In the harshest downturn for American workers in history, employers cut an unprecedented 20.5 million jobs in April and the unemployment rate more than tripled to 14.7%.
Joblessness now stands at the most since the Great Depression era of the 1930s after the coronavirus pandemic brought the U.S. economy to a standstill. As recently as February, the rate hovered at just 3.5%, the lowest level in five decades.
April’s losses -- following a March payrolls decline of 870,000 -- erase roughly all of the jobs that the economy had added in this past decade’s expansion and lay bare just how precarious employment is for vast swaths of Americans. The report showed an outsize impact on lower-paid workers as well as women and minorities.
“It’s devastating,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics. “There’s someone behind each of these numbers. It’s going to take years to recover from this. There’s a case to be made that a lot of these are temporary layoffs, so hopefully people can return to work quickly as we begin to reopen the economy -- but there’s no guarantee in that.”
With a steep recession now in progress, the destruction of jobs heaps election-year pressure on President Donald Trump to restart the economy and show results by November. But with little containment of a contagious disease that’s killed 75,000 Americans and counting, business is returning unevenly and slowly if at all, and signs are mounting that many employers will be forced to make the cuts permanent.
Stock investors have largely looked past the dire economic news, with equities rallying since late March. The S&P 500 opened higher on Friday, while the yield on benchmark 10-year Treasuries rose and the Bloomberg dollar index pared its decline.
Earnings, Underemployment
The data showed average hourly earnings rose a massive 4.7% from the prior month and 7.9% from a year earlier -- more than double March’s pace -- but those figures were skewed higher by the disproportionate loss of low-wage workers from payrolls, rather than any wage pressures boosting employee pay.
One particular group of lower-paid workers -- leisure and hospitality employees, such as those in restaurants and hotels -- declined by 7.65 million, almost half of total employment in the sector.
The underemployment rate, which includes discouraged workers and those working part-time who want full hours, rose to 22.8% from 8.7%.
Furloughed Workers
The Labor Department said the unadjusted unemployment rate in April would have been almost 5 percentage points higher if unemployed workers had properly classified themselves, rather than marking down that they were employed but absent from work. Furloughed workers accounted for about 4 out of every 5 unemployed Americans.