On Friday, the Labor Department said that the economy shed more than 20.5 million jobs in April. It sent the unemployment rate to 14.7 percent. Thus, this is devastation unseen since the Great Depression.
The report is underscoring the depth and speed of the collapse of the labor market. That happened because the coronavirus pandemic took a devastating toll on it. The unemployment rate was 3.5 percent in February, which is, in fact, a half-century low. Nonetheless, millions of people have filed claims for jobless benefits since the survey was taken.
In the last recession, the April job losses alone far exceed 8.7 million. In October 2009, unemployment peaked at 10 percent. Nevertheless, 1993 is the only comparable period when the rate reached about 25 percent. But this was before the government started to publish official statistics.
The report understates the damage, if anything. The definition of the government of unemployment typically is requiring people to be actively looking for work. Thus, the statistics of unemployment does not include the millions who have their pay cut or had their hours slashed.
Many of the unemployed say that they have been temporarily laid off, and they expect to return to their jobs. Nevertheless, the joblessness that started with layoffs in the hospitality and leisure industry has extended throughout the economy. It covers white-collar redoubts like business services, retail, and manufacturing industries. Thus, it means that it will take longer for the labor market to recover.
Race and Job Losses
Black workers’ unemployment rate jumped to 16.7 percent. That is nearly three times the level in February. It was before the coronavirus shutdowns took hold. That is the highest indicator Since early 2010.
Moreover, the unemployment rate jumped to 18.9 percent for Latino and Hispanic workers. In March, the price was 6 percent lower. That is the highest rise on record going back to the 1970s.
Among minorities and black workers, the number is striking. That is because there had been a major bright spot in the record-long expansion that preceded America’s coronavirus lockdown. The record-low jobless rate of these groups became a significant talking point for crucial Federal Reserve officials and President Trump.
Jerome H. Powell is the Federal Reserve’s chair. He said, at his April 29 news conference, that it is frankly heartbreaking to see that all are threatened now.
Moreover, in April, tens of millions of Americans lost their jobs. As a result, 78.3 percent of them classified their separation with a temporary layoff. Nevertheless, 11.1 percent of them said their situation was permanent.
There is a considerable share of people on temporary layoffs. Thus, this could be good news for the economy. In March, temporary layoffs accounted for just 26.5 percent of job losses. In February, the indicator was 13.8 percent. Dating back to the 1960s, the share was at a record high.
Nevertheless, hiring might come back quickly when businesses reopen. That is what short-term losses of jobs suggest. Recessions over the past half-century with a higher share of temporary layoffs have been followed by faster job recoveries, according to Goldman Sachs.
Let us see what happens in the future.
