Job Loss in April Was Historic
Job Loss in April Was Historic; Historic Racial Disparity Only Worsened Under COVID-19
Written by Dr. Bernard A. Anderson, Professor Emeritus, the Wharton School, University of Pennsylvania and Senior Economic Advisor, National Urban League
The April Jobs Report was expected to be momentous, but the numbers still have the power to shock. The 14.7 percent unemployment rate reported by the Bureau of Labor Statistics is the highest since the peak of the Great Depression. At least 20.5 million people lost their jobs in April, bringing the 7-week total to about 33 million.
During the Great Depression, employment declined over several years following the stock market crash of October 1929 through 1933. During the Great Recession, 2007 to 09, “only” 8.5 million jobs were lost over a 14-month period. At no time in the nation’s history did nearly 33 million workers lose their jobs in 5 weeks!
As expected, black workers bore a disproportionate burden of job loss. They lost nearly 1.9 million jobs, with a 16.7 percent unemployment rate, a direct reflection of black worker concentration in industries and occupations that are hardest hit by lockdowns and social distancing.
Black workers are heavily concentrated in the leisure hospitality industry, in hourly paid jobs, and in occupations where they provide personal services requiring physical contact. That heightens both their risk of contracting the virus on the one hand and being laid off as a result of business shutdowns on the other.
Every industry and every size grouping is impacted by the shutdown: blue-collar, white-collar, and every collar in between. Government shutdowns and depressed tax revenue also generate government employment cuts, State and local governments are queried to balance their budget, even in times of crisis.
On the other hand, some companies and the government can maintain operations through stay-at-home scheduling. That mostly benefits white-collar, salaried workers. Some industries, including higher education, health care, and retail shopping have shifted to online production systems, including virtual communication.
Those adjustments have implications for the post-COVID-19 work world. Companies that emphasize digital services and E-commerce will make immediate and lasting gains. Among firms that will benefit at Microsoft, Zoom, and Netflix. Remote work will become commonplace. Employees who are working at home might demand a work lifestyle that allows them to spend more time with their family, readjusting their preference for work and leisure.
Black-owned businesses operate at a disadvantage in the best of times and are far more likely to fail in the worst of times. Most black-owned businesses are small, with fewer than 5 employees, limited capital, and a low margin of profit.
Black-owned small businesses were left behind in the first tranche of federal assistance for small businesses under the CARES Act. The second round of funding sets aside $346 billion for small businesses, with special eligibility requirements that should help more Black-owned businesses gain assistance. If carefully monitored, the supplementary support should increase the participation of Black-owned businesses.
Organizations like the National Bankers Association and National Association of Accountants are collaborating to achieve that goal.
The historic racial disparities in American economic life are exacerbated by the impact of Covid-19. Any public policy to address the economic impact of the virus must take racial disparity into account and include measures to address fairness and equal opportunity.