THE COVID-19 EFFECT: April Unemployment Rate Climbs To 14.7 Percent

Total nonfarm payroll employment fell by 20.5 million in April, and the unemployment rate rose to 14.7 percent, the U.S. Bureau of Labor Statistics reported today. The changes in these measures reflect the effects of the coronavirus (COVID-19) pandemic and efforts to contain it.

Employment fell sharply in all major industry sectors, with particularly heavy job losses in leisure and hospitality.

The change in total nonfarm payroll employment for February was revised down by 45,000 from +275,000 to +230,000, and the change for March was revised down by 169,000 from -701,000 to -870,000. With these revisions, employment changes in February and March combined were 214,000 lower than previously reported.

In April, average hourly earnings for all employees on private nonfarm payrolls increased by $1.34 to $30.01. The average hourly earnings of private-sector production and nonsupervisory employees increased by $1.04 to $25.12 in April.

The increases in average hourly earnings largely reflect the substantial job loss among lower-paid workers; this change, along with earnings increases, put upward pressure on the average hourly earnings estimates.

Household Survey Data

In April, the unemployment rate increased by 10.3 percentage points to 14.7 percent. This is the highest rate and the largest over-the-month increase in the history of the series (seasonally adjusted data are available back to January 1948).

The number of unemployed persons rose by 15.9 million to 23.1 million in April. The sharp increases in these measures reflect the effects of the coronavirus pandemic and efforts to contain it.

In April, unemployment rates rose sharply among all major worker groups. The rate was 13.0 percent for adult men, 15.5 percent for adult women, 31.9 percent for teenagers, 14.2 percent for Whites, 16.7 percent for Blacks, 14.5 percent for Asians, and 18.9 percent for Hispanics. The rates for all of these groups, with the exception of Blacks, represent record highs for their respective series.

The number of unemployed persons who reported being on temporary layoff increased about ten-fold to 18.1 million in April. The number of permanent job losers increased by 544,000 to 2.0 million.

In April, the number of unemployed persons who were jobless less than 5 weeks increased by 10.7 million to 14.3 million, accounting for almost two-thirds of the unemployed.

The number of unemployed persons who were jobless 5 to 14 weeks rose by 5.2 million to 7.0 million. The number of long-term unemployed (those jobless for 27 weeks or more), at 939,000, declined by 225,000 over the month and represented 4.1 percent of the unemployed.

The labor force participation rate decreased by 2.5 percentage points over the month to 60.2 percent, the lowest rate since January 1973 (when it was 60.0 percent). Total employment, as measured by the household survey, fell by 22.4 million to 133.4 million.

The employment-population ratio, at 51.3 percent, dropped by 8.7 percentage points over the month. This is the lowest rate and largest over-the-month decline in the history of the series (seasonally adjusted data are available back to January 1948).

The number of persons who usually work full time declined by 15.0 million over the month, and the number who usually work part-time declined by 7.4 million. Part-time workers accounted for one-third of the over-the-month employment decline.

The number of persons at work part-time for economic reasons nearly doubled over the month to 10.9 million. These individuals, who would have preferred full-time employment, were working part-time because their hours had been reduced or they were unable to find full-time jobs.

This group includes persons who usually work full time and persons who usually work part-time.

The number of persons not in the labor force who currently want a job, at 9.9 million, nearly doubled in April.

These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job.

Persons marginally attached to the labor force–a subset of persons not in the labor force who currently want a job–numbered 2.3 million in April, up by 855,000 over the month.

These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey.

Discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, numbered 574,000 in April, little changed from the previous month.

Establishment Survey Data

Total nonfarm payroll employment fell by 20.5 million in April, after declining by 870,000 in March.

The April over-the-month decline is the largest in the history of the series and brought employment to its lowest level since February 2011 (the series dates back to 1939).

Job losses in April were widespread, with the largest employment decline occurring in leisure and hospitality.

In April, employment in leisure and hospitality plummeted by 7.7 million, or 47 percent. Almost three-quarters of the decrease occurred in food services and drinking places (-5.5 million).

Employment also fell in the arts, entertainment, and recreation industry (-1.3 million) and in the accommodation industry (-839,000).

Employment declined by 2.5 million in education and health services in April. In health care, employment declined by 1.4 million, led by losses in offices of dentists (-503,000), offices of physicians (-243,000), and offices of other health care practitioners (-205,000).

