Job losses approach Depression territory as election looms

The economic damage of the coronavirus was laid bare Friday when the Labor Department reported the worst job losses since the Great Depression, jolting the race for the White House less than six months before Election Day.

The pandemic and the desperate scramble to contain it have wiped out at least 21.4 million U.S. jobs in just two months, including a record-breaking loss of 20.5 million jobs in April alone.

The unemployment rate jumped from a 50-year low of 3.5 percent in February to 14.7 percent in April, the highest since record-keeping began in 1948.

“It’s the biggest and fastest economic change that our country’s ever experienced,” said Aaron Sojourner, a labor economist at the University of Minnesota and member of the White House Council of Economic Advisers from 2016 to 2017.

Economists warn that even the record high unemployment numbers do not capture the full extent of the damage to the labor market.

The jobless rate would have been almost 5 percentage points higher if not for an error in classifying roughly 8.1 million workers who were forced to stay at home as unemployed, the Labor Department said. An additional 9 million people left the workforce last month, and a broader gauge of unemployment that includes underemployed workers and those able to work but not currently seeking jobs rose to 22.8 percent in April.

The staggering economic toll of COVID-19 is ramping up pressure on government officials at every level to ease the pain and stop the bleeding. More than 30 states have begun loosening social distancing restrictions and business closures despite warnings from public health officials.

President Trump has been the chief proponent of reopening an economy that was once seen as his strongest argument for reelection.

“People want to come back. I think everybody in this room realizes we have to come back; otherwise, you have a broken country,” Trump said in remarks Friday before a meeting with congressional Republicans at the White House.

Earlier in the day, speaking to Fox News, the president downplayed the unemployment figures, calling them “fully expected” and saying there was “no surprise.”

But Democrats, including presumptive presidential nominee Joe Biden, have blamed Trump’s response to the pandemic for exacerbating the economic damage of COVID-19. In a Friday speech, Biden charged that Trump “utterly failed to prepare us for this pandemic and delayed in taking the necessary steps to safeguard our nation”

“COVID-19 caused massive economic challenges, but this crisis hit harder and will last longer because Donald Trump spent the last three years undermining the core pillars of our economic strength,” Biden said.

Trump has been eager to move past the pandemic and recapture some of the economic strength that bolstered his pitch for another term. Republican lawmakers have also grown increasingly impatient with the length of coronavirus restrictions on businesses.

“These lockdowns cannot continue indefinitely. We need to be careful, but practical,” said Sen. Mike Lee (R-Utah), chairman of the Joint Economic Committee, in a Friday statement.

“A nation-wide approach may not make the most sense. Where possible, American society should return to normal as soon as is safe,” he added.

Even so, many workers are finding it difficult to strike a balance between their finances, which are pushing them back to work, and exposure to a deadly virus.

The Ohio Department of Job and Family Services has encouraged businesses to report employees who are legally allowed to return to work but are unwilling to do so. Several other states have also threatened to pull benefits from employees who don’t come back to work.

Caitlin Rivers, a senior scholar at the Johns Hopkins Center for Health Security, warned lawmakers Thursday that not a single state has seen COVID-19 cases decline at the pace needed to pull back on social distancing.

That quandary frightens both economists and public health officials, who broadly agree that a premature loosening of restrictions could fuel a surge in cases that will plunge the country deeper into crisis.

“It’s no longer an option for us to just go about things the way we used to,” Sojourner said, adding that reopening the economy should not depend on “which business owner is most desperate for cash” and “which worker’s family is most desperate for cash and health insurance.”

“If we’re allowing that to drive the decisions, we’re going to end up making the public health crisis worse,” he added.

Democrats have proposed extending the expanded unemployment benefits enacted through the record $2.2 trillion Coronavirus Aid, Relief and Economic Security Act signed into law on March 27. Earlier this week, Speaker Nancy Pelosi (D-Calif.) backed automatic triggers for enhanced unemployment benefits in the next coronavirus relief bill.

Rep. Don Beyer (D-Va.) joined Democratic Sens. Michael Bennet (Colo) and Jack Reed (R.I.) on Tuesday to introduce a bill that would create such automatic stabilizers amid calls from progressive economists to ensure a stronger safety net.

“Money spent on continuing crucial unemployment insurance provisions will help avoid a prolonged period of high unemployment that will do far more serious and persistent damage to the economy,” wrote economic research director Josh Bivens and policy director Heidi Shierholz of the left-leaning Economic Policy Institute in a Monday post.

Such provisions could very well find their way into the next economic rescue package being crafted by Democrats, with aspirations toward a modern New Deal.

Republicans, however, are hitting the brakes on further legislation at this time.

The White House and GOP lawmakers have called for a pause, arguing more time is needed to measure the impact of $3 trillion in relief funding already passed. Trump’s top economic adviser, Larry Kudlow, said Friday that negotiations on another legislative package are unlikely this month.

But other economists and policymakers have warned of a deeper, longer recession if Washington doesn’t act sooner rather than later to alleviate the pain and chart a path forward.

Trump said Friday, after the jobs report came out, that he’s content to wait before proceeding with congressional negotiations.

 “We’re in no rush,” Trump said Friday. “We want to see what they have, but I can’t say that we’re in a rush.”