Data doesn’t reflect the magnitude of jobs being lost due to the coronavirus pandemic
By guest author Eric Morath and Sarah Chaney from Wall Street Journal. Michelle Hackman contributed to this article.
U.S. employers shed more jobs in March than in any month since the darkest days of the 2007-09 recession—the start of a much deeper labor-market collapse under way due to the coronavirus pandemic.
Payrolls decreased by 701000 jobs in March, the Labour Department said Friday, April 3, 2020 as efforts to contain the virus disrupted the U.S. economy. Job losses were widespread – from corner restaurants to manufacturing plants to international tourism—inflicting damage to the labor market that economists say dwarfs the most significant economic downturns of the post-World War II era.
The payrolls decline was the largest monthly decline since March 2009, the worst month for job losses during the last recession.The unemployment rate for March rose to 4.4 % from 3.5 % in February, the largest one-month increase in the rate since January 1975.
Stock markets fell as investors took in the jobs-market disruption caused by the virus.
If shutdowns continue, the April jobs report, due out May 8, could show the largest ever one-month decline in the labor market.
In March, more than half of the jobs lost, 417000, were at restaurants and bars, among the first businesses to close because of efforts to contain the pandemic. The amount offset all the jobs added in the sector over the past two years. Hotels and other tourism and hospitality businesses—industries also hit early in the crisis—cut 42000 jobs.
Air-transportation jobs rose very slightly. In early March, airlines sought to avoid job cuts and instead asked employees to take voluntary leave. Retailers cut 46000 jobs, including at clothing, furniture and general-merchandise stores.
There are signs job loss is spreading across the economy. Health-care employment declined by 43000, with jobs lost at dentists and physicians offices; and 19000 day-care jobs were cut. Employment in temporary-help services fell by 50000. Manufacturing employment was down 18,000. Employment in construction decreased by 29000.
Jennifer Schellenberg, a 32-year-old bartender at Minneapolis punk-rock venue Palmer’s Bar, lost her job when Minnesota authorities shut down restaurants on March 17—St. Patrick’s Day.
“Some people were hoping for one last big payday,” she said. “But from a public-health standpoint, it’s not a good idea to have a party day right before everything shuts down.” The USD 400 a week Ms. Schellenberg is receiving in unemployment benefits is less than half her regular pay because much of her income came from tips. She said she is moving in with her sister, who is a cook at an assisted-living facility.
“Getting sick is not an option in this house, because that would put my sister out of a job too,” she said.
Joel Begin, a union painter in New Hampshire, also lost his job on March 17, when authorities shut down construction projects. He was able to apply for unemployment benefits but is struggling to make ends meet. He said the payments account for about a third of his regular income.
“I live paycheck to paycheck,” he said. “I don’t know how I can keep up with my bills and my child-support payments.” He said an extra USD 600 a week promised in the federal rescue package would make a big difference, but he doesn’t know when he will receive the additional funds.
Due to the timing of surveys, Friday’s figures don’t fully reveal the millions of unemployment-insurance claims individuals filed in the last two weeks of March. Jobs lost in recent weeks and additional expected losses this spring could push the U.S. unemployment rate to record highs.
Forecasting firm Oxford Economics projects that by May, the U.S. will have lost 27.9 million jobs and have a 16 % unemployment rate, erasing all the jobs gained since 2010 during the record-setting 113-month stretch, which ended in March. That job loss would be more than double the 8.7 million positions cut from payrolls during the 2007-09 recession and its aftermath. And those jobs were lost over 25 months.
The nonpartisan Congressional Budget Office said Thursday, April 2, 2020 that the unemployment rate would exceed 10% in the second quarter. The highest monthly unemployment rate on record, going back to 1948, is 10.8%, set in late 1982 during the deep recession under President Reagan.
“There’s no comparison to this shock,” said Gregory Daco, Oxford’s chief U.S. economist. “The sudden drop in economic activity is like what you’d see in an area after a natural disaster or a terrorist attack, but it’s occurring across the entire country.”
