Unemployment in April signals long-term problems for US economy; Black Unemployment increases less than expected
The Bureau of Labor Statistics announced depression level unemployment levels in the April employment situation report. Twenty two million people lost their jobs as the country shut down due to coronavirus. There was wide spread layoffs across all industries and across all racial and gender groups. During the past eight weeks about 30 million initial claims for unemployment were filled with state labor departments.
The official national unemployment rate was reported as 14.7%. The real rate is presumed to be around 25% based on weekly unemployment claims. The leisure and hospitality industry was the hit the hardest by the pandemic losing 7.6 million jobs.
There was wide spread unemployment across all worker groups: White unemployment was 14.2%, for Blacks it was 16.7% and Hispanic’s 18.9%. The Hispanic rate jumped 12.9% while the White rate rose 10.2% and the Black rate moved 10%. It is probably the first time the Black rate rose less than all other rates. Many believe the reason is the type of essential jobs many Black people hold.
Women have lost more jobs than men during the current crisis. During the last recession, it was men who got hit hardest. About eight million women lost jobs during April as compared to million men. The unemployment rate for women stood at 15.5% against 13.0% for men. Economist are not sure, but they believe the reason for the higher job losses is that women provide almost all of the child care and they are concentrated in vulnerable industries like hospitality and healthcare.
The labor force participation rate dropped -2.5% to 60.2% and the employment to population (EM) ratio tanked -8.7% to 51.3%. The EM ratio tells us that only 50% of the people in the US are working.
About 18 million people reported themselves as on “temporarily laid off” rather than permanent job losers. The number of people not in the labor force who want jobs was 9.9 million. Discouraged workers (who have given up looking) stayed flat at 574,000.
The “real” unemployment rate (U-6) stood at 22.8%. U-6 is everyone who want a job or more hours.
The index of weekly working hours fell by 15%.
The diffusion index which captures businesses hiring trends stood at 5 of 100: The lowest ever. Anything above 50 is an expected increase in hiring. The index was 62 in a year ago (Apr 2019)
The US quarterly GDP is expected to fall by 8% to 10%. The stock market (DJIA) continued to bubble up slowly. The index was recorded at 23,625 about 2,000 points higher than its Coronavirus low.
Business Survey Results
Non-farms payrolls also lost 20.5 million jobs in April 2020. All sectors and industries lost jobs. Major losses occurred in Leisure and Hospitality, Health and Education, Goods Production and Retail trade.
Certain kinds of business were especially hard hit: Restaurants and Bars lost 5.5 million positions, Retail lost 2.1 million, Education and Health lost 2.5 million and Business and professional services got rid of 2.2 million workers.
A lot of these losses were expected, but some other areas also shrank. These are important sectors to keep an eye on: Construction, down -900K; Cars and Trucks(725K), -381K in production and -344K in sales; Air Transport, -140K; Mass Transit, -185K; Movies and Music, -216K; Temporary Work, 842K; Outpatient Healthcare,-1,188,000; Child Care, -336,000; Amusement Parks, Gambling and Recreation, -1,062K; Hotels, -839K and Local Government, 801K.
There were two industries that actually added workers. Can you guess? It was “General merchandise stores, including warehouse clubs and super centers” which added 93,000 workers. And the “Couriers and messengers” category, which added 1,800 people. The industry sector with the best quality jobs and the least job losses was “Utilities” which shed only -3,000 jobs.
The Black Unemployment Rate
The Black unemployment rate jumped from 6.7% to 16.7%. The number of employed Black workers went down from 19.2 million to 12.2 million a loss of approximately 3 million jobs.
The unemployment rate for Black men, 20 and order, was 16.1% while Black women in the same age group were unemployed at a rate of 16.4%. More than one million Black Women lost their jobs.The Black labor force participation rate another measure of employment fell 4 percentage points to 59%.
The employment to population (EM) ratio fell to 49%. There are more Black people are
not working than working.
For the first time ever, the Black unemployment rate increased less than the White rate. Also the difference between the Black and White rate fell to 2%, also the lowest ever. During the 2008 recession, the difference in rate was as high as 7%.
The chart below shows the Black unemployment rate and the black Labor Force Participation.
As is our custom, we calculate the real Black unemployment rate: about 25% in April. Both the Black unemployment rate and the US U-6 rate climbed to record levels in April. U-6 is basically anyone who wants to work and has looked in the past 12 months plus part time people who want full time work.
ADP reported -20.2 million employment changes from March to April: Small Business (1-49) lost -6 million staff; mid-sized companies lost -5.2 million and large companies laid off -8.9 million.
