The labour department said Friday that the economy shed more than 20.5 million jobs in April, sending the unemployment rate to 14.7 per cent — devastation unseen since the Great Depression.
The report underscores the speed and depth of the labour market’s collapse as the coronavirus pandemic took a devastating toll. In February, the unemployment rate was 3.5 per cent, a half-century low. And even since the survey was taken, millions of people have filed claims for jobless benefits.
The April job losses alone far exceed the 8.7 million in the last recession, when unemployment peaked at 10 per cent in October 2009.
The only comparable period came when the rate reached about 25 per cent in 1933, before the government began publishing official statistics.
If anything, the report understates the damage. The government’s definition of unemployment typically requires people to be actively looking for work.
And the unemployment rate doesn’t reflect the millions still working who have had their hours slashed or their pay cut.
Many of the unemployed said they had been temporarily laid off and expected to return to their jobs.
But the joblessness that began with layoffs in the leisure and hospitality industry has extended throughout the economy, from manufacturing and retail industries to white-collar redoubts like business services, meaning it will take longer for the labour market to recover.
Many people still employed have had their hours reduced. Others have suffered pay cuts. Some who have lost jobs won’t have been able to look for work amid widespread shutdowns and won’t even be counted as unemployed. A broader measure —the proportion of adults with jobs — could plunge to a record low.
“What we’re talking about here is pretty stunning,” said Diane Swonk, chief economist at Grant Thornton. “The shock is unique because the cause is unique. It’s such a different animal from anything that we’ve ever seen.”
The total number of layoffs is now nearly 34 million since the shutdowns began seven weeks ago.
That figure is much larger than the expected April job loss because the two are measured differently: The government calculates job losses by surveying businesses and households. It’s a net figure that also counts the hiring that some companies, like Amazon and many grocery stores, have done despite the widespread layoffs.
By contrast, the total jobless claims is a cumulative figure that includes aid applications that began in March.
Still, the job loss for April may be much larger than expected, with most economists acknowledging that their usual models might not work as well in a collapsing job market.
Swonk notes that several million unauthorised immigrants who weren’t able to file for unemployment benefits were nevertheless probably laid off last month. Those jobs losses would be counted, though, in the government’s surveys. Swonk estimates that April’s job loss could total as high as 34 million.
Companies are still cutting jobs in the midst of a severe downturn, with the economy possibly shrinking at an unheard-of 40 per cent annual rate in the April-June quarter.
GE Aviation said it is cutting up to 13,000 jobs. Uber will shed 3,700 positions. Amy Egert, a dental hygienist in Severn, Maryland, was laid off in mid-March. She was told she could return a month later, but she’s still waiting and it’s unclear when she will able to go back. She monitors Maryland statistics on coronavirus cases in hopes that the figures will show enough of a downward trend for her to work again.
“As I watch the numbers, it'’s like OK, are we going to make it back by the end of May?” Egert asked. “Is it going to be the first of June? Is it going to be mid-June?”
