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Financial News: U.S. Employment Nosedives By Record 20.5 Million Jobs

U.S. Employment Nosedives By Record 20.5 Million Jobs In April

05/08/2020 - 09:34:00 (RTTNews)

(RTTNews) - Reflecting the effects of the coronavirus pandemic and efforts to contain it, the Labor Department released a report on Friday showing a record nosedive in employment in the U.S. in the month of April.

The report said non-farm payroll employment plummeted by 20.5 million jobs in April after tumbling by a revised 870,000 jobs in March.

The steep drop in employment was not as bad as feared, however, as economists had expected employment to plunge by 22.0 million jobs compared to the loss of 701,000 jobs originally reported for the previous month.

Nonetheless, the Labor Department said the unemployment still skyrocketed to a post-World War II record high of 14.7 percent in April from 4.4 percent in March. Economists had expected the unemployment to spike to 14.0 percent.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said the unemployment rate would have been even higher, but the Bureau of Labor Statistics is still having problems with misclassifying absent workers who should have been recorded as on temporary layoff.

"Without that distortion, the unemployment rate would have been close to 20% last month," Ashworth said.

The record drop in employment reflected sharp jobless losses in all major industry sectors, with particularly heavy job losses in leisure and hospitality.

Employment in the leisure and hospitality sector plummeted by nearly 7.7 million jobs, while employment in the education and health services and retail sectors also plunged by 2.5 million jobs and 2.1 million jobs, respectively.

The jump in the unemployment rate came as the household survey measure of employment plummeted by 22.4 million persons, while the labor force shrank by 6.4 million persons.

Meanwhile, the report said average hourly employee earnings surged up $1.34 or 4.7 percent to $30.01 in April. Annual wage growth soared to 7.9 percent in April from 3.3 percent in March.

The Labor Department noted the spike in average hourly earnings largely reflect the substantial job loss among lower-paid workers.

"Overall, this report lays bare the full extent of the human tragedy stemming from the pandemic," Ashworth said.

He added, "While we are hopeful many will get back to work in the coming months, there will be severe scarring effects on the labor market for years to come."

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