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First Cut: April Employment Situation not as bad as expected, but plenty bad enough

It is difficult to find anything particularly useful or insightful to say about the April Employment Situation. There is simply nothing to which to compare it. If the decline in payrolls was somewhat less than market expectations, the 20.5 million decline was still massive and without precedent. The net downward revision of 214,000 to March and February would be significant in any other month, but is only a drop in the bucket for these numbers.

Job losses were clearly concentrated among lower paid workers. Payrolls for leisure and hospitality were down 7.653 million and retail trade was down 2.107 million. The loss of jobs in sectors more closely associated with lower wages was behind the overall gain in average hourly earnings which were up 4.7% month-over-month and up 7.9% compared to a year ago. The small 0.1 increase in the average workweek to 34.2 hours was for a similar reason, i.e. many workers lower on the pay scale tend to work fewer hours per week.

The increase in the unemployment rate to 14.7% in April from 4.4% was not as much as markets had anticipated but was bad enough. The U-6 unemployment rate had an even larger increase to 22.8% form 8.7%. The participation rate fell to 60.2% from 62.7% and the employment-to-population ratio was down to 51.3% after 60.0%.

Those working part-time for economic reasons nearly doubled to 10.877 million in April from 5.765 million in March as hours were drastically reduced or workers took temporary jobs – like delivery services – to replace some lost income. Those leaving their jobs voluntarily were down 157,000 to 570,000 and new entrants to the labor force were down 120,000 to 389,000. Labor force growth declined 6.432 million as workers found it difficult or pointless to seek employment.

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