After experiencing a five-year low of 3.5% as recently as February, the U.S. unemployment rate hit 14.7% in April, the Labor Department reported on Friday. It’s the most rapid one-month job loss since the Great Depression.
20.5 million jobs were lost throughout the month in the U.S., which is the worst on record, and could be much higher now than the Labor Department’s figure suggests.
“It is stunning how fast we got there,” said Paul Isely, associate dean of Grand Valley State’s Seidman College of Business. “This number would’ve been taken the week of April 12th, think about what’s happened since April 12th. Since that time we’re close to 10-million more people have applied for unemployment benefits.”
Isely and other experts, even the Labor Department itself, point to a figure likely close to 20%. A recent finding by the Economic Policy Institute found that for every for every 10 people who successfully applied for unemployment, another three to four people gave up because they could not get through their state's system to make a claim. An additional two people didn't even bother trying because they knew it would be too difficult.
“It’s really about when it was taken more than anything else,” Isely said. “It was taken early enough in the month that it didn’t pick up a lot of the distress that’s happened in the last half.”
Isely said workers in the hospitality sector were hit hardest, but also those in the healthcare sector. With hospitals focusing their efforts almost strictly towards fighting Covid-19, layoffs have been widespread in other departments.
But Isely also said, with many returning to work soon, the worst has likely passed. He says the May numbers will also likely be around 20%.
“When we see these numbers we’re looking in the rearview mirror, we’re looking at what’s happened to us already,” Isely said. “So we expect that those really high elevated numbers that we’re seeing right now will actually decrease pretty quickly if the virus stays under control to a number that would have been amazing and horrendous to us just a few months ago. So we’ll drop back to 7-to-9% unemployment very quickly.”
Isely expects things to hover around that rate for a year or so.