Laury Hammel said he furloughed 600 employees at six health clubs in New England and Utah on March 16.
“It was the darkest day of my career,” said Mr. Hammel, the chief executive of Longfellow Health Clubs. “I had to shut down the clubs. It was too risky for everyone involved.” Mr. Hammel closed his businesses before being mandated to do so by states, but the layoffs occurred too late to be reflected in Friday’s data.
Normally, he said, the clubs are filled with the sounds of clanging weights, bouncing tennis balls and shouting fitness instructors. When reached on Thursday, Mr. Hammel said he was the only person inside a 100,000-square-foot building in Massachusetts. “It’s dead in here,” he said.
Longfellow Health employees were paid for their final week of work, Mr. Hammel said, and donations from members will allow the company to pay for employee health insurance through April. He said he hopes government loans will allow him to keep up with insurance and maintenance payments—including keeping domes over the tennis courts inflated to avoid damage—until he can reopen.
Mr. Hammel said he plans to rehire all his staff when he is cleared to reopen the clubs.
Other businesses have announced mass layoffs in recent weeks—all too late for the March report.
Las Vegas casinos shut on March 18 – and 10 % of Nevada’s workforce has since sought unemployment assistance. That same day, Detroit auto makers laid off 150000 workers. Marriott International said last month that tens of thousands of hotel staff would be furloughed. Macy’s Inc., Gap Inc. and Kohl’s Corp. let workers go this week.
An alternative measure of unemployment and underemployment, known as the U-6, rose to 8.7 % in March, from 7 % in February. The rate, which captures those too discouraged to look for work and those stuck in part-time jobs, was the highest in three years.
However, many of those who lost their jobs expect it will be a temporary setback. The number of unemployed persons who reported being on temporary layoff more than doubled in March to 1.8 million. The number of people saying they permanently lost their jobs increased by 177,000 to 1.5 million.
Jim Stocking temporarily closed Park Tire Co. in Lincoln Park, Mich., last month, and laid off eight workers, including his sons and an employee with 38 years of service.
“The only other time I closed the store was when my parents died,” he said. The tire seller is still allowed to operate in Michigan because auto repair is deemed essential, but Mr. Stocking said he didn’t want to put his workers at risk and wanted his customers to stay home.
“A lot of other tire dealers are open, but I doubt the owners are there,” he said.
He said he looks forward to reopening this summer, hopefully with a big party. “We’re going to get through this,” he said.
Elsa Vargas lost both of her part-time jobs in a span of a week last month.
A package store, where Ms. Vargas earned USD 300 a week in cash, shut down operations after the mall where it was located closed to the public. A cleaning service, where Ms. Vargas worked in crews of four to clean people’s homes, laid her off when customers began hesitating to allow cleaning crews into their houses.
The mother of four in Silver Spring, Md., is an unauthorized immigrant, and therefore can’t tap unemployment insurance. Ms. Vargas is unsure where she will find money to pay rent and utilities. Her ex-husband, also an unauthorized immigrant, offered her a couple hundred dollars. Ms. Vargas’s ex-husband has continued working for a local construction company.
“I keep hearing about all these types of help they’re offering to people, but I don’t think I qualify because I don’t have papers,” she said in Spanish.
Some economists have somewhat more positive—though still dire—forecasts for the labor market.
Forecasting firm IHS Markit projects 14 million jobs will be lost by December, based on the expectation that employment will fall sharply this spring and edge lower for the remainder of the year. The firm expects the unemployment rate to peak near 10%, or close to previous records.
Joel Prakken, IHS Markit chief U.S. economist, said the firm’s forecast assumes a pickup in hiring among other businesses.
“I think there will be more of an offset than some realise,” he said, pointing to hiring announcements by grocery stores, online retailers, warehouses and pharmacies. Mr. Prakken projects employment will return to early 2020 levels by fall 2022. Next year, he said, it won’t be unusual for monthly jobs reports to show 700000 or more jobs added.
“The recovery will be much faster than from past downturns,” he said.