April 3, 2020 – Employment fell by 701,000 last month as the U.S. unemployment rate rose to 4.4 percent low, according to the most recent U.S. Bureau of Labor Statistics report released this morning. The number of unemployed currently stands at 7.1 million. Over the last two weeks, 10 million Americans have filed for temporary unemployment benefits. That’s two percent of the U.S. population.
The changes in these measures reflect the effects of the coronavirus (COVID-19) and efforts to contain it. Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places. Notable declines also occurred in healthcare and social assistance, professional and business services, retail trade, and construction.
Executive Recruiters & Talent Leaders Navigate Uncertain Times
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“There’s no comparison to this shock,” Gregory Daco, Oxford’s chief U.S. economist, told the Wall Street Journal. “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.”
“Covid-19 has had the multiple impact of tragic illness and loss along with economic hardship for many,” said Robin Judson, president at Robin Judson Partners. “It has particularly highlighted the intersection of a loss of employment with the loss of health insurance in the time of pandemic, with little recourse for those affected. Regardless of one’s point of view about the role of government versus the market in providing solutions in normal times, this is clearly the time for government at all levels to step up and step in to provide for those who are the most affected by illness and unemployment.”
“The main message is the labor market conditions started to slip in March, but obviously with the last two initial claims reports we’ve seen, we know April will be a disaster for labor markets,” said Michael Gapen, chief U.S. economist at Barclays. “We still have two more weeks, and we’re probably looking at an unemployment rate of more than 10 percent in April.”
Inside the Numbers
- In March, employment in leisure and hospitality fell by 459,000. Most of the decline occurred in food services and drinking places (-417,000); this employment decline nearly offset gains over the previous 2 years. Employment in the accommodation industry also declined in March (-29,000).
- Employment in healthcare and social assistance fell by 61,000 in March. Healthcare employment declined by 43,000, with job losses in offices of dentists (-17,000), offices of physicians (-12,000), and offices of other healthcare practitioners (-7,000). Over the prior 12 months, healthcare employment had grown by 374,000. In March, social assistance saw an employment decline of 19,000, reflecting a job loss in child day care services (-19,000). Over the prior 12 months, social assistance added 193,000 jobs.
- Employment in professional and business services decreased by 52,000 in March, with the decline concentrated in temporary help services (-50,000). Employment also decreased in travel arrangement and reservation services (-7,000).
- In March, employment in retail trade declined by 46,000. Job losses occurred in clothing and clothing accessories stores (-16,000); furniture stores (-10,000); and sporting goods, hobby, book, and music stores (-9,000). General merchandise stores gained 10,000 jobs.
- Employment decreased over the month in construction (-29,000). In March, nonresidential building (-11,000) and heavy and civil engineering construction (-10,000) lost jobs. Construction employment had increased by 211,000 over the prior 12 months.
- Employment in the other services industry declined by 24,000 in March, with about half of the loss occurring in personal and laundry services (-13,000). Over the prior 12 months, other services had added 89,000 jobs.
- Mining lost 6,000 jobs in March, with much of the decline occurring in support activities for mining (-5,000). Since a recent peak in January 2019, mining employment has declined by 42,000.
- In March, manufacturing employment edged down (-18,000). Over the past 12 months, employment in the industry has shown little net change.
- Federal government employment rose by 18,000 in March, reflecting the hiring of 17,000 workers for the 2020 Census.
- Employment in other major industries, including wholesale trade, transportation and warehousing, information, and financial activities, changed little over the month.
Jobless Claims Rising
Americans displaced by the coronavirus crisis again filed unemployment claims in historic numbers, with the Labor Department reporting Thursday a surge to 6.6 million. Nearly 10 million people have filed for unemployment benefits in two weeks. Economists now expect the U.S. economy to fall into a recession in the second quarter, before staging a comeback later in the year after the spread of the virus slows.
Managing Through the COVID-19 Pandemic
The COVID-19 pandemic is causing worldwide public health concerns and widespread disruptions across the global economy, including for businesses and schools. It has caused society to put a pause on public gatherings, sporting events, the arts, restaurants and nightlife, which otherwise would have provided relief during difficult times.
As the crisis unfolded last week, the team at Summit Leadership Partners engaged in conversations with client management teams, CEOs and CHROs at a variety of organizations across several industries, helping them navigate their decision making during the crisis.
“What usually takes months or quarters to happen in a recession is happening in a matter of weeks,” said Michelle Meyer, chief U.S. economist for Bank of America Merrill Lynch. Heading into yesterday’s unemployment claims report, weekly jobless claim estimated varied widely with Nomura forecasting 4.1 million, Morgan Stanley estimating 4.5 million, Bank of America reporting 5.5 million and Goldman Sachs forecasting six million. It turned out that 6.6 million filed claims across the U.S. But that number will certainly rise in coming weeks as more unemployed people are able to tap into their individual state’s computer systems that have been overloaded with claims filing requests.
A Silver Lining
These numbers mark just the initial wave of a punishing couple of months to come. The Federal Reserve Bank of S. Louis predicts nearly 50 million American layoffs by summer and a staggering 32 percent unemployment rate. Just a few weeks ago, that figure was at a historic low of just under four percent.
In a report yesterday, the Congressional Budget Office said it expected the unemployment rate to top 10 percent this quarter, reflecting the historic surge in new jobless claims. Bank of America economists, meanwhile, said yesterday that they expected as many as 20 million jobs will be cut in the coming couple of months amid the outbreak, leading to a peak unemployment rate of nearly 16 percent. To give that figure context, at the height of the global financial crisis, the unemployment rate reached as high as 10 percent in the fall of 2009. Some analysts predict the United States could double that figure by June.
Nearly every state providing comments cited the COVID-19 virus impacts. “States continued to identify increases related to the services industries broadly, again led by accommodation and food services. However, state comments indicated a wider impact across industries,” according to the Labor Dept. report, which also cited healthcare and social assistance, manufacturing, retail and wholesale trade and construction as among the industries most heavily affected.
Dan Davenport, president and general manager of Randstad RiseSmart, said the COVID-19 pandemic has taken a serious toll on the American workforce, and many industries have been forced to lay off or furlough employees during this crisis.
“But we’re also seeing organizations who are focused on taking care of their employees as much as possible, with some pledging to postpone layoffs for 60 or 90 days. Others are offering outplacement services that include access to career coaches via video conference that allows workers to prepare for their next role while practicing social distancing. There is no doubt that this crisis is hitting some industries hard, but through the hardship will also come growth and opportunity for both employees and employers, so how businesses treat their workers today will impact how quickly they can pivot once the crisis is over.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media