March Jobs Report: Unemployment Surging To Record Levels; Black Workers Hardest Hit

By Dr. Bernard E. Anderson 
Professor Emeritus, the Wharton School, University of Pennsylvania and Senior Economic Advisor, National Urban league

 The nation is facing an employment crisis unlike any since the Great Depression. The economy is shedding jobs so quickly that the March Jobs Report – the first in almost a decade to show a net loss of jobs -- was outdated the moment the Bureau of Labor Statistics released it. 

The Labor Department’s official figure of 701,000 jobs lost, and the unemployment rate of 4.4 percent, reflects the pay period that includes the 12th of the month, so the massive job losses of the last two weeks are not included.   

Based on the stunning 10 million applications for unemployment compensation over the last two weeks, the real unemployment rate likely is closer to 10 percent. Last week’s record number of applications, 6.6 million, was five times higher than the previous record.

COVID-19, like other economic crises, will fall disproportionately on the Black community.  The old truism is more sadly appropriate than ever: when the economy catches a cold, Black people get pneumonia.  In an especially cruel twist of fate, COVID-19 struck at the time when Black workers were beginning to make gains in the labor market.  The Black unemployment rate had declined to an historic low, 5.6 %, and the perpetual 2:1 Black/white unemployment disparity tended down to 1.81.  That progress is likely to be reversed by current conditions.

Black workers are disproportionately concentrated in several employment sectors that are hardest hit by the crisis: leisure and hospitality, transportation and warehousing, and minimum wage jobs.  On the other hand, Black workers are also well represented in health care, the sector that should see an upward spurt in employment during the crisis.  At worst, the crisis might return Black workers to the employment and income disparities observed during the post- WW II decades up to the 2008-09 recession.

Further muddling the true state of unemployment is the $2.3 trillion CARES Act, which essentially pays businesses to keep idled workers on the payroll. For businesses that keep their workforces on the payroll through June, their “loans” becomes grants.  Even so, the unemployment rate could exceed 20 percent by summer.

Under the CARES Act, unemployment compensation was broadly expanded, giving relief to the states. Some business owners who were not eligible for unemployment compensation under the old law now can collect. The CARES Act is fiscal policy aimed at bolstering household income, increasing government spending for health care, and mitigating the impact of the health crisis on small businesses.  But if the virus is not contained soon, additional stimulus will be required to avoid a collapse of the U.S. economy.

The economy won’t recover by simply sending out checks.  Depressed people don’t “shop until they drop”.  Many will hoard much of the funds they receive.  Many businesses won’t ramp up operations quickly. They need demand.  If consumers remain uncertain, sales will lag. Unemployment will remain high – the foundation for tepid economic growth. That’s what happened in the mid-1930s in response to New Deal pump priming. The Great Depression, which started in 1930 after the stock market crash, didn’t end until the U.S. entered WW II.  That spurred war production and a sharp increase in manpower in the armed forces.

In short, the Black community is well advised to heed the words of the Prophet Isaiah in 54:2, “enlarge the place of  your tent; do not hold back; lengthen your cords and strengthen your stakes”.  Households and businesses must work hard to maximize their efforts, set realistic goals, stretch themselves to the limit, and leave time and energy for family and friends.