U.S. employers shed 20.5 million jobs in April, the worst monthly loss in history, underscoring how intensely the coronavirus crisis disemboweled the U.S. economy and upended American lives at the height of the pandemic.
The drop wasn’t as steep as the consensus among economists. Still, the Labor Department’s report indicates that the unemployment rate soared to 14.7%, a level not seen since the government began tracking the metric in 1948.
“There’s no sugarcoating it. It’s an unprecedented drop,” said economist Robert Frick at Navy Federal Credit Union. “This is a heavy psychic weight that people are carrying now. They’re worried about the jobs.”
The government’s report on Friday showed that the leisure and hospitality sector, which employs cooks, hotel staff and casino workers, faced the brunt of the impact. Office jobs and education employees took secondary losses as advertising budgets were slashed, schools were closed and stay-at-home orders were issued. But there’s a silver lining in the number of those who are furloughed, hinting at the possibility of an upswing in the not-too-distant future.
While the swiftness of the job losses defies modern-day comparison, the trajectory of the payroll numbers and the unemployment rate weren’t a surprise. The country has been awash in novel economic headlines and chyrons since mid-March when cases of COVID-19 spiked.
“We know how we got here,” said Mark Hamrick, senior economic analyst for Bankrate.com. “We just don’t know what the path forward will look like.”
March’s jobs report showed that restaurants were among the first businesses to let go of employees en masse once the pandemic was declared. April’s numbers convey a more complete picture of the fallout.
The fast-casual dining chain Dog Haus lost 75% of its workforce nationwide by the middle of April, weeks after dining-in was halted to curb the spread of the virus amid widespread social distancing orders.
The chain of 35 franchised restaurants also suspended contracts with consultants and cut ties with vendors to keep the lights on for its corporate staff, dampening the employment landscape for gig workers and other small businesses relying on a paycheck.
“We had to look them in the eye and say, ‘We’ll call you in a couple of months when we reopen,’” André Vener, co-founder of Dog Haus, said.
The jobs eliminated by Dog Haus are one example of the losses contributing to the 5.5 million jobs obliterated from the foodservice industry in April. The losses were also felt in industries that aren’t as heavily reliant upon tourism and discretionary spending.
While the retail industry shed 2.1 million workers, professional and business services lost just as many. Manufacturing cut 1.3 million jobs and the government laid off close to a million workers, mostly on the local level.
“It’s often said that most Americans are living paycheck to paycheck. Now they’re living without a paycheck,” Hamrick said.
Some employment categories lost jobs despite increasing demand. Hospitals were hit with an onslaught of patients, still, the healthcare sector shed 1.2 million jobs from dental offices and elective surgery clinics.
A number of racial and gender disparities also showed up in the data. Low-income workers, women and minorities lost the most jobs.
While the unemployment rate for Whites rose to 14.2% in April, it jumped to 16.7% for Blacks, 14.5% percent for Asians and 18.9% for Hispanics.
Women were also more likely than men to lose employment.
Before the pandemic, when the economy was roaring with unemployment rates teetering around 3%, the numbers in the jobs report were merely data points that edged up or ticked down each month.
But behind Friday’s numbers are personal stories of Americans who were slapped with the sudden news that they’d be laid off at worst, furloughed at best.
Labria Chandler, 24, lost her job as a line cook in an Athens, Georgia restaurant last month. She couldn’t afford rent in April and she is behind on payments in May. Without a paycheck in weeks, the mother of three said she has had to choose between feeding her kids – aged 2, 6 and 9 months – or paying rent.
“I’ve been depressed, depressed, depressed during this time,” Chandler said. “The worst moments are when my daughters say they’re hungry, and I have to tell them I’m doing the best I can.”
The unemployment rate and payroll count don’t capture everything. The numbers are determined by surveys that have seen a reduction in participation since the economy came to a halt. Economists use the approximations to enhance rebound projections or gussied up guesses in the stay-at-home era.
Some suggest the recovery will take the shape of the letter V, projecting that the workforce will bounce back just as fast as it collapsed. Others forecast abstract recoveries that mimic the shape of a Nike Swoosh or checkmark. The reality is: No one knows.
“I like to call the recovery shape a question mark,” Hamrick said.
The nation’s economic aftermath largely relies on yet-to-be-answered questions surrounding a vaccine for the ongoing respiratory illness. Resurgences in the virus could send job gains back in the opposite direction. And it’s unclear how confident employers will be to hire in the wake of uncertainty.
“The aftershock from this coronavirus meltdown in the labor market may persist for a while,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “Companies may be a little less optimistic about the future.”
There was one sign of a speedier turnaround outlined in the jobs report.
Roughly 18 million Americans said they were temporarily laid off – which means they expect to have jobs waiting for them once reopening occurs. Some states, like Florida and Georgia, have already started easing restrictions with barbershops and nail salons back in business.
Many reopenings kicked off during the first week in May, so those will play a role in next month’s jobs report.
“Americans are still optimistic,” Frick said. “If those people do get their job back quickly, then a quick recovery becomes possible.”
Some previously furloughed workers have started transitioning back to the workplace.
Karolina Kozdra, 27, was shocked to find out that the dentistry she worked at on Manhattan’s upscale Upper East Side was shutting down in March. Initially, she was furloughed. Then, in April her boss said she can come back to work in May.
“At first, it felt like the world was ending,” Kozdra said. “But with unemployment and us opening back up, things are turning out OK.”