The Impact of COVID-19 on Unemployment in 2020
By: The Ascent Staff | Published June 24, 2020
Over 20 million Americans lost their jobs in April, driving the unemployment rate in the U.S. up to 14.7%. Unemployment like this hasn’t been seen since the Great Depression -- which means many more Americans are being forced to rely on what's in their savings accounts.
These employment changes didn't affect all Americans equally. Here we take a deep dive into the data to see who was most negatively impacted.
- The true unemployment rate for April is actually higher than the official number reported.
- Unemployment rates were higher in April in all 50 states, and 10 states had a higher unemployment rate than the U.S.
- Fifty-two metropolitan areas had an unemployment rate of less than 10%, while 12 metro areas had an unemployment rate of at least 25%.
- Minority workers and workers without a high school diploma faced the highest unemployment rates when looking at demographics.
- Nearly every industry lost jobs in April. One that didn’t: general merchandise stores.
The unemployment rate may be 5% higher than reported
Beginning with unemployment data for March, the U.S. Bureau of Labor Statistics (BLS) reported difficulties in collecting reliable data during a pandemic.
Since March, there has been a large number of participants who classify themselves as employed but absent from work. The suspicion is that these workers are absent from work due to COVID-19-related business closures and should therefore be counted as temporarily laid off.
If the workers suspected of being temporarily laid off due to COVID-19 were correctly identified, the unemployment rate would have been almost 5% higher than reported in April.
The BLS doesn't modify reported data, which is why the official unemployment rate for April stands at 14.7% rather than 19.5%.
9.9 million Americans are unemployed but want a job
The labor force is made up of two groups of individuals: those who are employed and those who are unemployed. To be included in the unemployment rate, you need to have actively looked for work during the four weeks prior to the survey or have been unavailable to take a job.
In April, the number of Americans who were unemployed but wanted a job was 9.9 million, nearly double the number from March.
A criticism of the unemployment rate is that it undercounts the true number of unemployed because it doesn't include people who are unemployed and not actively looking for work. Some people believe the labor force participation rate, or the labor force as a percent of the population, is more reliable than the unemployment rate because it does include those who are unemployed but have given up looking for work.
In April, the labor force participation rate fell to 60.2%, the lowest rate since January 1973.
If you look at the number of Americans employed as a percent of the population in the U.S., the employment-population ratio declined from 60% from March to 51.3% in April. For comparison, the employment-population ratio during the Great Recession ranged from 62.9% to 59.4%.
The total number of workers employed in the U.S. in April was 133.4 million, a decrease of 22.4 million from March.
To break down the labor force participation further, the number of Americans who usually work full-time declined by 15 million from March to April, and the number of Americans who usually work part-time declined by 7.4 million.
There were 10.9 million Americans working part-time who would have preferred to be working full-time -- nearly double the number from March.
Nevada's unemployment rate rose more than any other state
Nevada experienced the highest rise in unemployment from March with an increase of 21.3%, followed by Hawaii (19.9%) and Michigan (18.4%). Nevada, Michigan, and Hawaii also had the highest unemployment rates in April at 28.2%, 22.7%, and 22.3% respectively.
Here's what those increases in unemployment look like plotted on a map:
Why are Nevada and Michigan at the top of the list? It could be because they were two of the earliest states to impose restrictions, announcing the closure of non-essential businesses on March 17 and 23, respectively.
In addition to other restrictions, Hawaii implemented a mandatory self-quarantine for anyone entering the state on March 21, which crippled the tourism industry. The restrictions in Hawaii may have caused economic damage, but Hawaii continues to have one of the lowest COVID-19 case counts of any state in the U.S.
Conversely, Connecticut, Minnesota, and Nebraska had the lowest unemployment rates in April at 7.9%, 8.1%, and 8.3%, respectively. Connecticut and Minnesota announced the closure of non-essential businesses on March 20 and 25, respectively. However, their economies are less dependent on industries that have not been able to transition to remote work.
Nebraska, on the other hand, never issued a statewide shutdown.
Forty-three states recorded their all-time high unemployment rates in April. Before the COVID-19 pandemic hit the U.S. economy, 19 states recorded their all-time low unemployment rates in the first quarter of 2020.
Alaska, Idaho, Kansas, Maryland, North Dakota, Oklahoma, and Tennessee recorded record low unemployment rates in March followed by record-high unemployment rates in April.
