Thursday, June 20, 2024

US unemployment spikes to a Depression-era level of 14.7%

by Associated Press

WASHINGTON (AP) — The U.S. unemployment rate hit 14.7% in April, a level last seen during the Great Depression, as 20.5 million jobs vanished in the worst monthly loss on record — stark evidence of how the coronavirus has brought the economy to its knees.

The breathtaking losses, reported by the Labor Department on Friday, are certain to intensify the push-pull over how and when to ease the coast-to-coast shutdowns of factories, stores, offices and schools. And they undermine any effort by President Donald Trump to point to the strong economy as he runs for reelection.

Nearly all the job growth achieved during the 11-year recovery from the financial meltdown has now been lost in one month.

Worldwide, the virus has infected more than 3.8 million people and killed nearly 270,000, including over 75,000 in the U.S., according to a tally by Johns Hopkins University based on official data.

The unemployment report indicated that the vast majority of April’s job losses — roughly 90% — are considered temporary, a result of businesses that were forced to suddenly close but hope to reopen and recall their laid-off workers.

Whether most of those workers can return anytime soon, though, will be determined by how well policymakers, businesses and the public manage their response to the health crisis.

The collapse of the job market has occurred with stunning speed. As recently as February, the unemployment rate was a more than 50-year low of 3.5%, and employers had added jobs for a record 9 1/2 years. In March, unemployment was just 4.4%

The last time unemployment was this high was 1939, at the tail end of the Depression.

As bad as the numbers are, they don’t capture the full devastation wrought by the business shutdowns.

The Labor Department said its survey-takers erroneously classified millions of Americans as employed in April even though their employers had closed down. If they had been counted correctly, the unemployment rate would have been nearly 20%, the government said.

Trump, who faces the prospect of high unemployment rates through the November elections, said the figures were “no surprise.”

“What I can do is I’ll bring it back,” he said. “Those jobs will all be back, and they’ll be back very soon. And next year we’ll have a phenomenal year.”

But economists increasingly worry that it will take years to recover all the jobs lost. The nonpartisan Congressional Budget Office expects the jobless rate to be 9.5% by the end of 2021.

Minorities and poor people suffered the most from the economic shutdown. Job losses were especially severe for Latinos, whose unemployment rate leaped to 18.9% from 6% in March.

In addition to the millions of newly unemployed, 5.1 million others had their hours reduced in April.

Though some businesses are beginning to reopen in certain states, factories, hotels, restaurants, resorts, sporting venues, movie theaters and many small businesses are still largely shuttered.

One of the newly unemployed, Sara Barnard, 24, of St. Louis, has lost three jobs: floor manager at a pub and restaurant, bartender at a tavern and occasional stand-up comedian.

“I’m usually a very busy person,” Barnard said. “So all this down time is awful. I’d rather be working. I miss the social interaction.”

The health crisis has taken a heavy economic toll around the world.

Unemployment in the 19-country eurozone is expected to surpass 10% in coming months as more people are laid off. That figure is expected to remain lower than the U.S. unemployment rate, in part because millions of workers in Europe are staying on the payroll with the help of government aid.

In France, about half the private-sector workforce is on a government paid-leave program whereby they receive up to 84% of their salary. In Germany, 3 million workers are supported in a similar system, with the government paying up to 60% of their pay.

Over the past seven weeks, an estimated 33.5 million American workers have filed for unemployment benefits.

The job losses reported Friday are a different figure. It captures just five weeks, it is based on a survey of businesses and households, and it is a net figure — that is, it takes into account the hiring that some companies, such as Amazon and many grocery stores, have done.

Also, many people who lost jobs in April but didn’t look for another one weren’t even counted in the unemployment rate. They are captured in a separate index: The proportion of all working-age adults who are employed. That figure is now just 51.3%, the lowest on record.

Applications for unemployment benefits, while high, have declined for five straight weeks, a sign that the worst of the layoffs has passed. Still, few economists expect a rapid turnaround.

Harvard economist Raj Chetty said the economy’s health will hinge on when the outbreak has subsided enough that most Americans will feel comfortable returning to restaurants, bars, movie theaters and shops.

Small businesses are hanging on in hopes that spending and the economy will rebound soon, he said, but “there’s only so long you can hold out.”

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