America went from the lowest unemployment rate in 50 years in February to the highest unemployment rate in 80 years in April.
The U.S. Department of Labor said Friday (May 8) the U.S. economy lost 20.5 million jobs in April and the unemployment rate jumped 10.3 percentage points to 14.7%. The U.S. unemployment rate stood at 3.5% in February.
The full release can be found here.
“It’s a jarring number, but it’s not shocking,” said Mervin Jebaraj, an economist with the University of Arkansas’ Sam M. Walton College of Business and director of Center for Business & Economic Research. “Given the increase in unemployment claims over the last month, we were expecting an unemployment rate like this.”
The data illustrates the rapid effects of the COVID-19 (coronavirus) pandemic and efforts to contain it. Employment fell sharply in all major industry sectors, with particularly heavy job losses in leisure and hospitality.
The job losses are by far the worst on record, according to government monthly payrolls data spanning back to 1939. The worst fall in payrolls amid the global financial crisis was by 800,000 in March 2009.
And it could get worse. The April jobless report captures data through the middle of the month, meaning the second half of April’s job losses aren’t captured in today’s unemployment figure.
“There was a large increase in the number of workers who were classified as employed but absent from work,” the BLS report said. “As was the case in March, special instructions sent to household survey interviewers called for all employed persons absent from work due to coronavirus-related business closures to be classified as unemployed on temporary layoff. However, it is apparent that not all such workers were classified.
“If the workers who were recorded as employed but absent from work due to ‘other reasons’ (over and above the number absent for other reasons in a typical April) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported (on a not seasonally adjusted basis),” the report added.
Jebaraj said that underemployed workers are also at risk of driving the jobless rate higher.
“The rate might actually be higher than 14%. Another 22% are underemployed in some way and the employment population ratio is just over 50%, meaning nearly half the country is not working,” he said. “In the good news column, 18 million of the jobs lost were listed as temporary. Additional government programs will be needed to make sure those remain temporary.”
Employment in leisure and hospitality accounted for nearly half the job losses (47%) at 7.7 million. Almost three-quarters of the decrease occurred in food services and drinking places (-5.5 million). Employment also fell in the arts, entertainment, and recreation industry (-1.3 million) and in the accommodation industry (-839,000).
Employment declined by 2.5 million in education and health services in April. Professional and business services shed 2.1 million jobs and employment in retail trade also declined by 2.1 million.
Arkansas’ February jobless rate jumped from 3.5% – the second lowest in history – to 4.8% in March. The next state report for April is due out on May 22.
“We have to be utterly realistic about this because there is political fantasy out there and then there is economic reality. It’s going to be years before we recover all of these lost jobs and as much as 25 percent of them aren’t ever coming back,” Joseph Brusuelas, chief economist at consulting firm RSM, told Politico.