With shops and factories closed nationwide due to the coronavirus pandemic, nearly all of the jobs created in the US economy in the last decade were wiped out in a single month. This has resulted in a massive job losses in the US.
An unprecedented 20.5 million jobs were destroyed in April in the world’s largest economy, the biggest amount ever recorded, the Labor Department said in a report released Friday, the first to capture the impact of a full month of the lockdowns.
That drove the unemployment rate to 14.7 percent from 4.4 percent in March — the highest level since the Great Depression of the last century.
The United States is home to the world’s largest and deadliest coronavirus outbreak, with more than 75,000 fatalities and 1.2 million cases reported as of Thursday, according to Johns Hopkins University.
Nearly all of the jobs created in the US economy in the last decade were wiped out in a single month.https://t.co/UYV8C2WBZs
— Yahoo Singapore (@YahooSG) May 8, 2020
The economic damage from the lockdowns to contain the virus has been swift and stunning, despite nearly $3 trillion in financial aid approved by Congress, and there is growing fear that the temporary layoffs will become permanent since some companies won’t survive.
Taken together, 21.4 million jobs were destroyed in March and April, nearly equal to the 23 million positions created during the economy’s long expansion from February 2010 to February 2020.
All major industry sectors felt the pain.
Leisure and hospitality was the first sector hit and the one bearing the brunt of the impact of the lockdowns, shedding 7.7 million jobs, while manufacturing eliminated 1.3 million positions.
Those two sectors alone added up to more than the 8.6 million total jobs lost in the two years of the global financial crisis.
As bad as the data was, the real picture likely is much worse. The Labor Department noted the unemployment rate would have been closer to 20 percent, but some workers were misclassified as employed when they actually had been laid off because of COVID-19.
Not a good future
The pandemic has caused many employees to leave the workforce altogether, while others have been forced from full-time jobs into part-time work.
The measure of the labor force as a share of the total population sunk to 51.3 percent, its lowest in history, meaning nearly half of working-age Americans are not employed.
Minorities were hit particularly hard: African American unemployment spiked to 16.7 percent from 6.7 percent in March, while the rate for Hispanics was 18.9 percent, more than triple last month.
President Donald Trump said Friday the numbers were expected and promised: “I’ll bring it back.”
“I think it’s going to come back blazing,” he told reporters on the economy.
But 57-year-old Sandra Mahesh, who recently lost her job in Maryland and had her unemployment benefits cut off, is not hopeful.
“I don’t see a good future with America right now,” she told AFP.
— Gulf-Times (@GulfTimes_QATAR) May 8, 2020
While Trump proclaimed on Fox News earlier Friday that “even the Democrats aren’t blaming me” for the job losses, Democratic presidential candidate Joe Biden lambasted him for his handling of the crisis.
“Donald Trump utterly failed to prepare for this pandemic and delayed in taking the necessary steps to safeguard our nation against the near-worst-case economic scenario we are now living,” Biden said in a statement.
Echoing the fears of many economists over the fates of small businesses, Biden said, “A lot of them won’t open again because they do not have a cushion due to three years of Trump’s policies that reward the biggest companies.”
The report showed average wages rose, but economists say that it is merely another sign of catastrophe.
“In April, the job losses were disproportionately concentrated in relatively low-wage sectors like leisure and recreation,” Ian Shepherdson of Pantheon Macroeconomics said in an analysis.
A University of Chicago study based on the huge ADP private payrolls database found that low-wage workers saw employment decline by 35 percent, a rate three times as high as the nine percent decline seen by top earners.
Job losses at the bottom of the wage scale account for one-third of the total decline, the authors found.
“The beginning of this likely ‘Pandemic Recession’ is unprecedented,” co-author John Grigsby said on Twitter.
“Labor market declines (are) concentrated among low-income workers and small firms, precisely those that are unlikely to have savings to smooth over shock.”
AFP with additional input from GVS News Desk