, perpetuating the downward cycle.
The large job aggregation site, Indeed, said that its number of job listings dropped by 39.3%, as of May 1, compared to last year at this time. New job postings declined about 45.3%.
A glimmer of hope is that a large portion of companies announced furloughs instead of layoffs. Hopefully, this means that they are relatively confident that they’ll be able to rehire people once the economy reopens. Similarly, as businesses restart operations, workers will be needed, which will then generate a resurgence in hiring.
