COVID-19

The unemployment rate spiked to 14.7% in April. It doesn’t fully capture COVID-19 job losses.

Mitchell Hartman May 8, 2020
Heard on: Marketplace Morning Report
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Unemployment numbers are likely missing people who aren't working in order to home-school or care for family. Above, a mom works while her son does schoolwork during the pandemic. Brendon Thorne/Getty Images
COVID-19

The unemployment rate spiked to 14.7% in April. It doesn’t fully capture COVID-19 job losses.

Mitchell Hartman May 8, 2020
Unemployment numbers are likely missing people who aren't working in order to home-school or care for family. Above, a mom works while her son does schoolwork during the pandemic. Brendon Thorne/Getty Images
HTML EMBED:
COPY

The Labor Department’s monthly employment report for April shows the jobless rate has soared to 14.7%, the highest level since the Great Depression. The U.S. lost 20.5 million jobs amid the coronavirus pandemic. Almost all the job growth achieved during the 11-year recovery from the Great Recession has now been lost in one month.

We also know that more than 33 million people have filed for jobless benefits since mid-March. And this April report does not include many of the most recent job losses. It also does not account for the entirety of unemployment resulting from the pandemic.

As bad as the numbers look, the April jobs report can’t capture the full scale of employment loss since the pandemic began, according to Erica Groshen, the Bureau of Labor Statistics’ chief economist in the Obama administration. 

“This is a shock unlike anything else we have sustained,” Groshen said. The official unemployment rate is likely not counting many who’ve lost their jobs, she added. 

That’s because the standard definition of an unemployed person is someone who hasn’t had paid work and has been actively looking for a job. But in the pandemic, millions have been laid off or left a job and aren’t hunting for a new one.

“People who say that for now, ‘I’m not working, and I’m not looking for work until I feel I can be safe out there,’” Groshen said. Also, the unemployment rate may not count people out of work caring for others in the pandemic, people “who maybe made the decision to stay home and home-school or take care of elderly relatives because they don’t want them endangered.”

And, it’s going to be hard to gauge exactly how much job loss is temporary — just until companies reopen and workers get called back. 

Joseph Brusuelas, chief economist at RSM, a consultancy, has been tracking jobless claims.

“Many of the initial claims were classified as furloughed, but are becoming permanently unemployed,” he said. Meanwhile, many who still have jobs, aren’t working or earning nearly as much as they used to, said Julia Pollak, a labor economist at ZipRecruiter.

“You can either be laid off, or you can take a 20, 30, 40, even 50% pay cut to keep your job,” Pollak said.

In a recent survey, ZipRecruiter found that about one in four job-seekers has had hours or earnings cut, or both. 

COVID-19 Economy FAQs

With a slow vaccine rollout so far, how has the government changed its approach?

On Tuesday, Jan. 12, Health and Human Services Secretary Alex Azar announced changes to how the federal government is distributing vaccine doses. The CDC has expanded coronavirus vaccine eligibility to everyone 65 and older, along with people with conditions that might raise their risks of complications from COVID-19. The new approach also looks to reward those states that are the most efficient by giving them more doses, but critics say that won’t address underlying problems some states are having with vaccine rollout.

What kind of help can small businesses get right now?

A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.

What does the hiring situation in the U.S. look like as we enter the new year?

New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.

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