Employment also declined in social assistance (-651,000), reflecting job losses in child day-care services (-336,000) and individual and family services (-241,000). Employment in private education declined by 457,000 over the month.

Professional and business services shed 2.1 million jobs in April. Sharp losses occurred in temporary help services (-842,000) and in services to buildings and dwellings (-259,000).

In April, employment in retail trade declined by 2.1 million. Job losses occurred in clothing and clothing accessories stores (-740,000), motor vehicle and parts dealers (-345,000), miscellaneous store retailers (-264,000), and furniture and home furnishings stores (-209,000).

By contrast, the component of general merchandise stores that includes warehouse clubs and supercenters gained 93,000 jobs. 

In April, manufacturing employment dropped by 1.3 million. About two-thirds of the decline was in durable goods manufacturing (-914,000), which saw losses in motor vehicles and parts (-382,000) and in fabricated metal products (-109,000). Nondurable goods manufacturing shed 416,000 jobs.

Employment in the other services industry declined by 1.3 million in April, with nearly two-thirds of the decline occurring in personal and laundry services (-797,000).

Government employment dropped by 980,000 in April.

Employment in local government was down by 801,000, in part reflecting school closures. Employment also declined in state government education (-176,000).

Construction employment fell by 975,000 in April, with much of the loss in specialty trade contractors (-691,000). Job losses also occurred in construction of buildings (-206,000).

Employment fell in transportation and warehousing in April (-584,000). Transit and ground passenger transportation and air transportation lost 185,000 jobs and 141,000 jobs, respectively.

Wholesale trade shed 363,000 jobs in April, largely reflecting losses in the durable and nondurable goods components.

Employment in financial activities fell by 262,000 over the month, with the vast majority of the decline occurring in real estate and rental and leasing (-222,000).

Employment in information services fell by 254,000 in April, driven by a decline in motion picture and sound recording industries (-217,000).

Mining lost 46,000 jobs in April, with most of the decline occurring in support activities for mining (-33,000).

The average workweek for all employees on private nonfarm payrolls increased by 0.1 hours to 34.2 hours in April. In manufacturing, the workweek declined by 2.1 hours to 38.3 hours, and overtime declined by 0.9 hours to 2.1 hours.

The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.1 hours to 33.5 hours.

Coronavirus (COVID-19) Impact on April 2020 Establishment and Household Survey Data

Data collection for both surveys was affected by the coronavirus (COVID-19) pandemic. The household survey is generally collected through in-person and telephone interviews, but personal interviews were not conducted for the safety of interviewers and respondents.

The household survey response rate, at 70 percent, was about 13 percentage points lower than in months prior to the pandemic.

 In the establishment survey, approximately one-fifth of the data is collected at four regional data collection centers. Although these centers were closed, about half of the interviewers at these centers worked remotely to collect data by telephone.

Additionally, BLS encouraged businesses to report electronically. The collection rate for the establishment survey in April was 74.9 percent, essentially unchanged from collection rates prior to the pandemic.                        

In the establishment survey, workers who are paid by their employer for all or any part of the pay period including the 12th of the month are counted as employed, even if they were not actually at their jobs.

Workers who are temporarily or permanently absent from their jobs and are not being paid are not counted as employed, even if they are continuing to receive benefits.

The length of the reference period does vary across the respondents in the establishment survey; one-third of businesses have a weekly pay period, slightly over 40 percent a bi-weekly, about 20 percent semi-monthly, and a small amount monthly.

There was a change to the estimation method used in the establishment survey for April. Business births and deaths cannot be adequately captured by the establishment survey as they occur.

Therefore, the establishment survey estimates use a model to account for the relatively stable net employment change generated by business births and deaths.

Due to the impact of the COVID-19 pandemic, the relationship between the two was no longer stable in April. Therefore, the establishment survey made modifications to the birth-death model.

For more information, see www.bls.gov/cps/employment-situation-covid19-faq-april-2020.pdf.

In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (April 12th through April 18th).

Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff.

In April, there was an extremely large increase in the number of persons classified as unemployed on temporary layoff.

However, there was also a large increase in the number of workers who were classified as employed but absent from work.

As was the case in March, special instructions sent to household survey interviewers called for all employed persons absent from work due to coronavirus-related business closures to be classified as unemployed on temporary layoff.

However, it is apparent that not all such workers were so classified.

If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical April) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported (on a not seasonally adjusted basis).