The Bureau of Labor Statistics reported on Friday that the U.S. economy lost a total of 701,000 jobs in the month of March. The unemployment rate, which was at a consistent half-century record low of slightly more than 3% over the last 10 years, bolted upward to 4.4% last month.
According to the Department of Labor, “The changes in these measures reflect the effects of the coronavirus (COVID-19) and efforts to contain it.” The data reflects that workers in the leisure, food services, drinking establishment and hospitality sectors were hit hard with 459,000 less jobs. These areas were aggressively hiring up until the pandemic started.
The amount of people who said they they were on a temporary layoff more than doubled to 1.8 million. The number of workers who claimed permanent job losses spiked upward by 177,000 to 1.5 million.
The job losses cut across all of the groups surveyed in the report. The unemployment rate was 4% for adult men, 4% for adult women, 14.3% for teenagers, 4% for Whites, 6.7% for Blacks, 4.1% for Asians and 6% for Hispanics.
The number of persons employed on a part-time basis increased by 1.4 million to 5.8 million. These people would have prefered full-time employment, but were forced to work part time, as their hours were cut or they were unsuccessful in finding full-time jobs.
These numbers are indicative of a frighteningly new trend in rapidly escalating unemployment. However, it’s a lagging indicator and doesn’t tell the full story. The real impact on the job market will show up in upcoming jobs reports in the months to come.
On Thursday, it was reported that a record-setting 6,6,648,000 Americans filed unemployment claims. This follows the prior week’s unemployment claims, which was a shocking 3,341,000 filings. After over 100 months of consecutive job growth, we now have 10 million Americans who have filed for unemployment benefits within the last two weeks.
We are not lacking in dire prognostications. Economists at the Federal Reserve Bank’s St. Louis district predict that 47 million people will lose their jobs. This translates to a 32.1% unemployment rate. A quirk in the data from the Labor Department is that it conveniently leaves out people who have finished collecting unemployment benefits, but couldn’t find another job. It also fails to count those who have simply given up looking or were forced into early retirement because they couldn’t find a job. If these and other overlooked groups were included in the reports, the unemployment rate would be even higher.
Miguel Faria e Castro, an economist at the St. Louis Fed, wrote in a blog post, “As state and local governments implement social-distancing measures to suppress and contain the spread of COVID-19, many businesses are faced with a large decrease in sales and revenue. This slowdown of economic activity could inevitably lead to solvency and liquidity problems that result in workers being laid off.” He continued, “Many workers in professional services, for example, are able to work from home and continue their activities with minimal disruption. Others—who work in occupations that involve direct physical contact with customers, such as restaurant waiters—are likely to see their jobs affected by social-distancing measures.”
The numbers are based, in part, on research and studies conducted that estimate 66.8 million people are employed in occupations that are at high risk of layoffs. These include occupations in sales, production, food preparation and services and other service-related roles.
The Federal Reserve’s research reflected that 27.3 million workers have occupations with a “high-contact intensity.” These positions include “barbers, hair stylists, food and beverage serving workers, and flight attendants, among others.”
Regrettably, the data predicts that the same people who had benefited from the 10-year job boom—workers at restaurants, hotels, airlines, sporting and music venues, department stores, shopping malls and in the gig-economy—are now experiencing the highest levels of threat to their job security. These industries have been crushed by the government’s call to close down businesses and for people to stay home under self-quarantine.
This trend, unfortunately, looks like it will last a long time.