Unemployment Update: Who’s Been Hit Hardest?
“Not every single broke and unemployed person needs a job; some need customers.” ~Mokokoma Mokhonoana, author
The nation’s unemployment rate jumped significantly to 14.7% in April, representing the largest percentage of unemployed workers since the Great Depression, when the rate reached 25% in 1933. Since the pandemic led to the temporary shutdowns of many businesses across the nation in March, more than 40 million people have filed new claims for unemployment benefits. And while in recent weeks the employment news has been more positive, the negative impact of spring’s surge will be felt for some time.
Making the COVID related spike in unemployment even more unique is that all sectors of the economy have been affected, along with all income and education levels. Data compiled by the Department of Labor show that employment fell across a wide spectrum of income and education levels in April 2020. Unemployment has historically been highest for those without a high school degree and for recent high school graduates, relative to those with bachelor and master’s degrees. But in the face of the pandemic, the unemployment rates across all education levels have more than quadrupled since the stay-at-home orders were first enacted.
What occupations were hardest hit during the pandemic?
While the data shows people across the country, from all backgrounds and industries, are being affected, specific sectors and groups have been particularly hard hit by stay-at-home orders. “The COVID-19 pandemic has caused immense economic damage, but the harm has not been evenly felt,” Gallup’s Principal Economist, Jonathan Rothwell writes. “Workers who provide in-person services have borne the brunt of layoffs and wage reductions.”
Gallup identified 10 occupations that have been impacted the most by the pandemic. We cover the top two here:
- Service Workers – 34% have been laid off, 41% have experienced reduced hours, and 43% have experienced reduced pay. This category includes such occupations as food servers, leisure and hospitality workers; any job that involves face-to-face interactions. Widespread temporary shutdowns of businesses made it impossible for many of these workers to perform their job duties.
- Entertainment, Arts, Media Workers – 25% have been laid off, 27% have experienced reduced hours, and 48% have experienced reduced pay. Theaters of all types have shut down which means cast and crew on stage and screen are no longer working. Nor are ticket takers, concession stand workers and others.
In response to the coronavirus, Congress has passed several measures exceeding $2 trillion in aid, collectively. While disbursal of that aid has hit some roadblocks — states are reporting issues handling the volume of unemployment requests, some U.S. taxpayers are struggling to get their relief money, and the first round of loan funding for small businesses quickly ran out of money — the government response has generally been “more aggressive” than in the past, said Tom Jackson, U.S. Regional Economist for IHS Markit.
Betsey Stevenson, a professor of public policy and economics at the University of Michigan, noted that many workers have been able to receive more money from unemployment benefits than they did while employed, due to extra government assistance during the pandemic. “In Michigan, more than half of workers are getting at least as much in unemployment insurance as they were getting in wages,” Stevenson said.
Of course, experts are hesitant to make too many predictions about the current economic condition, but several have noted the federal and state government responses have helped to limit economic insecurity and vulnerability. Still, much remains uncertain as states begin to ease stay-at-home restrictions.
During this unsettling period of anxiety and market volatility we have been diligently working with our clients to address any changes to their financial situations. Eventually, this too shall pass and we are dedicated to assisting you along the way. If you would like to revisit your financial plan or have any questions about how the repercussions of the pandemic could affect your portfolio, let’s be sure to discuss.
Important Note: This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Madison Wealth Management does not provide tax, legal or accounting advice. © Madison Wealth Management 2020