Many businesses are closed for businesses, which is having a significant negative impact on the labor economy. | Spencer Platt/Getty Images
New labor economy data paints a fuller — and bleaker — picture of the economy.
While many early indicators suggested that the coronavirus pandemic and efforts to contain it would be damaging to the labor economy, we’re now getting a fuller picture of just how bad the situation is in the United States.
In mid-March, a number of populous states, including New York, California, and Illinois, enacted stay-at-home measures that required nonessential businesses to shutter and people to limit trips out of the house to what was strictly necessary. Florida, the third most populous state, followed in early April. In total, 42 states had enacted statewide stay-at-home directives by late April. Experts said such measures were the key to reducing the spread of coronavirus and flattening the curve. Nearly two months after the initial stay-at-home orders began, the economic impact of such measures is starting to become clear.
Several states, against the advice of experts, have already begun reopening businesses, though it’s unclear how robust business will be as the pandemic rages on.
While stay-at-home measures have undoubtedly helped lessen the number of coronavirus cases and deaths in the US, they’ve also had serious economic repercussions. That’s been felt most by those who’ve lost their jobs, as companies try to cut down on costs amid a bleak economy, and automation is likely to rise. Of those who are still employed, many might not return to the office as they knew it, or at all. Those in the gig economy or who are essential workers have had to brave dangerous conditions, often without an increase in compensation, as their jobs become even more integral to American life.
Here’s what we know so far about the coronavirus’s effects on the US labor economy, in six charts.
1) The unemployment rate is now at nearly 15 percent
The preliminary unemployment rate jumped to nearly 15 percent in April and total nonfarm payroll employment fell by 20.5 million, according to Friday’s Bureau of Labor Statistics jobs report data. To put that in perspective, the unemployment level had been at a longtime record low of 3.5 percent as recently as February, and it’s now higher than during the Great Recession. Job losses were most severe in the leisure and hospitality industries. In March, the Federal Reserve Bank of St. Louis predicted that the unemployment rate could eventually reach 32 percent — higher than levels seen during the Great Depression. Note that jobs report data are based on the pay period that includes the day 12 of the month, so April’s numbers wouldn’t include unemployment that happened later in the month. Weekly unemployment insurance claim numbers suggest April’s rate is going to continue to rise.
2) One in five American workers has filed for unemployment
On May 7, the Department of Labor reported an additional 3.2 million initial unemployment claims for the last week. That means in the seven weeks since governments began shutting down businesses to prevent the spread of the coronavirus, more than 33 million people have gone on unemployment. That’s about one in five American workers. These past few weeks represent the highest level of unemployment claims on record. Prior to major shutdowns, the unemployment insurance claims figure was 280,000 in the week ending March 14.
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Christina Animashaun
3) Those still working have seen reduced hours
The economic pain of the coronavirus isn’t only evident in statistics from those who lost their jobs. Many Americans have seen their hours reduced from what they were a few months ago. The average workweek for private sector workers stayed pretty steady, rising slightly in April, after declining to 34.1 hours in March from 34.4 hours in February. During the last recession, this number dipped to 33.7 hours per week. Again, this data reflects only through the pay period including April 12.
4) Job listings are down 40 percent from last year
The number of listings on Indeed, the largest US job site by traffic, is currently down 40 percent compared with last year. That’s bad news for the many newly unemployed and suggests the situation won’t be getting better soon. As Mark Muro, a senior fellow at Brookings Institution’s Metropolitan Policy Program, told Recode in March, when listings were down around 7 percent, “Posting a job is a forward-looking glimpse of managers’ sense of a business’s prospects. This is a vote of no confidence.”
5) Job hiring is down across industries
As a result of all the above indicators, hiring is down as well. In April, hiring across industries on the platform was down nearly 30 percent, compared with the same month a year earlier, and down 24 percent, compared with March 2020. Hiring in recreation and travel took the hardest hit, down 60 percent compared to last year, as the industry has suffered from travel bans and stay-at-home directives. Segments like hardware and networking, public safety and education, have also seen declines in hiring, though not nearly as bad as jobs overall.
6) Working from home is the new work routine, for many office workers
Working from home has allowed many businesses to attempt to continue business as usual. MIT has estimated that about a third of the workforce that had previously commuted to work was able to work from home during the pandemic. And it’s likely that when this is all over, many office workers, at least, will not return to their offices. In April, more than 1,000 public company transcripts mentioned the topic of working from home, mostly in conjunction with mentions of the coronavirus. That’s more than the entire last decade combined.
It may take much longer to know the lasting effect the coronavirus pandemic has had on the workforce. What we know so far is bleak and will likely only get worse as more data becomes available.
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via Vox – Recode