By Eric Morath
April's employment report, to be released Friday, will almost
certainly show that the coronavirus pandemic inflicted the largest
one-month blow to the U.S. labor market on record.
Economists surveyed by The Wall Street Journal forecast the new
report will show that unemployment rose to 16.1% in April and that
employers shed 22 million nonfarm payroll jobs -- the equivalent of
eliminating every job created in the past decade.
The losses in jobs would produce the highest unemployment rate
since records began in 1948, eclipsing the 10.8% rate touched in
late 1982 at the end of the double-dip recession early in President
Reagan's first term. The monthly number of jobs lost would be the
biggest in records going back to 1939 -- far steeper than the 1.96
million jobs eliminated in September 1945, at the end of World War
II.
Combined with the rise in unemployment and the loss of jobs in
March, the new figures will underscore the labor market's sharp
reversal since February, when joblessness was at a half-century low
of 3.5% and the country notched a record 113 straight months of job
creation.
Even so, the count of jobs cut and the unemployment rate will
appear less dire than implied by the recent surge in people seeking
unemployment benefits because of the different ways the figures are
tallied.
Taken together, the figures paint a grim picture of job losses
since the pandemic prompted widespread closures of businesses to
curb the spread of infection.
The picture looks worse through the lens of new claims for
unemployment benefits -- a proxy for layoffs. Workers filed 26.5
million claims for unemployment benefits from March 15 through
April 18 -- the weeks covered by the April jobs report. This is
equivalent to 16% of the U.S. labor force seeking aid, which would
suggest an unemployment rate above 20%. (Another 3.8 million filed
the following week, which will be reflected in the May report.)
The measures come from different sources and methodologies. The
claims figures reflect the number of people submitting applications
through their state labor agencies each week. Those figures may
still undercount the total because of processing backlogs in some
swamped systems. The Labor Department's estimates of the
unemployment rate and payroll jobs numbers are based on surveys
that ask about the week or pay period including the 12th of the
month.
And there was still some hiring in April, including at online
retailers, pharmacies and pizza chains. The coronavirus-induced
shock caused about three new hires for every 10 layoffs, according
to Federal Reserve Bank of Atlanta researchers.
Also, many people who have been laid off because of recent
business closures -- at hotels, stores, restaurants and the like --
aren't actively looking for other jobs because such employers
aren't hiring or the workers are ill, caring for sick relatives or
worried about the risk of infection. These people won't be counted
in the April unemployment rate because they aren't officially part
of the labor force.
Arizona State University economist Alexander Bick conducts
online surveys attempting to mirror the jobs report every two
weeks. He estimates the unemployment rate in the April 12-18 week
was 16.2%, down from 20.2% in late March. He attributes the decline
to Americans dropping out of the labor force.
"Just because you're not counted as unemployed doesn't mean you
don't want a job," he said. "And a lot of people fall in that
category now. In times like these, it's better to look at the
employment rate."
The employment-to-population ratio shows the share of Americans
with jobs. That rate reached a postrecession peak of 61.2% in
January and fell to 60% in March. The record low was 54.9% in 1949,
when a much smaller share of women held jobs.
Mr. Bick's data shows the employment rate among 18- to
64-year-olds surveyed declined to 55.8% in mid-April, indicating
that 34 million jobs were lost since mid-March.
He found greater job loss among women than men, though male job
loss accelerated in recent weeks as layoffs extended to
construction and office positions. He also found that workers older
than 50 experienced more job loss than younger workers did.
A Labor Department measure known as U-6 includes the unemployed
plus people who aren't looking for work but say they want a job and
people working part time who say they want full-time employment.
Goldman Sachs economists forecast that the measure could hit 29%,
well above the 17.2% peak right after the 2007-09 recession and
more representative of recent job destruction.
Friday's report could show whether Americans expect to return to
their jobs. The March report showed that 47% of those who recently
lost work were on temporary layoff, up from 29% in February. How
employment will shift in the coming months remains unclear. Key
factors include the paths states will take to reopen, the degree to
which federal programs intended to preserve jobs are successful and
how fast the economy recovers.
The report will also show how different industries were affected
in April. University of Chicago economist Joseph Vavra identified
the six industries most vulnerable to coronavirus shutdowns:
restaurants and bars; travel and transportation; entertainment,
such as casinos and amusement parks; personal services, such as
dentists, day-care providers and barbers; some retail, including
department stores and car dealers; and some manufacturers, such as
aircraft and auto makers.
Those six sectors most likely to be affected by the pandemic
employed 30.6 million Americans in 2019, or 20.4% of all workers,
according to the Labor Department. That was led by 12.3 million
restaurant employees and 6.5 million at affected retailers. The
largest job losses likely occurred in lower-wage fields sensitive
to consumer spending.
But the report is expected to show job losses across most of the
economy, including in health care, construction and business
services, such as law firms and consulting firms. Oxford Economics,
a forecasting and consulting firm, projects the April jobs report
will show job cuts for 3.4 million business-services workers, 1.5
million nonessential health-care workers and 100,000 information
workers, including those working in media and
telecommunications.
Write to Eric Morath at eric.morath@wsj.com
(END) Dow Jones Newswires
May 03, 2020 10:14 ET (14:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.