April’s employment report, to be released Friday, will almost certainly show that the coronavirus pandemic inflicted the largest one-month blow to the U.S. labor market on record.
Economists surveyed by The Wall Street Journal forecast the new report will show that unemployment rose to 16.1% in April and that employers shed 22 million nonfarm payroll jobs—the equivalent of eliminating every job created in the past decade.
The losses in jobs would produce the highest unemployment rate since records began in 1948, eclipsing the 10.8% rate touched in late 1982 at the end of the double-dip recession early in President Reagan’s first term. The monthly number of jobs lost would be the biggest in records going back to 1939—far steeper than the 1.96 million jobs eliminated in September 1945, at the end of World War II.
Combined with the rise in unemployment and the loss of jobs in March, the new figures will underscore the labor market’s sharp reversal since February, when joblessness was at a half-century low of 3.5% and the country notched a record 113 straight months of job creation.
Even so, the count of jobs cut and the unemployment rate will appear less dire than implied by the recent surge in people seeking unemployment benefits because of the different ways the figures are tallied.
Taken together, the figures paint a grim picture of job losses since the pandemic prompted widespread closures of businesses to curb the spread of infection.
The picture looks worse through the lens of new claims for unemployment benefits—a proxy for layoffs. Workers filed 26.5 million claims for unemployment benefits from March 15 through April 18—the weeks covered by the April jobs report. This is equivalent to 16% of the U.S. labor force seeking aid, which would suggest an unemployment rate above 20%. (Another 3.8 million filed the following week, which will be reflected in the May report.)
The measures come from different sources and methodologies. The claims figures reflect the number of people submitting applications through their state labor agencies each week. Those figures may still undercount the total because of processing backlogs in some swamped systems. The Labor Department’s estimates of the unemployment rate and payroll jobs numbers are based on surveys that ask about the week or pay period including the 12th of the month.
And there was still some hiring in April, including at online retailers, pharmacies and pizza chains. The coronavirus-induced shock caused about three new hires for every 10 layoffs, according to Federal Reserve Bank of Atlanta researchers.
Also, many people who have been laid off because of recent business closures—at hotels, stores, restaurants and the like—aren’t actively looking for other jobs because such employers aren’t hiring or the workers are ill, caring for sick relatives or worried about the risk of infection. These people won’t be counted in the April unemployment rate because they aren’t officially part of the labor force.
Arizona State University economist Alexander Bick conducts online surveys attempting to mirror the jobs report every two weeks. He estimates the unemployment rate in the April 12-18 week was 16.2%, down from 20.2% in late March. He attributes the decline to Americans dropping out of the labor force.
“Just because you’re not counted as unemployed doesn’t mean you don’t want a job,” he said. “And a lot of people fall in that category now. In times like these, it’s better to look at the employment rate.”
The employment-to-population ratio shows the share of Americans with jobs. That rate reached a postrecession peak of 61.2% in January and fell to 60% in March. The record low was 54.9% in 1949, when a much smaller share of women held jobs.
Mr. Bick’s data shows the employment rate among 18- to 64-year-olds surveyed declined to 55.8% in mid-April, indicating that 34 million jobs were lost since mid-March.
He found greater job loss among women than men, though male job loss accelerated in recent weeks as layoffs extended to construction and office positions. He also found that workers older than 50 experienced more job loss than younger workers did.
A Labor Department measure known as U-6 includes the unemployed plus people who aren’t looking for work but say they want a job and people working part time who say they want full-time employment. Goldman Sachs economists forecast that the measure could hit 29%, well above the 17.2% peak right after the 2007-09 recession and more representative of recent job destruction.
Friday’s report could show whether Americans expect to return to their jobs. The March report showed that 47% of those who recently lost work were on temporary layoff, up from 29% in February. How employment will shift in the coming months remains unclear. Key factors include the paths states will take to reopen, the degree to which federal programs intended to preserve jobs are successful and how fast the economy recovers.
The report will also show how different industries were affected in April. University of Chicago economist Joseph Vavra identified the six industries most vulnerable to coronavirus shutdowns: restaurants and bars; travel and transportation; entertainment, such as casinos and amusement parks; personal services, such as dentists, day-care providers and barbers; some retail, including department stores and car dealers; and some manufacturers, such as aircraft and auto makers.
Those six sectors most likely to be affected by the pandemic employed 30.6 million Americans in 2019, or 20.4% of all workers, according to the Labor Department. That was led by 12.3 million restaurant employees and 6.5 million at affected retailers. The largest job losses likely occurred in lower-wage fields sensitive to consumer spending.
But the report is expected to show job losses across most of the economy, including in health care, construction and business services, such as law firms and consulting firms. Oxford Economics, a forecasting and consulting firm, projects the April jobs report will show job cuts for 3.4 million business-services workers, 1.5 million nonessential health-care workers and 100,000 information workers, including those working in media and telecommunications.
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