Las Vegas-Henderson-Paradise had the highest unemployment rate for a large city
Kahului-Wailuku-Lahaina, HI had the highest unemployment rate in April at 35%, followed by Kokomo, IN (34.1%).
Looking at metro areas with a population greater than 1 million (as of the 2010 Census),
- Las Vegas-Henderson-Paradise, NV had the highest unemployment rate in April at 33.5%, followed by
- Detroit-Warren-Dearborn, MI (24.4%), and
- Cleveland-Elyria, OH (23.1%).
The leisure and hospitality industry was hardest hit across all metro areas, so it shouldn't come as a surprise that the tourism-heavy Las Vegas economy shed a lot of jobs with travel grinding to a halt in March.
Detroit was hit especially hard due to job losses in hospitality, construction, and manufacturing where automakers and their suppliers had to shut down production.
Cleveland was hit hard in hospitality and other services, which includes activities like equipment repair, religious, advocacy, and pet care professions.
The Logan, UT-ID metro area had the lowest unemployment rate in April at 6.2%, followed by Columbia, MO and Jefferson City, MO (both 6.5%).
Hartford-West Hartford-East Hartford, CT and Minneapolis-St. Paul-Bloomington, MN-WI had the lowest unemployment rates amongst metro areas with a population greater than 1 million with 7.5% and 9.2%, respectively.
These metro areas all had a higher percentage of their population employed in industries that were able to transition to remote work. Hartford residents primarily work in education and health services and government. The industries that dominate the Minneapolis economy are trade, transportation, and utilities, professional and business services, and education and health services.
Hispanic and black workers have the highest unemployment rate
Hispanic workers faced the highest unemployment rate, followed by Black workers, Asian workers, and white workers. Foreign-born workers saw a larger rise in unemployment than native-born workers.
More adult women lost their jobs from March to April than did adult men.
The unemployment rate for teenagers soared to 31.9% compared to 14.3 in March and 12.9% in April 2019.
More jobs were lost by Americans without a high school diploma than those with higher education. As the amount of education attained increased, the unemployment rate decreased. For example, workers with a high school diploma had an unemployment rate of 17.3% in April, an increase of 12.9% since March. Meanwhile, workers with a Bachelor’s degree or higher had an unemployment rate of 8.4% in April, an increase of 5.9% since March.
Recently hired Americans were more likely to lose their jobs than those who had been working longer. In April, 61.7% of Americans who were without a job had been employed less than five weeks before being let go. Only 8.4% of those who were unemployed in April had been previously employed for 15 weeks or longer.
Leisure and hospitality lost 3 times as many jobs as education and health services
The leisure and hospitality industry saw the largest decrease in jobs in April, followed by education and health services, professional and business services, and retail trade.
The specific industries with the largest reduction in jobs were
- food services and drinking places (-5.5 million);
- health care (-1.4 million);
- arts, entertainment, and recreation (-1.3 million); and
- durable goods manufacturing (-914,000).
With most of the country shut down due to COVID-19, it's no surprise that restaurants and entertainment venues laid off workers. Then, outbreaks in manufacturing plants caused closures there.
On the surface, maybe the most surprising is the loss of jobs in health care. However, it makes sense when you factor in all of the non-hospital health care office closures.
While most industries shed jobs, you may be able to guess one industry that didn't, based on the stockpiling of supplies we saw beginning in March. General merchandise stores (think warehouse clubs and supercenters) added 93,000 jobs in April and look to be continuing that trend in at least the short-term.
Find yourself without work? We have resources for you, no matter where you live
If you or someone you know has recently lost a job, here’s some information you may want to file for unemployment insurance. This is a joint state-federal program based on guidelines established by federal law, with each state administering their own benefits under state laws.
The U.S. Department of Labor produces an annual report comparing benefits across states. The last report published covered state laws in place on January 1, 2019.
Our Coronavirus Resources page provides more details on how to apply for unemployment in each state, as well as information on relief, travel, and personal finance. To find official unemployment benefits resources for your state, visit CareerOneStop.
Whatever you do, be sure to contact your state’s unemployment insurance program as soon as possible after becoming unemployed.
- U.S. Bureau of Labor Statistics (2020). “The Employment Situation – April 2020.”
- U.S. Bureau of Labor Statistics (1948). “Labor force, employment, and unemployment, 1929—39: estimating methods.”
- U.S. Bureau of Labor Statistics (2020). “State Employment and Unemployment – April 2020.”
- U.S. Bureau of Labor Statistics (2020). “Metropolitan Area Employment and Unemployment – April 2020.”
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