Even though it's no surprise that the April jobs report was brutal, it was still breath-taking in its magnitude. Further, the numbers quantify the human cost of the shutdowns necessary to fight the coronavirus. And they make the jobs lost in previous recessions look child's play.
One theme of the economy over the last 40 years which intensified over the last decade is rising inequality. This is evident between people and companies. The coronavirus has accelerated this trend as more than 50% of people who make less than $15/hour have lost their jobs or seen a reduction in hours. In contrast, only 9% of people who make more than $50/hour have lost their jobs or had their hours cut.
20.5 Million Jobs Lost
In April, the US economy lost 20.5 million jobs which are 10 times more than any previous month of job losses. This follows 877,000 jobs lost in March. In total, this amounts to 2.5 times the number of jobs lost during the Great Recession which lasted from early 2008 to mid-2009.
One silver lining is that 78% of people who lost their jobs expect that they will be re-hired when the economy opens up again. 18 million of the 23 million unemployed are considered to be "on temporary layoff" which means they would get their jobs back if the situation quickly returns to normal. Additionally, the job losses were due to a public health crisis that caused an economic shutdown, and the government is providing aid to offset the loss in income. Ideally, this will prevent demand destruction which has led previous recessions to last for months if not years.
Inside the Numbers and Beyond
Given the nature of the shutdown and the coronavirus, nearly every non-essential business was shut down either due to government decree or a lack of customers. Travel and hospitality was the hardest hit sector with 7.1 million jobs lost. Next was the retail industry with 2.1 million lost.
These figures also don't take into account the number of lost opportunities to independent contractors and seasonal workers who won't be hired in retail or hospitality. Even the health care industry was hit hard with 1.2 million jobs lost as doctor's offices and dentist's offices also had to be shut down and non-emergency health care procedures were put off.
The ripple effects of this are unclear and depend on a number of variables including the government's response and how the virus evolves. Financial markets are currently optimistic about the situation as they are focused on the virus' growth plateauing, the fiscal and monetary shock which has offset a good chunk of economic damage, and policymakers' willingness to step up with aggressive and quick measures.