The March 2020 jobs report: What employers need to know
After a strong start to the year, there was a significant downturn in the economy in last month as the coronavirus pandemic gained traction across the United States, according to the March 2020 jobs report. The U.S. Bureau of Labor Statistics’ monthly jobs report only reports data through the middle of the month, but says 701,000 jobs were eliminated in March. The outlook for April is predicted to be far worse, as we’ll detail below. Here are the headlines from March’s report, with additional insights from Monster’s job search traffic across the same period.
Coronavirus Wreaks Havoc on Labor Market
Leading up to the release of the BLS report, payroll processor ADP reported job losses within the private sector totaling 27,000. Offset by gains in mid- to large-size businesses, small businesses suffered the most, with 90,000 jobs shed in March. Economists knew that the labor market would take a hard hit in the BLS report—Wall Street economists expected losses of 10,000 jobs in March—but no one was quite prepared for the shock Friday morning.
Providing a more comprehensive view, the BLS report, which accounts for total nonfarm employment, indicated that the economy shed 701,000 jobs in March. This marks the first decline in payrolls since September 2010 and comes dangerously close to the May 2009 financial crisis peak of 800,000.
The job losses in March, however, may not even be the worst of what’s to come next month, as this month’s report didn’t account for the entire month of March. The mid-month reference point that the BLS uses to calculate the monthly jobs report fell just before many states enacted nonessential business closings and stay-at-home orders. When it comes to calculating job gains and losses, the BLS uses whatever week includes the 12th day of the month as a reference point. For March’s report, that was the week of Sunday, March 8 through Saturday, March 14.
Leisure and Hospitality Industry Most Affected by Coronavirus
According to the BLS report, about two-thirds of the drop in employment occurred in the leisure and hospitality industry (-459,000), specifically in restaurants and bars (-417,000). In many states, including California and New York, restaurants and bars were some of the first nonessential businesses to be shut down. This employment decline nearly offset the gains that were made over the past two years in the industry.
Employment in the accommodation industry also declined by 29,000 in March. 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.
Health Care Jobs Experience a Sharp Decline
While the need for health care workers is ramping up amid the coronavirus pandemic, employment in health care and social assistance actually fell by 61,000 jobs in March. Diving deeper into this sector, health care jobs declined by 43,000, primarily in dentist offices (-17,000), physician offices (-12,000), and offices of other health care practitioners (-7,000). The 19,000 job losses in social assistance can be largely attributed to an increase in parents working from home as well as the government-mandated closings in child daycare services. Before last month, the health care sector served as the biggest job creator, with 374,000 jobs created over the prior 12 months.
On Monster, however, it’s important to note that there was a significant increase in people searching for health care jobs, such as registered nurse, medical assistant, and respiratory therapist, during the last week of March, compared to a week prior.
Employment Decreases Experienced Across the Board
Leisure and hospitality and health care and social assistance weren’t the only sectors affected by the coronavirus pandemic. According to the BLS report, notable employment declines were seen across the board, specifically in:
- Professional and business services: Employment declined by 52,000 jobs in March, primarily in temporary services (-50,000).
- Retail trade: While the sector, as a whole, lost 46,000 jobs, primarily in clothing and accessories stores (-16,000) furniture stores (-10,000), and sporting goods, hobby, book, and music stores (-9,000), general merchandise stores experienced gains of 10,000 jobs. On Monster, we noticed that the number of people searching for grocery-related jobs increased during the last week of March.
- Construction: While employment in construction was on the upswing prior to March (increasing by 211,00 jobs over the past year), the industry experienced a swift decline last month. Of the 29,000 construction jobs lost, nonresidential buildings (-11,000) and heavy and civil engineering construction (-10,000) were most affected.
- Services: Employment in the services industry declined by 24,000 in March, with about half of the loss occurring in personal and laundry services (-13,000).
- Manufacturing: Prior to the coronavirus pandemic, manufacturing had been on a slow decline. This decline was only pushed further down in March, with losses of about 16,000 jobs.
Employment in other major industries, including wholesale trade, transportation and warehousing, tech, and finance, was little changed over the month. Meanwhile, on Monster, delivery, customer service, and work from home jobs experienced high search traffic.
Weekly Unemployment Claims Reach Record High
The unemployment rate has remained historically low over the past year, with 5.8 million unemployed Americans and an unemployment rate of 3.5% in February. That all changed in March with social distancing measures and nonessential business closings and stay-at-home orders enacted across the country. The BLS report revealed that unemployment increased to 4.4% in March. According to the New York Times, this was the largest monthly unemployment increase since January 1975.
Again, keep in mind that many of these orders weren’t in effect at the time of the BLS’s mid-month reference point. When it comes to calculating the unemployment rate, the BLS only accounted for the number of people over age 16 in a household who worked at least one hour during the week of Sunday, March 8 through Saturday, March 14.
Latest Updates are Twice as Dire as Predicted
For a more up-to-date picture of unemployment, the Department of Labor’s latest reading shows that a record 6.6 million Americans filed for unemployment during the week of March 22 – 28, more than double the 3 million that economists had expected. Prior to March 2020, the highest number of unemployment claims filed in a single week was 695,000 in October 1982.
To put it in a more recent perspective, at the peak of Great Recession unemployment in 2010, “there were 7.7 million more officially unemployed people than before the downturn,” tweeted Atlantic writer Derek Thompson. “The labor market is contracting at the rate of one Great Recession per 10 days.”
Wage Growth Continues to Climb
Despite the crumbling labor market, wages continued to tick up, increasing by 11 cents in March. Now totaling $28.62 in average hourly earnings, wage growth increased to 3.1% for the year. MarketWatch predicts that wage gains will also decrease in the coming months, as employers enact reductions in pay and hours in response to the coronavirus pandemic.
Economists Predict 27 Million Jobs Will Be Eliminated by May
According to the Wall Street Journal, forecasting firm Oxford Economics projects that by May, the U.S. will have lost 27.9 million jobs and have a 16% unemployment rate. This would erase all the jobs gained since 2010 during the record-setting 113-month stretch of employment gains through February. Economists and employers alike will be awaiting the next jobs report to be released on May 8, 2020, at 8:30 a.m. EST., to find out. In the meantime, see how Monster can help you navigate the challenges of the coronavirus pandemic at your organization.