U.S. jobless rate triples to 14.7% in sharpest labor downturn
In the harshest downturn for American workers in U.S. history, employers cut an unprecedented 20.5 million jobs in April and the unemployment rate more than tripled to 14.7%.
Back in February, before the coronavirus pandemic brought the U.S. economy to a standstill, the rate hovered at just 3.5%. That had been the lowest level in five decades. April's is the highest since just after the Great Depression of the 1930s.
The Labor Department said the unadjusted unemployment rate in April would have been almost 5 percentage points higher had workers been classified as unemployed on temporary layoff, rather than employed but absent from work due to other reasons. Furloughed workers accounted for about 4 out of every 5 unemployed Americans.
April's losses erase roughly all of the jobs that the economy had added in this past decade's expansion and lay bare just how precarious employment is for vast swaths of Americans.
With a steep recession now in progress, the destruction of jobs heaps election-year pressure on President Donald Trump to restart the economy and show results by November. But with little containment of a contagious disease that's killed 75,000 Americans and counting, business is returning unevenly and slowly if at all, and signs are mounting that many employers will be forced to make the cuts permanent.
In the minutes after the report, the Bloomberg dollar index pared its decline for the day while the yield on benchmark 10-year Treasuries rose to its highs of the session after the report. S&P 500 futures maintained their gains.
Key details:
- Average hourly earnings rose 4.7% from the prior month and 7.9% from a year earlier, skewed higher by the disproportionate loss of low-wage workers from payrolls -- rather than any wage pressures boosting employee pay.
- The labor-force participation rate fell to 60.2% from 62.7%.
- The underemployment rate, which includes discouraged workers and those working part-time who want full hours, rose to 22.8% from 8.7%.
Almost every industry was hit hard. Leisure and hospitality employers cut 7.65 million, manufacturers cut 1.33 million positions and retailers 2.1 million. Even health care jobs fell by 1.44 million as non-Covid visits and elective procedures dried up or offices closed.
The job losses may also fan calls for a fourth round of fiscal aid from Congress on top of trillions of dollars already dispatched, even with signs many Americans are having difficulty tapping the funds. The Federal Reserve is likely to keep pumping money into the economy while leaving interest rates near zero for an extended period.
Trump said Friday that the massive U.S. job losses from the coronavirus outbreak aren't a surprise and that he shouldn't be blamed for it.
"It's totally expected, there's no surprise," he said on Fox News Channel, where he was being interviewed as the report was released. "Even the Democrats aren't blaming me for that. What I can do is I can bring it back."
While the pandemic has crushed economies around the world, job losses hurt more in the U.S. than in most other developed nations. That's because about 160 million Americans get health insurance through employers, and without jobs, they could face steep monthly premiums or lose coverage entirely -- which may exacerbate the economic impact of Covid-19.
The response rate for the household survey -- which determines the unemployment rate -- was 13 percentage points lower than usual, as in-person visits were halted. The establishment survey's response rate was in line with typical rates.
