The crisis of coronavirus: the unemployment rate in the U.S. has reached a historic high

According to the Bureau of labor statistics in April in the US, 20.5 million people lost their jobs. This is the most sudden and the biggest decline since then, as the government began tracking the data in 1939. This writes CNN.

Кризис из-за коронавируса: уровень безработицы в США достиг исторического максимума

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These losses followed by a sharp reduction of workplaces in March, when the economy lost 870 000 workers. These two months are so severe that more than twice the unemployment rate at 8.7 million jobs lost during the financial crisis.

For many Americans who lost their jobs and their homes in the Wake of the financial crisis of 2008, this situation re-opens old wounds. It took years to recover from these failures. When the economy eventually began to recover, us employers for 10 years, added to 22.8 million jobs — a victory for all those who survived the Great recession.

Now pandemic coronavirus destroyed almost an entire decade of job gains in just two months.

The unemployment rate in April rose to 14.7%, reaching the highest level since BLS began to record unemployment in 1948. The last time U.S. unemployment was as strong during the great depression: the unemployment rate peaked at 24.9% in 1933, according to historical data.

The General view was that this was a devastating two months for American workers.

As it happened

In late March, the state governments and local authorities have introduced decrees on isolation to slow the spread of the coronavirus. Enterprises closed suddenly, EN masse, dismissing or reducing the millions of workers.

Government jobs report shows some of the steepest job losses in leisure — 7.7 million, and retail trade — 2.1 million

Even despite the fact that the hospital was struggling with trying to serve the influx of patients, health workers also suffered layoffs as outpatient services such as doctors and dentists have cut 1.2 million jobs in April.

Food and drinks, which were also essential during the crisis, lost 42 000 jobs.

And no matter how terrible these figures are, they do not reveal the full picture.

The number of jobs based on a survey of employers and does not include independent contractors such as Uber and Lyft.

People are considered “unemployed” only if they remained without work, but actively looking for a new job during the previous four weeks. Or, if they were under “temporary dismissal” with the expectation of rehire within six months. In April, about 18 million people were considered “unemployed due to temporary layoffs,” up from 1.8 million a month earlier.

But since most of the country is still under quarantine, many laid-off workers were not looking for new jobs in April. Instead, to be considered “unemployed”, these people were classified as retired from the workforce. The employment rate of the population, which measures the percentage of the U.S. population over the age of 16 work in April decreased to 51.3% compared to 60% in March.

Economists expect that many people will be able to find a job because businesses are slowly opening, but it may take months or even years that the labor market regained some of its former strength.

Ripple effects

Historically, the most destructive aspect of the recession was that jobs disappear, and companies it takes years to create a new, said Adam Ozimek, chief economist Upwork, a web site, which brings together companies and freelancers. This dynamic may be different in a recession coronavirus, when the optimistic forecast is that many, but not all, jobs will open up again.

The rest might need more time to recover, as a policy of social distancing destroyed the business models of companies.

38-year-old Barbara hull working as a croupier at Caesar’s Palace in Las Vegas until March 18, when it started closing and dismissal. “We all knew it would happen,” she said.

“Financially, we are scared because when we come back, we don’t know what to return, she said. — The whole point of Vegas is to bring people together, and we don’t know how much time will it take”

Economists also worry about whether the customers will feel comfortable coming back to a restaurant or traveling after the lifting of restrictions. To people like hull, it may mean less work and much less of a tip after re-opening.

Cautious behavior of the consumers can delay recovery.

“You will see weaker demand for jobs that require a lot of direct interaction with people,” said Ozimek, adding that work that can be performed remotely, will be relatively safer during the crisis.

But experts are also worried about the second wave of coronavirus in the second half of the year.

It’s also a terrible time for recent graduates, job-seekers during the crisis.

22-year-old Michaela, Stoya from Oxnard (CA), was fired from her job as a trainer at Petco, when the isolation. She applied for unemployment benefits, but have not yet received any money. Stoya studied political science in College and wants to eventually work in government.

“By the time when I’m 26 years old, I need a steady job with good benefits, she said. — I have type I diabetes, and I need benefits to maintain health. I work to achieve this goal, but the pandemic has suspended all”.

“It’s hard to start if I only have a diploma, she added. — No one hires the internship”.

Ozimek predicts that government workers state and local government may be next in line for dismissal. Different municipalities have already been forced to lay off workers. Dayton, Ohio, for example, fired a quarter of its workforce, and Detroit expects to lay off employees who work part-time to Finance their multi-million dollar budget deficit.

The government’s answer

Comparisons with the great depression may seem horrible, and, although the jobs crisis because of the coronavirus historically large, economists do not predict that it will be as serious as the economic downturn in the 1930-ies. The great depression lasted 12 years, and at that time the United States had no system of social protection.

In the current crisis, the government quickly took measures to expand unemployment benefits, has provided funding to companies and sent out receipts Federal aid to people earning less than $99 000 per year. Although these programs were far from perfect, they nevertheless provide much-needed assistance to some workers and employers.

In response to the pandemic, the Congress has expanded unemployment benefits, including the additional $600 per week for up to four months.

He also expanded the range of persons who can apply for unemployment benefits, including contractors and self-employed.

In April, the Governor of new York Andrew Cuomo said that the state hired an additional 1,000 people only to consider applications for unemployment. In neighboring new Jersey Governor Phil Murphy was looking for volunteers who know the programming language COBOL, because many systems of the state are still working on the old mainframe.

The US labor market will take time to recover from this unprecedented shock.

The Chairman of the Federal reserve system Jerome Powell stated that some time will pass before the US will return to its historically low unemployment rate, which was in February.