US payrolls plunge by 20.5 million jobs; unemployment climbs to 14.7%
Friday, May 08, 2020
Attempts to contain COVID-19 led the U.S. economy to shed 20.5 million nonfarm jobs in April versus March’s employment loss of 701,000. April’s unemployment rate spiked to 14.7% from 4.4% in March. In April, job losses hit all sectors, notably hospitality and leisure payrolls.
“Today’s report is more than ten-fold worse than the previous all-time high of 1.95 million job losses in September 1945,” Andrew Stettner, senior fellow at The Century Foundation, said in a statement.
All major workers’ groups experienced rising unemployment in April compared with March. “The number of unemployed workers on temporary layoffs climbed tenfold to 18.1 million from 1.8 million in March, the BLS reported. Job losses among Hispanic workers rose the highest, 6.0% in March to 18.9% in April.
Employees who reported working reduced hours on a part-time basis for economic reasons climbed to 10.9 million in April from 5.8 million in March. Meanwhile, April’s average hourly earnings for all workers on private nonfarm payrolls rose by $1.34 to $30.01, the BLS reported.
Small firms of 1-49 employees lost 6,000,000 jobs in April versus losing 90,000 in March, while midsize firms of 50-499 workers culled 5.3 million jobs compared with hiring 7,000 employees in March, according to the Automatic Data Processing National Employment Report, produced with Moody’s Analytics. U.S. companies with 500 workers and laid off 9 million employees in April after adding 56,000 workers in March.
ADP/Moody’s monthly report looks at nonfarm private-sector jobs only.
Goods-making firms lost 4.23 million jobs in April versus layoffs of 9,000 in March. The service sector that dominates the U.S. economy shed 16 million jobs in April after 18,000 layoffs in March.
Ahu Yildirmaz co-heads the ADP Research Institute. “The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession,” she said in a statement.
Fiscal policy fixes include increasing federal aid to state and local governments. They are experiencing acute drops in tax revenue from COVID-19 measures closing the doors of businesses across the U.S.
Stettner calls for Congress to carry on with the $600 per week Federal Pandemic Unemployment Compensation through the Oct. 31 or the end of the COVID-19 emergency.
Unemployed workers are now choosing between paying for food or rent. Rep. Ilhan Omar (D-Minn.) and other lawmakers have introduced H.R. 6515, the Rent and Mortgage Cancellation Act. This legislation proposes to suspend “obligations of residential renters and mortgagors to make payments during the COVID-19 emergency, and for other purposes.”
Changes to the nation’s monetary policy to assist at-risk small firms are underway. To facilitate lending to small businesses through the Small Business Administration's Paycheck Protection Program, the Federal Reserve Bank on April 30 expanded access to its Paycheck Protection Program Liquidity Facility (PPPLF) to more lenders.
In the meantime, small firms of 1-49 employees have struggled to obtain federal aid. Large businesses have been first in line to collect that aid via the Paycheck Protection Program 1.0 and 2.0.
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