April jobs report: disastrous, but not as cataclysmic as feared; lower paid part time workers take the biggest hit

April jobs report: disastrous, but not as cataclysmic as feared; lower paid part time workers take the biggest hit

 

HEADLINES:
  • -20.5 million jobs lost. Between March and April this is a loss of 14.0% of all jobs since February.
  • U3 unemployment rate up 10.3% from 4.4% to 14.7%
  • U6 underemployment rate rose 14.1% from 8.7% to 22.8%
  • February and March were both revised downward, by -45,000 and -169,000 respectively, for a net decline of -214,000 jobs from previous reports.

Leading employment indicators of a slowdown or recession

 

I am still highlighting these because of their leading nature for the economy overall.  These were uniformly very negative:

  • the average manufacturing workweek fell -2.1 hours from 40.4 to 38.3 hours. This is one of the 10 components of the LEI and will be a big negative.
  • Manufacturing jobs fell by 1.3 million. Manufacturing has lost 1.364 million  jobs in the past 2 months.
  • construction jobs fell by -975,000. In the past 2 months 1.08 million construction jobs have been lost.
  • Residential construction jobs, which are even more leading,  declined by -117,600. In the past two months together there have been -119,200 lost jobs.
  • temporary jobs declined by -842,000.
  • the number of people unemployed for 5 weeks or less rose by 14.3 million.
  • Professional and business employment fell by -2.128 million, or -10.0% for the month.

Wages of non-managerial workers

 


Here are wages in the past year:

  • Average Hourly Earnings for Production and Nonsupervisory Personnel: ROSE $1.04 from $24.08 to $25.12 (up 4.3% in one month).
Aggregate hours and wages:
  • the index of aggregate hours worked for non-managerial workers fell by -16.9%. In the past 2 months combined this has fallen -18.4%.
  •  the index of aggregate payrolls for non-managerial workers fell by -13.3%. In the past 2 months combined this has fallen -14.4%.

Other significant data:

  • Full time jobs were responsible for -15.0 million of the losses
  • Part time jobs were responsible for -7.4 million of the losses.
  • The number of job holders who were part time for economic reasons increased   By 5.122 million to 10.887 million. The total increase since February has been  6.564 million.
  • Temporary layoffs were 18.063 million
  • Permanent layoffs were -544,000

SUMMARY

This report was generated from data during the week of April 13, after a solid month of coronavirus impact. Note that since then layoffs have continued although not at the rate of early in April. But it nevertheless sets a baseline against which further impacts, both  temporary and more permanent, from the crisis can be measured.

The declines, while awful, were less than what was suggested by initial jobless claims. My suspicion is that the losses will be revised even more worse. The unemployment rate is the worst wince World War 2, but has not yet reached Great Depression levels.

The most marginal employees were the worst affected. A disproportionate number of part time employees (about 1/3rd vs. constituting  17% of all employees in February) were laid off. Another 5 million of full time employees were demoted to part time work. As a result, hours declined more than wages.

On that score, because I have seen many reports of wage cuts, I have been very curious what this report would show about wages. What this report showed is that is has been lower wage workers who have taken the brunt of layoffs so far. Professional and business employment, by contrast, also declined substantially, but not as much as non-office work.

Because, relatively speaking, higher paid employees suffered fewer layoffs, average hourly wages actually increased by 4.3% just in this past month, dwarfing any effect of wage cuts.

Because the last thing I expect is a V-shaped quick recovery in jobs, I anticipate that this will set a baseline. Whenever layoffs level off, I expect we will see that wages have indeed suffered. But we might have to wait for the Q2 Employment Cost Index (which measures wages per job category) to find that out.

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