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People Already Facing Opportunity Barriers Hit Hardest by Massive April Job Losses

May 12, 2020 at 10:00 AM

Most of the jobs lost in the first two months of the sharp economic downturn — most of which came in April — have occurred in industries that pay low average wages. As a result, the deep downturn has hit hardest at workers who already faced barriers to economic opportunity, including Latino and Black workers, workers without a bachelor’s degree, and immigrants, our analysis shows.

All told, April’s jobs report shows the most massive job losses and highest unemployment since the 1930s, with job losses last month alone exceeding total job losses due to the Great Recession. The number of people with a job fell by 8.3 million between the December 2007 start of the Great Recession and the lowest subsequent level of employment, reached in December 2009. That’s less than 40 percent of the 22.4 million job losses in April alone. Similarly, employer payrolls shrank by 8.7 million jobs between December 2007 and February 2010, compared with 20.5 million in April.

Many of those who want a job are not classified as unemployed in the official statistics, so the job loss is even higher than the official figures suggest. In contrast to those who are temporarily furloughed and can reasonably expect to return to their jobs — who are supposed to be classified as unemployed but many of whom may not have been in the April report — many others can’t be sure that they’ll have a job to return to and can’t actively look for a new job because of social distancing requirements and shuttered businesses. They may well be classified as not in the labor force rather than unemployed. Besides the 23.1 million unemployed in April, another 9.9 million people who are classified as “not in the labor force” say they want a job.

Since February, the overall unemployment rate has jumped from 3.5 to 14.7 percent. The white rate rose 11.1 points to 14.2 percent, the Black or African American rate rose 10.9 points to 16.7 percent, the Hispanic or Latino rate rose 14.5 points to 18.9 percent, and the foreign-born rate rose 12.9 points to 16.5 percent (see first chart). These increases reflect both a shrinking labor force (down 8 million since February) and higher unemployment (up 25 million since February).

The monthly jobs report provides only limited information on the demographic characteristics of people who want a job but are not classified as unemployed. Since February, however, the number of people with a job has fallen 16 percent, driving a drop in the share of those 16 or older with a job (the employment-to-population ratio) of 9.8 points, from 61.1 to 51.3. Across demographic groups, white employment fell 16 percent, Black or African American employment fell 18 percent, and Hispanic or Latino employment and foreign-born employment each fell 21 percent (see second chart). The resulting white, Black or African American, Hispanic or Latino, and foreign-born employment-to-population ratios in April were 51.8, 48.8, 51.3, and 51.7, respectively.

To understand the impact of low-wage job losses, we ranked industries by pre-crisis average wages and divided that ranking into high-, middle-, and low-wage groups with roughly the same number of employees in each in February, according to employer survey data from the Bureau of Labor Statistics. We used these rankings to categorize the job loss data by industry released last week. Then, using the Census Bureau’s American Community Survey for 2018, we analyzed who works in the industries with the steepest job losses since February. The results of these analyses show that:

  • More than half of the 20 million private-sector jobs lost since February come from the lowest-paying group of industries.
  • Industries that pay low wages employ a disproportionate number of people who face barriers to economic opportunity. These include younger people, those with limited economic resources, those who do not have a four-year college degree, Latino and Black workers, and non-citizens.
  • Industries in the low-paid group have shed 28 percent of their jobs since February, twice the rate in the middle-paid third (12 percent) and nearly four times the rate in the highest-paid third (8 percent).
  • The three hardest-hit industries are all in the lowest-paid one-third of U.S. industries. They include personal and laundry services (where total employment has fallen 53 percent since February); clothing stores (down 59 percent); and amusements, gambling, and recreation (down 60 percent).

We plan to expand upon this analysis after the data that underlie the April jobs report become available later this week. But the bottom line is clear: people who were already facing barriers to economic opportunity are experiencing disproportionate job losses from the deep economic downturn. That underscores the urgent need for lawmakers to enact further measures to soften the financial blow to families and the economy.

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