(CN) — Ending a record decade-long streak of employment growth, the U.S. economy lost 701,000 jobs in March as the coronavirus pandemic triggered a nationwide shutdown.
Last month marked the first time since September 2010 that the economy lost more jobs than it gained. The unemployment rate moved up from a 50-year low of 3.5% to 4.4%, according to a Labor Department report released Friday.
Elise Gould, senior economist at the nonprofit think tank Economic Policy Institute, said the massive loss represents “just the leading edge of the deep recession we are certainly now in,” noting the report only reflects the state of the labor market through mid-March.
“We won’t see the devastating job losses or large reductions in hours from Covid-19 in the employment data until the next report on May 8,” she said. “Then we will see what’s happened across the economy in terms of not only total employment, but also important labor market measures such an unemployment, underemployment, and labor force participation across and within demographic groups such as age, gender, race and ethnicity, and education.”
Friday’s jobs report, in addition to the news the day before that 6.6 million people applied for unemployment insurance benefits over the last week, means lawmakers must act fast to limit the economic damage caused by the outbreak, Gould said.
The Economic Policy Institute estimates that nearly 20 million jobs could be lost by the summer — wiping out nearly all the gains made in the last decade.
“Congress should now turn to crafting another relief package that includes a large and much-needed infusion of state and local aid, continues cash assistance to households beyond a single payment, and extends the unemployment insurance provisions in the earlier bill with explicit triggers-off tied to economic conditions,” Gould said.
The leisure and hospitality sector – including restaurants and bars — was hit hardest with 459,000 job losses, making up about two-thirds of the overall downturn. States across the country have ordered those establishments to only serve customers via drive-thru and pick-up orders, and some have shut their doors entirely.
The retail industry lost 46,000 jobs while manufacturing lost 18,000. Employers also cut 29,000 construction jobs and 43,000 positions in health care — including 17,000 in dentist offices.
Federal governments jobs rose by 18,000, mostly due to the hiring of 17,000 workers for the 2020 census.
Almost all Americans have been ordered to stay at home under various versions of statewide shutdown orders, forcing widespread layoffs across the economy. Experts say the unemployment rate could climb as high as 15% in the coming months — the highest level since the 1930s.
Nick Bunker, an economist at Indeed Hiring Lab, called Friday’s jobs numbers “shockingly bad and an understatement of the damage already done to the U.S. economy.”
“If this is an indication of what was happening before the full force of the crisis hit, then it will be hard to come up with the words to describe the numbers in future months,” he said.
The huge losses last month are in stark contrast to the revised 275,000 jobs added in February, before the Covid-19 pandemic strangled the American economy.
In March, average hourly wages rose by 3.1% over the past year and currently stand at $28.62 an hour.
“Since many of the workers who had already lost their jobs by mid-March are in lower wage sectors,” Gould said, “stronger wage growth reflects the dropping of lower wage jobs from the total, which results in higher average wages for the remaining jobs.”
In response to the pandemic, lawmakers passed a $2.2 trillion economic stimulus package last week that includes direct payments to most Americans as well as hundreds of billions of dollars for small businesses and large companies.
The next phase of Washington’s response to the crisis appears to be an infrastructure plan aimed at rebuilding America’s roads and bridges while creating thousands of jobs. House Speaker Nancy Pelosi, D-Calif., hopes to pass the proposed $770 billion measure by the end of the month.