Coronavirus crisis: US unemployment rate hits historic high

According to the Bureau of Labor Statistics, in April in the US 20,5 million people lost their jobs. This is the most sudden and biggest recession since the government began tracking data in 1939. Writes about it CNN.

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These losses followed a sharp job cut in March, when the economy lost 870 workers. These two months are so serious that they more than double the unemployment rate of 000 million jobs lost during the financial crisis.

For many Americans who lost their jobs and their homes in the 2008 financial crisis, this situation is reopening old wounds. It took years to recover from these setbacks. When the economy eventually began to recover, American employers added 10 million jobs over 22,8 years—a victory for everyone who lived through the Great Recession.

Now, the coronavirus pandemic has destroyed almost a decade of job growth in just two months.

The unemployment rate in April rose to 14,7%, reaching the highest level since the BLS began fixing unemployment in 1948. The last time in the United States was so strong during the Great Depression: unemployment reached a maximum of 24,9% in 1933, according to historical data.

By all accounts, these were devastating two months for American workers.

How did this happen?

At the end of March, state and municipal authorities issued isolation orders to slow the spread of coronavirus. Enterprises suddenly shut down en masse, firing or cutting millions of workers.

The government jobs report reveals some of the steepest job losses in the leisure sector — 7,7 million and in retail — 2,1 million.

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Even though hospitals struggled to cater for the influx of patients, medical workers also suffered temporary layoffs as outpatient services such as doctors and dentists' offices cut 1,2 million jobs in April.

Food and beverage stores, which were also needed during the crisis, lost 42 jobs.

And no matter how terrible these numbers are, they do not reveal the whole picture.

The number of jobs is based on a survey of employers and does not include independent contractors such as Uber and Lyft.

People are considered unemployed only if they were left without work, but were actively looking for a new job in the previous four weeks. Or if they fell under a “layoff” awaiting re-hiring within six months. In April, about 18 million people were considered “unemployed due to layoff,” compared with 1,8 million a month earlier.

But since most of the country is still under quarantine, many laid-off workers were not looking for new jobs in April. Instead of being considered unemployed, these people were classified as retired. The employment rate, which measures the proportion of the US population over 16 years old with work, fell to 51,3% in April compared to 60% in March.

Economists expect that many people will be able to find work again, as enterprises gradually open, but it may take months or even years for the labor market to regain its former strength.

Wave effects

Historically, the most damaging aspect of the recession has been that jobs are disappearing and it takes companies years to create new ones, said Adam Ozimek, chief economist at Upwork, a website that brings companies and freelancers together. This dynamics may differ during the recession of the coronavirus, when the optimistic forecast is that many, but not all, jobs will be reopened.

The recreation sector may need more time to recover, as the policy of social distancing has destroyed the business models of companies.

38-year-old Barbara Hull worked as a croupier at Caesar's Palace in Las Vegas until March 18, when closures and dismissals began. “We all knew this would happen,” she said.

“Financially, we’re scared because when we come back, we don’t know what we’re coming back to,” Barbara explained. “The whole point of Vegas is to bring people together, and we don’t know how long that will take.”

Economists are also worried about whether consumers will feel comfortable returning to restaurants or traveling after lifting restrictions. For people like Hull, this can mean less work and a lot less tip after reopening.

Cautious consumer behavior can delay economic recovery.

“You will see weaker demand for jobs that require a lot of direct interaction with people,” said Ozimek, noting that work that can be done remotely will be relatively safer during a crisis.

But experts are also worried about the next wave of coronavirus in the second half of the year.

This is also a scary time for recent graduates looking for work during the crisis.

22-year-old Michaela Stoya from Oxnard (California) worked as a trainer at Petco. When isolation began, she was fired. She applied for unemployment benefits, but has not yet received any money. Stoya studied political science in college and wants to work in the government.

“When I turn 26, I will need constant work with good benefits,” she said. “I have type I diabetes, and I need benefits to stay healthy.” I am working towards this goal, but the pandemic has halted everything. ”

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“It's hard to start if you only have a diploma,” she laments. “No one is hiring for an internship.”

Ozimek predicts that government and municipal employees may be next in line for layoffs. Local authorities have already been forced to fire workers. Dayton, Ohio, for example, has laid off a quarter of its workforce, and Detroit expects to lay off part-time workers to finance its multi-million dollar budget deficit.

Governments are responsible

Comparisons to the Great Depression may seem awful, and although the job crisis due to the coronavirus is historically great, economists do not predict that it will be as serious as the economic downturn in the 1930s. The Great Depression lasted 12 years, and at that time in the United States there was no social protection system.

In the current crisis, the government quickly took measures to expand unemployment benefits, provided financing to enterprises, and sent out federal aid checks to people earning less than $ 99 a year. Although these programs were far from perfect, they nonetheless provide much-needed assistance to some workers and employers.

In response to the pandemic, Congress expanded unemployment benefits to include an additional $ 600 per week for up to four months.

He also expanded the circle of people who can apply for unemployment benefits, including contractors and self-employed.

In April, New York Governor Andrew Cuomo said the staff hired an additional 1000 people just to handle unemployment claims. In nearby New Jersey, Governor Phil Murphy was looking for volunteers who knew the COBOL programming language because many state systems still run on old mainframes.

The US labor market will need time to recover from this unprecedented blow.

Federal Reserve Chairman Jerome Powell said it would take some time for the US to return to its historically low unemployment rate in February.

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