The U.S. economy lost a staggering 20.5 million jobs in April, according to the Bureau of Labor Statistics (BLS). This was the steepest workforce decline the nation has seen since the Great Depression and the second month of economic loss since the start of the COVID-19 pandemic.
Added together, total job losses in March and April nearly wiped out the 22.8 million jobs created in the past 10 years since the end of the Great Recession.
As a result of steep job losses, the U.S. unemployment rate shot up to 14.7% in April. In the past 70 years, unemployment has reached above 10% only two other times: in 1982, at 10.8% and in 2009, at the trough of the Great Recession, at 10%. Though monthly BLS data does not reach back prior to 1948, the Great Depression’s unemployment rate was estimated to peak at 24.9% in 1933.
While many of these lost jobs have the potential to come back at some point, most economists are not expecting a sharp “V” shaped recovery. As businesses slowly reopen, consumers may be reticent to frequent restaurants, retail, and other services as much as they did pre-pandemic. A few major employers have already filed for bankruptcy and many companies will be changing their business models in the wake of social distancing and health concern practices. The overall disruption to “business as usual” is hard to predict, but we are certainly in for some changes.
Average hourly earnings growth for all employees was higher than normal at 7.9% in April, a reflection of the large number of lower-paying jobs lost in the month. The monthly wage figure increased $1.34 between March and April, and was up $2.20 from April 2019, to $30.01. Previously, annual wage growth had been averaging about 3% with average annual increases of about $0.85.
With the steep job losses in March and April, annual job change dropped from average gains of 2.2 million in the past decade, to a loss of 19.4 million for the 12-months ending in April. The average annual change rate plunged from gains of 1.5% in the year-ending January to a steep loss of 12.9% in the year-ending April. At its worst, the most contraction in the U.S. labor force during the Great Recession was 5%. In fact, job loss was so severe in April, the data points for the past 109 months in the following chart are barely visible due to the huge increase in the scale.
The civilian labor force (CLF) participation rate was 60.2% in April, down 250 bps from March and down 320 bps from February. The CLF itself fell 6.4 million from March and 8.1 million from February. The employment-population ratio of 51.3% was down 870 bps from March and is at its lowest rate recorded since 1948. The total number of unemployed (23.1 million) is three times the level from March and about four times the February amount. The number of people not in the labor force who currently want a job has shot up from 4.96 million in February to 9.92 million currently.
The number of voluntary job leavers fell slightly from February, but the number of workers on temporary layoff shot up by more than 17 million to 18.06 million in April. The number of part-time workers for economic reasons (10.89 million in April) more than doubled from the pre-pandemic February figure. The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, jumped 1,580 bps to 22.8% from February, its highest level since peaking at more than 17% at the height of the Great Recession. This measure is a better barometer of the impact of COVID-19 on the labor market than the U3 or ‘headline” rate.
The number of long-term unemployed workers (out of work for 27 weeks or more) was down about 225,000 workers from last month, but the number of unemployed for less than five weeks shot up to 14.3 million from 2 million in February. The number of multiple jobholders decreased by 2.4 million year-over-year to 5.36 million. Meanwhile, the number of discouraged workers not in the workforce (585,000) rose by 131,000 from one year ago.
April’s jobs report from the BLS revealed losses in virtually every industry sector and subsector. As expected, Leisure and Hospitality was the hardest hit, as was Trade, Transportation, & Utilities as restaurants and stores were shut down. Other sectors or subsectors experiencing sharp declines included: health care (doctor and dentist offices), temporary help services, personal and laundry services, and accommodation. Two subsectors added jobs for the month: general merchandise stores (warehouse clubs and superstores), and couriers and messengers.
• The food services and drinking places subsector (-5.5 million jobs), together with the accommodation subsector (-839,000 jobs) accounted for 83% of the Leisure and Hospitality industry’s steep loss of 7.7 million jobs in April and for 28% of total jobs lost across all employment sectors in the month. Arts, entertainment, and recreation lost an additional 1.3 million jobs for the month.
• The Trade, Transportation and Utilities industry’s loss of 3.1 million jobs in April can be attributed to retail trade (-2.1 million), or about 70% of the industry’s losses. The only retail subsector to gain jobs was general merchandise stores (+93,400), which includes warehouse and supercenter stores. Wholesale trade lost 362,800 jobs, and transportation and warehousing lost 584,100 jobs, despite a slight gain in couriers and messengers (+1,800).
• The 2.5 million jobs lost in the Education and Health Services industry were primarily in the ambulatory health care services sector (-1.2 million) as many doctors, dentists, and other outpatient services were closed for the month. The social assistance sector lost 650,600 jobs in April, most in child day care services (-336,200), while educational services lost 457,100 jobs.
• The Professional and Business Services industry lost 2.1 million jobs in April, with the bulk of loss in the lower-paying administrative and waste services sector (-1.5 million). Roughly 70% of those were in the temporary help services subsector (-841,900). The higher-paying professional and technical services sector lost 509,000 jobs for the month as many in this category are capable of working remotely.
• Manufacturing contracted by 1.3 million jobs in April with the biggest layoffs in durable goods manufacturing (-914,000). Nondurable goods manufacturers cut 416,000 jobs from their payrolls for the month. Motor vehicles (-381,500), fabricated metal products (-108,700), and food manufacturing (-86,300) were the most affected subsectors.
• The Other Services sector lost 1.3 million jobs in April with the steepest loss of 796,900 jobs in personal and laundry services as barbers, hair salons, and other nonessential personal services were closed to minimize public contact.
• The Government sector lost jobs in April at both the state (-180,000) and local (-801,000) levels, while Federal employment was virtually unchanged. Government educators (both state and local) bore the brunt of these furloughs.
• The Construction industry lost 975,000 jobs in April. Residential and nonresidential specialty trade contractors lost about 300,000 to 400,000 jobs each for the month, and the construction of buildings subsector lost another 206,000 jobs.
• The Financial Activities industry lost 262,000 jobs in April, with losses in the real estate (-101,300) and rental and leasing services (-120,200) subsectors.
• The Information industry (-254,000) was hit hard by the idling of the motion picture and sound recording subsector (-216,500), but almost all subsectors experienced losses too.
• The Mining and Logging industry lost 50,000 jobs in April as the support activities for mining subsector lost 33,100 jobs. This industry has been doubly hit by the concurrent pandemic and oil price declines.