Unemployment in the United States is at its highest since the Great Depression

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This story originally appeared on Business Insider

Unemployment in the United States is at its highest since the Great Depression
Unemployment in the United States is at its highest since the Great Depression

The coronavirus pandemic led to Record Loss of Jobs in April in the United States and sent the unemployment rate to its highest level in almost a century.

Employers cut 20.5 million employees in April, the biggest drop in a month, the Bureau of Labor Statistics said on Friday. This is roughly 25 times the worst monthly decline during the last recession from 2007 to 2009. It also overshadows the 1945 record towards the end of the year Second World War.

The unemployment rate has since risen to 14.7 percent. That is the highest since then Great Depression of the 1930sAccording to the 1940s Department of Labor and previous figures from the National Bureau of Economic Research.

Two months ago, in February, the unemployment rate was 3.5 percent, a low of around 50 years.

The sad report showed how quickly the coronavirus pandemic devastated the labor market and brought the US economy into recession when states closed down non-core businesses, sent workers home, and urged people to practice social distancing to spread contain. from COVID-19.

“The number of workers who quickly lost their jobs in April is incredible,” said Nick Bunker, an economist at As a matter of fact. “With today’s report, the scope and extent of the current labor market crisis are only now coming into focus.”

The employment rate fell to 60.2 percent in April, the lowest since January 1973, and the employment rate to 51.3 percent, the lowest and largest decrease in a month.

Leisure and hospitality were hardest hit among specific industries. The number of employees fell by 7.7 million or 47 percent and mainly focused on food services and drinking opportunities. Education and health care employment decreased 2.5 million in April and retail employment decreased 2.1 million.

Manufacturing and other service industries have lost more than a million jobs, while government, construction, transportation and warehousing have lost nearly 1 million jobs.

Efforts to boost the economy

In the midst of the sudden recession, the government has done everything it can to stem the economic consequences of the closings. In late March, President Donald Trump enacted the $ 2 trillion CARES law that expanded unemployment benefits, sent direct checks to Americans, expanded aid to besieged industries, and granted loans to small businesses to help payroll protect.

However, the Paycheck Protection Program struggled with requests and ran out of $ 350 billion in just two weeks. A further $ 320 billion was then sent to the program.

The Federal Reserve has also gone beyond what was used during the last recession, providing billions of dollars to help governments, state and local businesses across the country. The central bank has promised to continue doing everything necessary to protect the economy.

Rapid deterioration

Despite these immense efforts, the job market has still suffered an extreme blow despite fluctuating layoffs and sharply reduced hires. In the seven weeks since corona virus layoffs began, more than 33 million Americans have applied for unemployment insurance and, according to Glassdoor data, around 25 percent of all job vacancies have evaporated.

“We saw changes overnight,” Becky Frankiewicz, president of North America at ManpowerGroup, a labor agency, told Business Insider. “It’s the fastest reallocation of workers since World War II.”

Jeff Crivello, CEO of BBQ Holdings, the parent company of Famous Dave’s, said Business insider that he had to make the “heartbreaking” decision to fire 2,700 employees in mid-March, about 85 percent of the employees.

“We believe that this was the only solution to keep the company liquid,” he said. He hopes the company can bring back as many workers as possible as the economy slowly opens up, but said that some of the famous Dave’s locations would be permanently closed.

This will leave some workers on the brink of rapid change.

“When the pandemic started, gastronomy was understaffed,” said Crivello. “If you spoke to a restaurateur, they would tell you that their only problem was finding work. And within 24 hours, it became too personal.”

Real unemployment is likely to be much higher

As shocking as the unemployment rate is, economists have warned that it will likely be a recount of the economic problems. This is at least partly due to the fact that the Office for Labor Statistics does not include unemployed but not actively looking for workers in the overall unemployment rate.

Despite the fact that some industries such as grocery stores and warehouses are still hiring, the health crisis has marginalized some job seekers.

“I don’t think many people want to try to find a new job during a pandemic,” said Bunker.

It is also difficult to make plans if the uncertainty is still so great. Colin Gold, a carpenter who stages stages for shows in New York, said he was considering changing some of his skills in case the live theater shouldn’t return. He started applying for unemployment at the end of March, but did not apply for another job or look for another job.

“I’ve been more or less concerned with my own fear for a month,” he said. “I didn’t prepare for the future.”

Other unemployment measures that could give a more complete picture, including U-6 reading, which takes into account discouraged workers who are no longer looking for work and part-time workers who are looking for full-time employment.

During the Great Recession, economists focused on this measure because of their broader definition of unemployment, said Ryan Sweet, senior economist at Moody’s Analytics. He estimated that U-6 could reach 25 to 30 percent in the coming months.

“But there will be some people who don’t fall into one of the categories that U-6 covers, even though they’re technically unemployed,” he said.

But will it ever be the same?

There are people who are ready Go back to work. As the state’s economies slowly reopen, companies should bring workers back and hopefully recruit them to attract more people to the labor market.

Cliff Rankin, a mechanic with nearly three decades of experience managing a shuttle bus fleet for Fast Park, an airport parking service in Austin, Texas, reduced his weekly hours from 10 to 40 after illegal travel was banned. and Fast Park’s revenue will decrease. The company announced to Business Insider.

Now she works one day a week and was able to receive unemployment benefits through extended CARES schemes: her employer and other similar companies were not entitled to state aid such as the paycheck protection program.

While enjoying the break, he misses the job.

“It’s strange,” said Rankin. “I’m ready to get back on my buses and take care of my babies.”

Nevertheless, the economy is likely to reopen slowly and cautiously, and there is great uncertainty about when the US will return to normal. Or, if possible, return to a world before the corona virus.

The longer Americans get along without paychecks, the less likely they are to spend money. While there is certainly pent-up demand for haircuts and manicures, it is unclear how long it will take for people to feel comfortable when they go to a movie theater or sporting event.

Economists do not expect high unemployment to return to the pre-Coronavirus lows soon.

“Even more worrying is that this is not a temporary increase,” Lindsey Piegza, chief economist at Stifel, told Business Insider. “We expect to continue to grow by 9 to 10 percent by the end of the year.”

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