By Kim Kennedy, Director of Forecasting, Dodge Data & Analytics
BEDFORD, MA – May 8, 2020 – Gut-wrenching is the word that comes to mind regarding the U.S. Bureau of Labor Statistics’ latest employment release. In April, the first full month of stay-at-home orders and social distancing due to COVID-19, the U.S. economy lost 20.5 million jobs and the unemployment rate spiked to 14.7%. This was, by far, the largest collapse of the labor market since the Great Depression. March job losses were revised down to 870,000 and, combined with April, sum to 21.4 million job losses over the past two months. These losses dwarf the 8.7 million jobs lost during the Great Recession and essentially wipe out the 22.4 million jobs gained in the decade since it ended.
The suddenness of the downturn was stunning. As recently as February, the job market had been growing for 113 months and the unemployment rate had fallen to a 50-year low of 3.5%. Furthermore, the current unemployment rate does not include the 5.1 million people whose hours were cut or the unknown numbers whose pay was reduced as a result of the pandemic.
The April figures shattered previous historical records. Previously, the largest one-month decline in employment had occurred in September 1945 when 2.0 million jobs were lost. The previous record for the highest unemployment rates (where records only go back to 1948) was 10.8% in November 1982, although estimates suggest that the unemployment rates reached nearly 25% during the Great Depression.
Job declines were widespread across industries in April. Construction lost 975,000 jobs with most of the losses coming from Specialty Trades, which fell by 691,000. But other industries were hit even harder: the greatest losses came from leisure and hospitality where 7.7 million jobs were lost (47% of the total). Most of these jobs came from restaurants and bars, which were down 5.5 million. The retail sector lost 2.1 million jobs, although warehouses/supercenters gained 93,000 jobs as online shopping surged. Education and healthcare lost a combined 2.5 million jobs in April and professional/business services were down 2.1 million. Even government employment was down 980,000 with most losses coming from local governments where 801,000 employees were laid off, mostly due to school closures.
As many states slowly begin to reopen during the month of May, job losses should begin to abate. Still, it will be many more months before the economy, and the job market, return to any sense of normalcy. As Thomas Paine once said, “These are the times that try men’s souls.”
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Allison Heard | 104 West Partners | email@example.com
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