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U.S. job market suffers its worst month in history

U.S. lost record 20.5 million jobs in April
U.S. lost record 20.5 million jobs in April as unemployment rate soars to 14.7% 03:10

A staggering 29 million Americans lost their livelihoods in April as the spreading coronavirus shuttered stores, factories and offices, canceled events, and brought transit around the country to a sudden stop.

Payrolls fell by 20.5 million last month, leaving 23 million unemployed, the Labor Department said Friday. Another 6.6 million Americans left the workforce altogether, meaning they were neither employed nor looking for work. The nation's unemployment rate more than tripled, soaring to 14.7% from 4.4% in March — the highest since the Great Depression.

The sheer scale of economic destruction — which wiped out a decade's worth of job gains in a matter of weeks — defies historical comparison. Prior to April, the largest one-month hit to payrolls was in September of 1945, when 1.9 million jobs were lost as the country demobilized from World War II. In March of 2009, in the depths of the Great Recession, 800,000 jobs were lost in a single month.

"Overall, this report lays bare the full extent of the human tragedy stemming from the pandemic," Paul Ashworth of Capital Economics said in a report. "While we are hopeful many will get back to work in the coming months, there will be severe scarring effects on the labor market for years to come."

No industry was unaffected, but losses landed particularly hard on the leisure and hospitality sector, which shed more than 7 million jobs. Education and health services, professional and business services, and retail each lost more than 2 million jobs.

The skyrocketing unemployment rate remains well shy of the 25% rate reached during the depths of the Depression. But it took four years for the jobless rate to finally peak in 1933. The speed of job losses in April is akin to what is seen after major floods or hurricanes, economists said — on a nationwide scale.

"It's like a natural disaster where the eye of the hurricane stays over the whole world," said Julia Pollak, labor economist at ZipRecruiter.

Unemployment rates reached records for all demographic groups except for black Americans. Women's unemployment rate was 16.2%, while men's was 13.5% — reflecting the disproportionate job losses in female-dominated service industries.

"Workers who are female or young or have lower educational qualifications and earn a smaller salary are disproportionately represented in the ranks of those who became unemployed in the last two months," Moody's Investors Service said in a note. "This is because they were employed in sectors most exposed to mandatory closures and drops in consumption due to the pandemic."

Unemployment rate understates the damage

While the headline unemployment rate is the highest in nearly a century, even that eye-popping figure doesn't fully capture the extent of the damage, economists say.

Americans unemployed by coronavirus share their stories 13:18

"The notion of unemployment includes the idea that you're without a job and you are actively looking. This is a very difficult environment for people to be actively looking for a job," said Donald Marron, director of economic policy initiatives at the Urban Institute.

Many of the people who are still working are seeing cuts in hours, pay or both. The number of people working part-time for economic reasons jumped by 5 million in April.

Economists expect the nation's gross domestic product — the total value of all goods and services — to plunge as much as 40% in the second quarter. That would dwarf the steepest fall in GDP during the recession, when growth declined 8.4% in the final three months of 2008.

To be sure, many of the workers who lost jobs in April will likely return to work once the crisis passes. More than three-quarters of the unemployed indicated that they were on temporary layoff. But even if just one-fourth of April's job losses are permanent, upwards of 7 million workers will need a job in an economy that Pollak notes was creating 2.3 million new jobs per year.

Although experts predict that many workers will be rehired later this year as the economy reopens, many economists expect unemployment to remain well above 10% by year-end.

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