Many people still employed have had their hours reduced. Others have suffered pay cuts. Some who’ve lost jobs won’t have been able to look for work amid widespread shutdowns and won’t even be counted as unemployed. A broader measure — the proportion of adults with jobs — could plunge to a record low.
“What we’re talking about here is pretty stunning,” said Diane Swonk, chief economist at Grant Thornton. “The shock is unique because the cause is unique. It’s such a different animal from anything that we’ve ever seen.”
Companies are still cutting jobs in the midst of a severe downturn, with the economy possibly shrinking at an unheard-of 40% annual rate in the April-June quarter. GE Aviation said it is cutting up to 13,000 jobs. Uber will shed 3,700 positions.
Even as the unemployment rate reaches dizzying heights, it will likely be held down by several factors. The Labor Department counts people as unemployed only if they’re actively searching for work. Yet many laid-off workers may be discouraged from looking for a new job given that so many non-essential businesses are closed. Others may stay home to protect their health. Still others may feel they have to stay with children who are home from school.
In addition, some workers on temporary layoff might be incorrectly classified as what the government calls “employed, but absent from work.” This can happen if employees assume they will return to their jobs once their employer reopens. In March, the Labor Department said that such misclassification by its survey takers — who have never before dealt with pandemic-related shutdowns — lowered the unemployment rate by a full percentage point.
Jason Faberman, senior economist at the Federal Reserve Bank of Chicago, says that including those workers, as well as millions who still have jobs but who have been reduced to part-time status, could raise a broader gauge of what’s called under-employment to 25% or higher on Friday.
Alexander Bick and Adam Blandin, economists at Arizona State University and Virginia Commonwealth University, respectively, have conducted two surveys since the virus outbreak began that mirror the government’s monthly survey that it uses to calculate the unemployment rate. They conclude that the proportion of American adults in their prime working years — 25 through 54 — who have jobs, fell to just 60.4% in April, the lowest on record.
They also noted that millions of Americans have had their hours cut in April.
“We have never had such low hours” worked, on average, for each employed person, Bick said.
<u>The Associated Press contributed to this report.</u>