The unemployment rate hit 14.7% in April, the highest ever recorded, and a confirmation that COVID-19 has decimated the U.S. job market.
Workers lost 20.5 million jobs between mid-March and -April, the Labor Department reported Friday. The losses compound the 870,000 jobs cut in the previous month, effectively obliterating the 22.8 million jobs created in the decade since the Great Recession.
“Total job losses over the last two months would fill all 30 currently empty major league baseball stadiums 16 times over,” Elise Gould, senior economist at the Economic Policy Institute. “These numbers are just hard to imagine how large they are.”
The staggering decline in employment reflects both the span and speed of the pandemic’s impact. Losses trounced every industry and unemployment rates in the teens struck every demographic group.
The leisure and hospitality industry felt the worst of it, reporting 7.7 jobs lost, a 47% decline in employment from the previous month. The nation’s shuttered restaurants and bars accounted for nearly three-quarters of those losses.
Sarah Levine, the owner of two small Philadelphia restaurants, remembers how quickly her clientele dropped off.
She had gone wedding dress shopping the first weekend in March and decided on a dress only to find out it was backordered because of the pandemic.
“That’s when I started thinking: ‘Oh, wow. If it’s affecting things to this point, it may start affecting my business,’” said Levine.
By the next weekend, the cafe was dead. Levine sent most of her staff home that Saturday brunch. By Sunday afternoon, she’d made the difficult decision to close.
“I employ entire families. I have 22 employees and shutting down two restaurants that are open seven days a week, that’s huge. That’s a lot of people out of work,” said Levine.
Workers laid off temporarily by employers who were forced to close or cut back because of COVID-19 make up the majority of the job losses in Friday’s report.
18.1 million, or 88.3% of the headline job losses are among workers furloughed or let go with the implication that they’ll be brought back on when the economy reopens.
This could aid a speedy recovery – the lauded V-shape – if employers make good on their promise and rehire these workers when the shutdown ends.
It’s more likely that an extended shutdown will force some businesses to close permanently. Without another wave of federal relief funds to tide over employers who’ve kept staff on payroll, business owners will be pressured to turn temporary layoffs permanent.
Furloughs are just a stop gap to keep panicked workers at bay. The reality is employers won’t financially be able to retain all of their employees, said Chris Rupkey, chief financial economist at MUFG Union Bank.
“To me all that means is companies are being a little more patriotic this recession,” said Rupkey. “A lot of these jobs won’t come back.”
Among restaurant workers, for example, social distancing measures will mean reduced customers capacity in restaurants and less staff required to serve them, said Saru Jayaraman, Director of the Food Labor Research Center at Berkeley.
“That’s going to be the case for a couple years, let’s be honest,” said Jayaraman.
For now, Levine has managed to keep her staff on payroll. She rotates for weekend takeout shifts, but can’t spare her employees severe cuts to their hours.
The same is true for the 10.9 million Americans who reported working part-time because they couldn’t find full-work, a figure that doubled in the past month.
Across the board, the most vulnerable demographic groups – those more likely to be financially-insecure – felt the brunt of layoffs. Women, black and hispanic workers saw disproportionately higher unemployment rates than Whites or men.
Education also played a part. Workers who didn’t finish high school experienced 20.9% unemployment, those with a high school diploma hit 17.0% and college graduates reached 8.2%.
An analysis by the Pew Research Center attributes the educational divide in unemployment to the fact that higher-educated people are more likely to have the option of remote work. The report found that 62% of workers with a bachelor’s degree are able to telework.
“That goes down with lower levels of education,” said Jeffrey S. Passel, senior demographer at Pew Research Center.
Juliette Ryan, a 21-year-old without a college education, was let go from her job at a restaurant in Philadelphia hours before the state-mandated shutdown. Her employer sent out information on how to apply for unemployment, but couldn’t offer severance pay or benefits.
In the four months leading up to the lay-off, Ryan had been supporting her live-in boyfriend who had lost his job in November. She’d depleted most of her savings to pay his portion of the rent.
He’d only just found a job in February.
“I was like, okay, I’m finally building my savings again. And then this immediately happened,” said Ryan.
Ryan’s only pulling $198 a week from unemployment. She hasn’t yet received the $600 weekly bonus the CARES act promised and her lease is almost up. In order to scrape together the first and last month’s rent and security deposit required to move, she’s living on a bare bones budget.
“It’s pretty stressful, because I basically cannot spend any money until I move,” said Ryan.
Though the headline figures of the pandemic’s employment impact prove catastrophic, they don’t reflect the extent to which COVID-19 has razed the economic landscape.
The Bureau of Labor Statistics (BLS) reported a 13 percentage-point drop in response rates to the household survey used to determine the unemployment rate. The missing responses could have a huge impact on how unemployment is represented by race, said Gould.
Plus, the household survey defines unemployed workers as those out of work and actively seeking a job. But workers who fear contracting COVID-19 or who’s industry has closed down fulfill the former but not the latter.
“Let’s say a restaurant worker has lost their job. They’re supposed to be social distancing, they’re staying home, all the restaurants are closed. Why would they possibly look for a job?” said Gould.
So, workers like Ryan, who want to work but can’t because their industry is shut down, go uncounted.
The very few winners of the report are industries for which the pandemic has spurred demand.
For example, gig workers employed by delivery services or personal shopping companies.
“If you’ve been trying to order your groceries using Instacart, you know that the wait is five or six days,” said Julia Pollak, labor economist at ZipRecruiter. “They can’t expand capacity fast enough.”
As for what comes next, economists agree that things will likely turn worse before they get better. Uncounted workers in this month’s report, will likely beef up unemployment figures for May. Job losses will likewise increase as temporary layoffs become permanent.
On the shape of the recovery, it’s anyone’s guess. The optimistic V-shape, with a brief bottom and quick comeback, has largely been thrown out.
Joe Brusuelas, chief economist at RSM US, is looking at a “lazy J,” or more familiarly, a Nike Swoosh. The shape implies a longer lull, followed by a steady schlep back to normal.
But any comeback depends on whether or not public health efforts can get a handle on new cases. If the economy reopens too soon and infection rates surge, another shelter-in-place order could mean the economy dives for a second time and American workers are left scrambling out of a W.