More than 20 million people in the US lost their jobs in April and the unemployment rate more than trebled as the coronavirus pandemic shuttered the global economy, triggering a financial crisis unseen since the Great Depression.
The Department of Labor announced Friday that the US unemployment rate rose to 14.7% from just 4.4% in March and a near 50-year low of 3.5% in February before the US was hit by the virus.
A decade’s worth of job gains have now been wiped out in under two months. The latest jobs losses are the worst monthly figure on record. The closest comparison came in 1933 when unemployment hit an estimated 25% but that was before the government began publishing official statistics.
The previous peak for unemployment was 10.8% in 1982 and the largest monthly job loss, close to 2m, came in September 1945 at the end of the second world war, when the country was demobilizing. April’s job losses also easily eclipsed the 800,000 jobs lost in March 2009, the height of the last recession.
The job losses swept across the economy, hitting all industries. Leisure and hospitality lost 7.7m jobs as the sector was hit hard by quarantine measures. But 2.5m jobs were also lost in education and health services, where dentist offices shed 503,000 people. Retail lost 2.1m jobs and manufacturing employment dropped by 1.3m.
Unemployment for African Americans soared from 6.7% last month to 16.7%, wiping out all of the gains made since the last recession. For white Americans unemployment also rose sharply, from 4% to 14.2%. Some 22.4 million people dropped out of the labor force during the month – meaning they stopped looking for work.
The labor force participation rate – which measures the percentage of the population working or looking for work – dropped 2.5% over the month to 60.2%, the lowest rate since January 1973.
“These are truly mind-blowing numbers,” said Jason Reed, professor of finance at the University of Notre Dame’s Mendoza College of Business. “We haven’t seen anything like this since the Great Depression.”
The figures probably undercount the true impact of the outbreak as state unemployment offices have been overwhelmed and millions have yet to have their benefit claims accepted.
“The employment situation report confirms what we already know about the economy. Regardless of the official number, we know that one in five workers filed for unemployment insurance. This is a staggering,” said Reed.
The scale of the crisis has overwhelmed state unemployment systems. Friday’s report follows the news on Thursday that another 3.2 million Americans filed for unemployment benefits last week. The number of filings has been declining on a weekly basis but remains at a historically high level. More than 33 million people have filed claims in the last seven weeks.
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States including California, Ohio and Washington are weeks away from running out of funds to pay claims.
Washington state said it approved Ivan Schierling’s unemployment benefits on 27 March, but seven weeks later, he still hasn’t received a payment. In the meantime, bills are piling up for his credit card, healthcare and car payments.
“This doesn’t include just paying to live,” Schierling, 34, said. “I can’t pay for my milk or for gas to get around. I’m kind of frozen.”
A $1,200 government stimulus check immediately went to paying off bills and his former employer doesn’t know when they will be able to hire people back. “There’s nothing I can do, I’m just sitting, slowly running out of cash,” Schierling said.
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