20.5 Mil. in US Lost Jobs in April

Update 437: 20.5 Mil. in US Lost Jobs in April,
25 Times Loss in Worst Month of 2008 Crash

The superlatives will abound in headlines around the nation, as Americans try to fathom the meaning of 14.7 percent official unemployment. Wasn’t it just 3.7 the day before yesterday? As for tomorrow, who can say? 

Today, we try to come to grips with our new economic reality, casting light on the scope and scale of the damage. We also outline a path to the end of the tunnel in policy terms to prevent further macroeconomic damage, as opposed to the ad hoc, yet understandable, rear-view relief of micro damage with micro policy thus far.

Good weekends all and stay safe…



The Department of Labor published its weekly unemployment claims report yesterday. We’ve now incurred more than 33.5 million new jobless claims in less than two months; roughly 20 percent of the labor force has suffered job loss. Job losses in April (20.5 million) exceeded those in the worst month of the 2008 crisis (800,000) by 25 times. 

Source: Dept. of Labor, BLS data

Today’s Bureau of Labor Statistics’ Employment Situation report brought more bad news. The unemployment rate currently sits at 14.7 percent and is expected to rise through May and June. In February, that rate was 3.5 percent, a 50-year low. 

Below, we illustrate the ongoing economic crisis through the eyes of everyday Americans — what the statistics look like on the ground and how vulnerable populations are coping. We demonstrate how this scale of unemployment is the result of bad policy and propose what can be done to reverse it.

Bread Lines to Poverty Lines amid Reopening

Pre-pandemic, the U.S. labor force stood at 164.5 million workers. Today, that number is 156.4 million and falling every day. How should we make sense of this number? In practical economic terms, millions of Americans are running out of food and can’t afford other basic necessities. At the same time, many are being called back to work while COVID-19 infections continue to rise.

The rapid rise in the unemployment rate makes adjusting to the new economic circumstances all the more difficult. But the 14.7 unemployment figure focuses the mind, as do the following snapshots of the material impact on Americans everywhere. 

  • Bread Lines: An April 2020 Brookings survey found that since the pandemic started, 17.4 percent of mothers with children ages 12 and under have children in their household not eating enough because they couldn’t afford enough food. Two years ago, that number was 3.1 percent. In total, 40.9 percent of mothers with children ages 12 and under reported household food insecurity since the onset of the COVID-19 pandemic.

    Food bank patronage is surging. Children are home from school, and parents who relied on subsidized lunches no longer can. Per the nonprofit Feeding America, some food banks are reporting up to 700 percent increases in distributions compared to pre-COVID, and two in five people visiting a food bank are seeking help for the first time. The pictures of lengthy lines in Elmhurst, Queens suggest a third world country or America in the 1930s.
  • Brink of Poverty: The Federal Reserve reported in July 2019 that 40 percent of Americans would struggle to come up with $400 for an unexpected expense. The number of people in poverty was growing before COVID-19, but now trends are even more worrisome. 

    About 31 million people lack medical insurance, 14 million in states where Republicans refused to expand Medicaid as part of the Affordable Care Act. The collapsing manufacturing sector and oil and gas industries mean that more layoffs and structural unemployment are on the horizon. So, choices need to be made. Should I continue paying my cell phone bill and internet or purchase food and medication? How will I find a job without a phone? How can I continue to study without internet access? 
  • States Reopening: As small businesses shutter across the country, states are reopening their economies against the wishes of public health officials. Texas lifted stay-at-home orders on May 1, along with nearly a dozen more states. Workers are being called back to their jobs, and many states will cut them off from unemployment benefits if they refuse to return. It is unclear whether premature openings will stave off unemployment claims, as that will depend on how state laws interact with CARES Act benefits, as well as workers’ personal circumstances.

Macroeconomic Value of Paycheck Continuity 

While some increase in unemployment is unavoidable, the skyrocketing U.S. jobless rate is a policy decision of commission or omission. Several European governments have paycheck guarantee programs. These programs provide direct government support to employers to cover payroll costs. Assistance covers a percentage of payroll costs, capped at a maximum amount per employee. 

Ireland, Denmark, and Germany all have paycheck guarantee programs up and running. 

European wage replacement programs

Sources: BLS, Eurostat, Irish Central Statistics Office, German Federal Ministry for Labor and Social Affairs

Preliminary unemployment data from these countries contrasts significantly with the situation in the United States. While unemployment in the United States has increased by 11.2 percent since February, it has gone up only 0.2 percent in Denmark, 0.6 percent in Ireland, and 2.3 percent in Germany. The German program was also successful during the Great Recession. From early 2009 to mid-2010, German unemployment decreased from 7.9 to 6.9 percent, while unemployment increased by about 5.5 percent in the U.S. 

A Progressive Paycheck Policy

Progressive Democrats are introducing similar policies that have support from some of the more moderate members. Rep. Pramila Jayapal’s Paycheck Guarantee Act (PGA) would establish a universal federal grant program that would provide funds for employers to continue paying workers’ salaries. The PGA would guarantee 100 percent of employee wages for all business and nonprofits (regardless of size) and cover health insurance. Wage replacement would be capped at $100,000 per employee. 

Rep. Mark Pocan introduced two complimentary bills that would help stem the tide of layoffs. The Preventing Layoffs During a Public Health Emergency Act and the Layoff Prevention Act would provide federal support for state work sharing programs. Workshare programs allow employers to scale down operations without laying off workers. This not only saves jobs but also allows businesses to ramp back up more quickly and cost efficiently, as they do not have to spend time re-hiring staff. Under current workshare programs, workers draw on Unemployment Insurance (UI) to cover for their lost wages. But Rep. Jayapal’s PGA would maintain worker wages without placing additional stress on already overburdened UI systems. 

Price Tag vs. Price of Omission

These programs will not be cheap. Professor Eric Beinhocker of Oxford University estimates the PGA will cost around $115 billion per month. But if unemployment continues to rise, aggregate demand, production, and consumer confidence will continue to tumble. The potential loss to GDP is in the trillions of dollars. It will take years to claw back these losses. Congress must ensure a smooth recovery, which starts with making sure that workers keep their jobs and continue to receive paychecks.

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