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 US 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.

What Bloomberg’s economists say

“The extent of job losses is consistent with
Bloomberg Economics’ modeling of a near 40% contraction in real GDP for the
quarter. While layoffs were concentrated in sectors such as restaurants,
hospitality and leisure, losses occurred in nearly all subcategories. The
breadth of job losses is a jarring signal of the massive challenge of
restarting vast swaths of the economy — not just a few sectors — and it
therefore serves as a stark indication that a ‘V-shaped’ recovery will not be possible.”

– Carl Riccadonna, Yelena Shulyatyeva and Andrew Husby

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 Labour 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.

The labor-force participation rate fell to 60.2% – the
lowest since 1973 – from 62.7%. Among prime-age men, those ages 25 to 54, it
dropped to a record-low 86.4%.

Almost every industry was hit hard. Manufacturers cut 1.33
million positions and retailers 2.1 million. Even health care jobs fell by 1.44
million as non-Covid visits and elective procedures dried up or offices closed.

The job losses may also fan calls for a fourth round of
fiscal aid from Congress on top of trillions of dollars already dispatched,
even with signs many Americans are having difficulty tapping the funds. The
Federal Reserve is likely to keep pumping money into the economy while leaving
interest rates near zero for an extended period.

Trump – who’s polling behind the presumptive Democratic
nominee, former Vice President Joe Biden – said Friday that the massive US job
losses from the coronavirus outbreak aren’t a surprise and that he shouldn’t be
blamed for it.

“It’s totally expected, there’s no surprise,” he
said on Fox News Channel, where he was being interviewed as the report was
released. “Even the Democrats aren’t blaming me for that. What I can do is
I can bring it back.”

While the pandemic has crushed economies around the world,
job losses hurt more in the U.S. than in most other developed nations. That’s
because about 160 million Americans get health insurance through employers, and
without jobs, they could face steep monthly premiums or lose coverage entirely
— which may exacerbate the economic impact of Covid-19.

Harder hit

The crisis hit harder for demographics including women and
minorities, after they had benefited from the previous tightening of the labour
market.

The jobless rate among women jumped to 15.5% from 4%,
compared with a 9-point increase among men, to 13%. Among black and African
Americans, the unemployment rate was 16.7%; it was 18.9% for Hispanics and
Latinos, compared with 14.2% for white Americans.

The quality of jobs also declined, continuing a pre-virus
trend. In April, 10.9 million people were working part-time even though they
wanted to work a full workweek – almost double the prior month — signaling
greater financial stress. That helped push up the so-called underemployment
rate, which includes discouraged workers, to a record in data back to 1994.

How fast hiring resumes is critical to the strength of the
overall recovery. Already, Uber Technologies Inc., Boeing Co. and US Steel
Corp. have announced sweeping layoffs, a sign companies are banking on a
slow resumption of growth.

The resulting job insecurity will undoubtedly merge with
health concerns to restrain consumer demand no matter how soon businesses
restart.

Economists expect it to take time for employment to recover,
even if the pandemic eases. Policy makers are also advising caution: San Francisco
Fed President Mary Daly told Bloomberg Television on Thursday that “no one
who I talk to is looking at a V-shaped recovery — they really think this will
be gradual and it will take time to build confidence back up for both workers
and consumers.”

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