US unemployment rises to 14.7 percent: Economy loses 20.5 million jobs

The U.S. lost 20.5 million jobs in April amid the economic devastation of the coronavirus pandemic as the steepest recorded surge in American unemployment wiped out a decade of job gains, according to data released Friday by the Bureau of Labor Statistics (BLS).

The unemployment rate spiked to 14.7 percent from 4.4 percent in March, according to the April jobs report, as thousands of businesses closed and laid off or furloughed workers they could no longer afford to employ. The one-month rise in the unemployment rate between March and April is the largest ever recorded by BLS.

April’s staggering job losses also shattered records for both the largest one-month decline in jobs — roughly 2 million in September 1945 — and the highest level of unemployment ever recorded by BLS of 10.8 percent in November 1982. The jobs lost in April alone are almost 2.5 times the 8.7 million jobs lost during the Great Recession and nearly equal to the 22.4 million jobs gained in the decade of recovery that followed.

Between March’s revised loss of 870,000 jobs and April’s record-breaking plunge, the U.S. has lost roughly 21.4 million jobs since the spread of COVID-19 upended American life and derailed a resilient economy.

“Unfortunately, for many of those in the job market, the question becomes whether these jobs will return and these businesses reopen, which could have devastating and far-reaching economic effects,” wrote Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, in a Thursday research note.

Bovino estimated that 90 percent of the U.S. population has been forced to live under some form of stay-at-home order as state and local governments took desperate measures to slow the spread of COVID-19.

The first stages of the U.S. coronavirus outbreak in early March prompted a wave of event cancellations, travel restrictions, and postponements that dampened the strong American economy. Unemployment had settled at a 50-year low of 3.5 percent at the start of the year, and the emergence of COVID-19 appeared to be a serious but fleeting obstacle.

Even so, a massive shortfall in coronavirus tests made containing the outbreak effectively impossible, prompting government officials to close or restrict non-essential businesses and buy time for a surge in COVID-19 cases. While the restrictions were likely crucial to slowing the pandemic, they did so at a dire economic cost.

“Although the ‘recession’ is only weeks old, the size of the labor market decline has been unprecedented,” wrote economists from the Federal Reserve, University of Chicago and ADP in a paper published Wednesday.

The economists also noted that an “alarming” 40 percent of furloughs and 16 percent of layoffs from private payrolls as of April 18th were due to businesses closing either temporarily or, perhaps unknowingly, for good.

“One would hope that many of the businesses we observe suspending activities will resume operations in the near future. If not, the jobs destroyed by exiting businesses are permanently gone, requiring extra growth among surviving businesses or extra business entry to replace them,” they wrote.

Those pandemic-driven business closures forced more than 33 million Americans to apply for unemployment benefits since mid-March, according to the Labor Department.

To cushion the blow, the federal government expanded and supplemented unemployment insurance through the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act enacted in March. But the record-breaking crush of unemployment claims overwhelmed teetering and outdated state systems, forcing millions of jobless Americans to wait weeks for their benefits.

“We're looking at a system that people don't pay attention to until there's a crisis, and the crisis came on so quickly this time that there is absolutely no way any of these systems were going to be able to process benefits quickly,” said Michele Evermore, senior policy analyst at the National Employment Law Project.

Evermore warned that the lags disbursing unemployment benefits could force some of the most vulnerable Americans into deeper financial trouble, particularly wage-earners who lack the financial flexibility to weather the crisis.

“People who didn't make much to begin with probably don't have access to any other kind of credit,” she said. “I don't know how these people are getting by.”

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