April 2020 jobs report: post-COVID-19 unemployment soars
There has been no shortage of terrible records broken by the coronavirus pandemic, and the latest release of the U.S. Bureau of Labor Statistics’ (BLS) monthly jobs report was no different. According to the BLS report, a record high of 20.5 million jobs were eliminated in April, while the unemployment rate increased to 14.7%— the highest reading on record. Here are the headlines from the April 2020 jobs report.
Labor market experiences record job losses
The outlook on the labor market in the wake of the coronavirus has been dismal at best. After 870,000 jobs (revised) were cut in March, the BLS report revealed that another 20.5 million jobs were lost last month. By comparison, the Wall Street Journal reports that the steepest monthly loss on record dates back to the end of World War II in 1945 when the labor market declined by 1.96 million jobs.
Nevertheless, these losses were to be expected during these unprecedented times. MarketWatch economists had predicted losses hovering around the 20 million mark prior to the release of the BLS report. Meanwhile, earlier this week, payroll processing company ADP reported that the private sector lost 20.2 million jobs in April, with the losses experienced across every industry and company size. The same holds true for the BLS report, as no industry was left unmarred by the coronavirus pandemic.
Leisure and hospitality industry most affected by coronavirus
According to the BLS report, about three-quarters of the drop in employment occurred in the leisure and hospitality industry (-7.7 million), specifically in restaurants and bars (-5.5 million). As restaurants begin to open up (with restrictions) in May in several states, including Georgia, Texas, and South Carolina, employers in the food service industry will want to keep a close eye on the job gains and losses in next month’s report.
Meanwhile, employment also fell in both the arts, entertainment, and recreation (-1.3 million) and the hotel and lodging industries (-839,000) in April. While there are no CDC restrictions for consumers on traveling within the U.S., the CDC has advised travelers to take certain factors into consideration, with many canceling hotel reservations as a result.
Employment decreases experienced across every sector
Leisure and hospitality wasn’t the only sector affected by the coronavirus pandemic. According to the BLS report, notable employment declines were seen across the board, specifically in:
- Education and health services: Despite the shortage of hospital workers battling the pandemic, employment declined by 2.5 million, primarily in health care (-1.4 million). As many elective, routine, and non-emergency healthcare visits were put on hold during the month of April, dentist offices (-503,000) and physician offices (-243,000) led the losses in this sector.
- Professional and business services: With many offices closing across the country, business and professional services cut 2.1 million jobs in April.
- Retail: Again, as many retail stores shut their doors in April, employment declined by 2.1 million. While major job losses occurred in clothing stores (-740,000), automotive dealerships (-345,000), and furniture stores (-209,000), general merchandise stores, including warehouse clubs and supercenters, gained 93,000 jobs.
- Manufacturing: The manufacturing sector shed 1.3 million jobs in April, with about two-thirds of the losses in durable goods manufacturing.
- Services: Employment in other services, such as hair and nail salons, massage parlors, and dry cleaners, dropped by 1.3 million in April. Nearly two-thirds of this decline was in personal and laundry services (-797,000).
- Government: Government employment declined by 980,000, mostly in local government as a result of school closings.
- Construction: Employment fell in the construction industry by 975,000 in April.
- Transportation and warehousing:Despite the increase in online shopping, employment in transportation and warehousing declined by 584,000 in April. These losses were mostly in transit and ground passenger transportation and airlines.
- Wholesale trade:Declines in durable goods manufacturing had a ripple effect in wholesale trade, with an overall decline of 363,000 jobs.
- Financial activities:The real estate market has taken a hard hit amid the coronavirus pandemic, with many agents and rental and leasing offices contributing to the sector’s overall decline of 262,000 jobs in April.
- Information:As motion picture and sound recording studios take pause, 254,000 tech jobs were shed in April.
Unemployment rate reaches record high
Two months ago in February, the unemployment rate had reached record lows of 3.5%. Inching up to 4.4% in March, the unemployment rate rose much further to 14.7% in April. In the 70-some years that the government has been keeping track, the unemployment rate has never exceeded 10.8%. To put it in perspective, economic historians estimate that unemployment reached 25% during the Great Depression. Meanwhile, the employment-to-population ratio for prime age workers fell to 69.7%, the lowest level since 1975.
While the BLS report only shows data leading up to its mid-month reference point, the most recent weekly jobless report from the Department of Labor, covering the last full week of April, showed that nearly 3.2 million Americans had filed for unemployment. The New York Times predicts, “the next weekly report, due Thursday, will probably add millions more.” A Yahoo Finance review of jobless claims data over the past six weeks identified the states experiencing the greatest spikes in unemployment claims, with the most claims filed in Georgia, Florida, and Alabama.
Unemployed workers may be back to work soon
As some businesses start to reopen and many others restructure, it can be difficult to know if business will rebound or if these job losses will be permanent. A good indicator, according to the New York Times, is to compare the number of people who have lost their jobs permanently versus those on a temporary layoff or furlough—and “the larger the share of workers in the second category, the faster the recovery could be.” Diving deeper into April’s unemployment numbers, the number of unemployed persons who reported being on temporary layoff increased about ten-fold to 18.1 million, while the number of permanent job losers increased by 544,000 to 2.0 million. These figures indicate that there is hope for many unemployed workers to return to work in the coming months.
Job seekers are discouraged amid coronavirus pandemic
Despite the record number of Americans filing for unemployment, many aren’t actively seeking work. The BLS report revealed that the labor force participation rate decreased by 2.5% over the month to 60.2%—the lowest rate since January 1973 when it was 60%. The Wall Street Journal says, “Some Americans whose jobs were cut aren’t actively looking for work because many companies have implemented hiring freezes, or they worry a return to work would raise their exposure to the coronavirus.”
Nevertheless, Monster data shows that some companies have increased hiring as they see some increase in demand. In Massachusetts alone, Monster Worldwide CEO Scott Gutz says companies like CVS, Amazon, Shipt, and Instacart are hiring, along with a lot of jobs being posted in the hardware category as well. “I think people need to be patient and a bit optimistic,” Gutz told Boston 25 News last week. “I’m optimistic! I think we will get through this, jobs will start to come back. I think if we all think about that better place, the opportunities for employment will go along with it.”
Wage growth spikes in April
Despite the crumbling labor market, wages saw significant increases last month. Increasing by 4.7%, or $1.34, average hourly earnings totaled $30.01 in April. Year-over-year, average hourly earnings have increased by 7.9%. According to Trading Economics, “The increases in average hourly earnings largely reflect the substantial job loss among lower-paid workers.”
The next jobs report will be released on June 5, 2020, at 8:30 a.m. EST. In the meantime, see how Monster can help you navigate the challenges of the coronavirus pandemic at your organization.