Brace yourself, America, for "single worst jobs report in history"
Just two months ago, American workers were enjoying the fruits of the lowest unemployment rate in 50 years. But Friday's jobs report, reflecting April's official unemployment rate, is expected to show just how thoroughly the economic collapse caused by the coronavirus has eviscerated the U.S. labor market.
Glassdoor economist Daniel Zhao bluntly predicts "the single worst jobs report in history" when the Labor Department on Friday releases employment numbers for April. Forecasters expect the nation's jobless rate, which was at 4.4% in March, to skyrocket to an annualized unemployment rate of 15% to 20% for the April period, based on a survey of workers during the week of April 12.
The spike in joblessness follows record-breaking unemployment claims week after week since mid-March, including Thursday's report that 3.2 million Americans applied for unemployment insurance benefits last week.
These weekly unemployment insurance claims provide insight into the country's larger job losses, although they may understate the ranks of jobless Americans because not all will apply for aid, in some cases because they aren't eligible, according to the Brookings Institution. That's partly why the monthly jobs report remains one of the most closely watched economic indicators.
Oxford Economics estimates that U.S. employers shed 28 million jobs last month. That would nearly quadruple the total number of jobs lost during the Great Recession, when 7.5 million jobs disappeared over the course of 18 months between December 2007 and June 2009, and unemployment peaked at 10%.
"One thing I've been doing is looking at a thesaurus and finding synonyms for 'large', 'colossal' and 'unprecedented'," said Nick Bunker, Indeed Hiring Lab's director of economic research. "We'll see an unemployment rate higher than anything we've seen in the official series" of federal labor data, which begins in 1948.
First wave of layoffs: Travel, food, hotels
Among the industries feeling the deepest impact are those related to travel, retail and hospitality, especially restaurants, airlines, hotels and brick-and-mortar stores. Stay-at-home orders shuttered businesses across the country and brought travel to a stand-still by mid-March. With empty hotel rooms, stores and restaurants across the U.S., many employers made the difficult decision to fire or furlough workers.
As a result, employment in the leisure, hospitality and retail sectors shrank by 19.8 million workers, a 60% decline from mid-February through the end of April, according to a new study from researchers at Drexel University and the University of Quebec in Montreal.
Among those who lost their jobs are Tim Yabor, a 55-year-old who had worked for decades in sales at hotels and a convention center. Like many laid-off workers, his termination came via a teleconference, another adjustment for employees.
"My boss said, "Do you have a couple minutes to talk on Zoom?" And that's when it happened," Yabor told Scott Pelley on "60 Minutes." "I was never unemployed. This is the first time."
Cascading to other industries
Although travel and food service companies have taken the biggest blow, few industries were spared in April.
"I hate to be the bearer of bad news, but I suspect every industry will see a decline in payrolls," Glassdoor's Zhao said. "This isn't a recession driven by a sector of the economy or a particular imbalance — this is first and foremost a public health crisis."
A variety of "non-essential" sectors are likely to report job losses of 10% to 20% of their workforces, Oxford Economics predicted. That includes manufacturing, mining and construction, elective health care and business services, according to the investor research firm.
Across-the-board losses
As horrendous as the job numbers are expected to look on Friday, they will likely understate the problem, Zhao said. That's because some workers who lost their jobs may not currently be looking for work given the unusual dynamics of the coronavirus crisis.
Some laid-off Americans may now be caring for children, older relatives or even those with COVID-19 — they're simply unable to look for a job while tending to others. As far as the Labor Department is concerned, that would leave them outside the workforce because they either aren't available for work or aren't actively looking for a job.
Other laid-off workers may decide it's not worth looking for a new job at the moment, given that many businesses remain closed. Others may be too afraid to return to work outside the home for fear of catching the coronavirus disease.
Yet to be officially counted as unemployed, a fired worker must have actively looked for a job within the last four weeks. "There are lots of folks who will give up as they see large chunks of the economy are on lockdown," Indeed's Bunker said.
The current labor environment is bleak, with Glassdoor finding that U.S. job listings have plunged 28% since early March. Two in three employers had fewer posted job openings since mid-March, while one in four have pulled down all their job listings, the employment site found.
Job openings are "down across the board in every industry," Zhao said.
Where do we go from here?
Recessions typically deliver a hit to the labor market when employers slow their hiring, which makes it more difficult for laid-off workers to find new jobs. Even if the pace of layoffs slows, tens of millions of workers will need to find new jobs for the economy to regain its footing.
Unemployment may recover in the third quarter, dropping to 11%, as some states relax their social distancing measures and folks return to their reopened workplaces, according to Moody's. But the jobless rate is likely to remain elevated into 2021, it added.
"Many services sector activities, such as those related to leisure, entertainment, retail and travel, will not normalize quickly," Moody's analysts noted in a report. "Despite the fiscal and monetary support measures, some establishments in these sectors may permanently close, leading to permanent job losses."
