U.S. employment falls 20.5 million in April, unemployment rate rises to 14.7%. And it’s probably worse than that.

The worst jobs report in memory was released today by the Bureau of Labor Statistics.

Total nonfarm payroll employment fell by 20.5 million in April, and the unemployment rate rose to 14.7 percent, the U.S. Bureau of Labor Statistics reported today. The changes in these measures reflect the effects of the coronavirus (COVID-19) pandemic and efforts to contain it. Employment fell sharply in all major industry sectors, with particularly heavy job losses in leisure and hospitality.

These two charts from the press release show just how dramatic the employment collapse has been.

There’s a lot of detailed information in the release, but also a significant methodological caution.

This news release presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry…

Data collection for both surveys was affected by the coronavirus (COVID-19) pandemic. The household survey is generally collected through in-person and telephone interviews, but personal interviews were not conducted for the safety of interviewers and respondents. The household survey response rate, at 70 percent, was about 13 percentage points lower than in months prior to the pandemic. In the establishment survey, approximately one-fifth of the data is collected at four regional data collection centers. Although these centers were closed, about half of the interviewers at these centers worked remotely to collect data by telephone. Additionally, BLS encouraged businesses to report electronically. The collection rate for the establishment survey in April was 74.9 percent, essentially unchanged from collection rates prior to the pandemic.

In the establishment survey, workers who are paid by their employer for all or any part of the pay period including the 12th of the month are counted as employed, even if they were not actually at their jobs. Workers who are temporarily or permanently absent from their jobs and are not being paid are not counted as employed, even if they are continuing to receive benefits.

FiveThirtyEight makes a strong case that the awful numbers understate current conditions. We’d encourage you to read the analysis. Here’s a short takeout.

There’s always a significant amount of uncertainty in one of the topline numbers — the 20.5 million jobs that were lost — but the scale of the damage this month means that this month’s estimate could be off by tens or even hundreds of thousands of jobs. Take the initial revision for payroll losses in March. Last month, the BLS reported that 701,000 jobs were lost. In this month’s report, though, it’s adjusted that to 870,000. And the April job losses are much, much larger, which means this month’s report could be underestimating the magnitude of the damage by a significant amount.

Also,

It’s important, too, to look not just at how many people are out of work, but which sectors of the economy have been hit hardest and which are continuing to do well. “There’s a real question about how many industries can weather this moment,” said Martha Gimbel, an economist at Schmidt Futures, a philanthropic initiative. In March, the job losses were overwhelmingly concentrated in the leisure and hospitality industry, which includes bars and restaurants. This month, those industries were hit hardest again: leisure and hospitality lost 7.7 million jobs, a decline of 47 percent.

But the overall job losses were more spread out than they were last month, signaling that the effects of the shutdown are already rippling into other industries. For instance, there were sharp declines in the health care sector, mainly concentrated in dentists’ and private doctors’ offices, many of which were forced to close or lost a significant amount of business due to the pandemic. Retail, professional and business services — including temporary help services and services to businesses and dwellings — and manufacturing also lost hundreds of thousands of jobs.

In its methodological discussion, the BLS noted,

If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical April) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been almost 5 percentage points higher than reported (on a not seasonally adjusted basis).

Bill McBride at Calculated Risk writes,

The April report was the worst monthly report ever in terms of job losses and the increase in the unemployment rate…

In addition, the job losses are ongoing. There will be millions more job losses in May, and when the PPP ends – after eight weeks – many of those workers will also become unemployed. It is very likely that the unemployment rate at the peak will exceed the worst of the Great Depression (25%).

From the Associated Press,

The collapse of the job market has occurred with stunning speed. As recently as February, the unemployment rate was a five-decade low of 3.5%, and employers had added jobs for a record 113 months. In March, the unemployment rate was just 4.4%.

Recovery may be slow.

But economists increasingly worry that it will take years to recover all the jobs lost. The nonpartisan Congressional Budget Office expects the jobless rate to be 9.5% by the end of 2021.

Or not so slow, depending…

A paper by economists at the San Francisco Federal Reserve estimates that under an optimistic scenario that assumes shutdowns are lifted quickly, the unemployment rate could fall back to about 4% by mid-2021.

But if shutdowns recur and hiring revives more slowly, the jobless rate could remain in double-digits until the end of 2021, the San Francisco Fed economists predict.

Bleak.