More than 20.5 million U.S. jobs were lost in April due to the coronavirus pandemic, driving the unemployment rate up to 14.7%, the highest since the Great Depression, according to the Bureau of Labor Statistics.
The job losses cut across all major industry sectors, but leisure and hospitality were particularly hard hit.
Employment in leisure and hospitality plummeted by 7.7 million, or 47%. Almost three-quarters of the decrease occurred in food services and drinking places (down 5.5 million). Employment also fell in the arts, entertainment and recreation industry (down 1.3 million) and in the accommodation industry (down 839,000).
Significant job losses also occurred in health services (down 1.4 million) and education (down 2.5 million).
Most of the losses in health care were due to the closing of dentist and physician offices, as well as the offices of other health care practitioners.
The total number of unemployed persons rose by 15.9 million to 23.1 million.
The labor force participation rate fell 2.5 percentage points to 60.2%, the lowest since January 1973.
The employment-population ratio dropped by 8.7 percentage points to 51.3%.
The only bright spot was that average wages increased in April: Average hourly earnings for all employees on private non-farm payrolls increased by $1.34 to $30.01.
Average hourly earnings of private-sector production and nonsupervisory employees increased by $1.04 to $25.12.
The big question now is how long will the pandemic last – which, in turn, will affect how long it takes for the labor markets to recover.
Some states are now slowly re-opening their economies – but if this results in new spikes in coronavirus cases, they might decide to reverse their re-opening plans and return to lockdown.
Previously, some economists were calling for a “V-shaped” recovery, with the job market quickly rebounding once state economies are re-opened. But now, most economists are forecasting a slower, “swoosh-shaped” recovery, with certain labor segments re-opening ahead of others.
“While it is too soon to tell, we do know that this labor market contraction is unusual, as the pandemic caused a sudden halt to the economy, which meant that the first round of job losses was very highly concentrated in a short period of time,” writes Odeta Kushi, deputy chief economist at First American, in a blog post. “The six-week jump in jobless claims is unprecedented on a national scale, but when we dig down to the state level, we find parallels to jobless claim numbers after national disasters, such as Hurricane Katrina in Louisiana and Hurricane Harvey in Texas. In these instances, we find that spikes in jobless claims were short, but sharp.
“While we are fairly certain the job loss decline will be deeper than in previous recessions, the duration remains unclear,” Kushi adds.