By Sarah Chaney and Eric Morath
WASHINGTON -- The April unemployment rate rose to a record 14.7%
and payrolls dropped by an unprecedented 20.5 million as the
coronavirus pandemic hit the economy.
April's jobless rate eclipsed the previous record rate of 10.8%
for data tracing back to 1948.
The job losses due to business closures triggered by the
coronavirus produced by far the steepest monthly decline on records
back to 1939. By comparison, nearly 2 million jobs were lost in one
month in 1945, at the end of World War II.
"The sharp increases in these measures reflect the effects of
the coronavirus pandemic and efforts to contain it," the Labor
Department said.
The job losses and high unemployment mark a sharp pivot from
just a few months ago, when the economy was pumping out hundreds of
thousands of new jobs, and joblessness was hovering near 50-year
lows. The jobs bust has been widespread.
Employment fell sharply in all broad business sectors last
month, with particularly heavy job losses in leisure and
hospitality, which cut 7.65 million jobs. The health-care, retail
and professional services industries each lost more than 2 million
jobs.
Last month, 88% of Americans who newly lost their jobs in April
reported being on temporary layoff. The unemployment rate rose more
for women than men. Among racial groups, the rate increased the
most for Hispanics, up 12.9 percentage points to 18.9%. The rate
rose about 10 percentage points each for white, black and Asian
Americans.
Average hourly earnings increased by 7.9% in April from a year
earlier, likely reflecting that many low-wage workers lost their
jobs, while more white-collar employees worked from home.
"It's a very, very difficult situation, even for companies that
were growing at a record pace before," said Julia Pollak, labor
economist at job site ZipRecruiter. "The big question is just, 'How
long-term will this be'?"
The longer-term severity of the employment crisis depends on
factors such as the path of the coronavirus and how fast consumers
start to visit businesses and open up their wallets, as the economy
reopens. Such reopenings are already materializing in South
Carolina, Georgia, Texas and elsewhere, though often with
restrictions.
It will likely take a while for industries directly affected by
the coronavirus, including restaurants, hotels and transportation,
to recover.
Colby Hill Inn, in Henniker, N.H., is normally fully booked on
weekends, but guests canceled all room reservations because of the
pandemic. "Without that income coming in, it is really hurting us,"
said Jefferson Brechbühl, a co-owner of the inn.
The inn would typically operate with about 20 employees during
its busy season, which starts this month. But after furloughs, the
inn is instead offering restaurant takeout services with six
workers, including some who have seen their hours cut.
Mr. Brechbühl said reopening guest rooms would be critical to
bringing back employees such as a sous-chef who is making more
money on expanded unemployment benefits than he would at his
job.
With a thinner staff, Mr. Brechbühl said he is scrambling to
answer the phone and fill takeout orders. So far, the lodge is
mainly funneling these food-service revenues toward guest-room
refunds, he said.
Some Americans whose jobs were cut aren't actively looking for
work because many companies have implemented hiring freezes, or
they worry a return to work would raise their exposure to the
coronavirus.
Lower-income Americans are most vulnerable to the effects of job
losses, said Steve Preston, chief executive at Goodwill Industries
International.
"They have no resources. It takes time to get unemployment, if
they qualify for unemployment," Mr. Preston said, referring to
financial benefits that states offer to those out of work. He added
most people coming to Goodwill for help are seeking support filing
for unemployment benefits.
Lynne Reback of Sanford, Fla., filed for unemployment benefits
on March 15 after she was laid off from her bartender job at the
Orlando International Airport. But she didn't receive her first
payment of $275 until April 16. The following two weeks she
received a $600 payment, less than the $875 she was expecting.
She said she's worried about making her mortgage payments and
the possibility of a housing foreclosure. "We don't want to lose
it, but at the same time, we don't know how long this will take,"
she said.
The widespread nature of the job losses extends to health care,
as those not working to fight the pandemic are seeing fewer
patients for routine checkups and, in some cases, only offering
emergency procedures.
One indication of how quickly Americans can return to their jobs
when the economy reopens is the number who are on temporary, as
opposed to permanent, layoff.
"The more that workers have a connection to their previous
employer, then the more rapidly we can start up jobs again," said
Erica Groshen, former commissioner of the Bureau of Labor
Statistics under President Obama. She noted that the increase in
unemployment in March came from workers on temporary furloughs, not
permanent layoffs.
Rebecca Smith, 47, was temporarily laid off from her bus-driving
job in mid-March and hopes to be back behind the wheel by June.
After surviving Covid-19, the disease caused by the new
coronavirus, she is looking forward to returning to her normal work
and life routine and seeing other workers in the bus-driving
industry.
"It's almost like having a little family," she said. "We all
look out for each other. I'm eager to see my extended family."
Employers could have also cut workers' hours as an alternative
to laying them off. This trend began in March, when average weekly
hours ticked down a couple notches from February. Meanwhile, the
number of people working part time who would have preferred
full-time work increased swiftly in March, another indication that
workers saw their hours cut back.
About 23% of respondents to a ZipRecruiter survey had seen their
working hours or their wages fall, or both, between February and
mid-April. The average pay cut reported was 57%.
Though government programs intended to help businesses and
individuals weather the crisis still face delays, many companies
and Americans are now drawing on federal and state aid. Nearly 23
million people were receiving unemployment benefits in the week
ended April 25, according to the Labor Department.
Valori Wells, owner of Stitchin' Post, a quilting-supplies
store, said small-business loans through the federal government's
Paycheck Protection Program allowed her to bring back three
employees who were laid off as a result of the pandemic.
The business, based in Sisters, Ore., is now operating with
eight employees who are filling shipping orders and handling social
media, among other tasks. The employee count is still down from 13
before the coronavirus.
Ms. Wells said she hopes to bring back all of her workers, but
is unsure when she will be able to.
"I can't predict what's going to happen," she said. "All I can
do is hope that at some point I can get back to some sense of
normalcy within our business -- or new normalcy."
Overall sales at the craft-supply store were down by about 30%
in April from a year earlier. The silver lining is that the
pandemic forced Stitchin' Post to invest in its website with
knitting demo videos and blog posts, Ms. Wells said. Online sales
have grown about threefold as a result.
"There's blessings in all of this. At least, we have to find
them," Ms. Wells said.
Write to Sarah Chaney at sarah.chaney@wsj.com and Eric Morath at
eric.morath@wsj.com
(END) Dow Jones Newswires
May 08, 2020 09:26 ET (13:26 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.