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Here’s Where the Jobs Crisis Is Hitting Hardest

Dental offices have been hit particularly hard. Photo: Ulrich Baumgarten/U. Baumgarten via Getty Images

In March, American dental offices employed 959,000 workers. By April, 503,000 of those workers had lost their jobs, according to data released Friday from the Bureau of Labor Statistics.

The April jobs report is a bloodbath, with 20.5 million payroll jobs — over 13 percent of all the jobs in America — lost in a single month. (And the report only took stock of the employment picture as of mid-April, so it didn’t capture the ongoing job loss since then.) But the effects across the economy are highly uneven. Employment in some industries was decimated, while other areas saw much more-modest declines. One major industry — general-merchandise retailers, like Walmart and Costco — actually gained employment. Workers’ average hourly earnings rose to $30.01 last month, a nearly 5 percent increase over a month earlier, which is not the good news it sounds like. This increase mostly reflects the fact that employees who lost jobs were disproportionately lower-paid, meaning the average wage of people who still have jobs went up.

The worst job losses hit in sectors where you might expect. Leisure and hospitality services accounted for about three-eighths of the total carnage, losing 7.6 million out of a previous 16.4 million jobs. These losses were spread across subsectors: About 40 percent of jobs in accommodation vanished, along with 40 percent in performing arts and sports, nearly half at eating and drinking places and 60 percent in amusement, gambling, and recreation. Museums and historical sites held up better, losing only a quarter of employment.

The “personal and laundry services” sector lost approximately 800,000 of its 1.5 million jobs. The largest occupational category within this sector is hairdressers, hairstylists and cosmetologists.

About 13.5 percent of jobs in retail trade disappeared last month, in line with job loss across the broader economy. But if you look at employment within retail subsectors, you can see what parts of the consumer economy remain robust and which are largely shut down. Nearly 60 percent of jobs at clothing and clothing-accessories stores were lost in April, along with almost half at furniture and home-furnishing stores and more than a third at sporting goods, hobby, book, and music stores. On the other hand, even as Americans stayed home and drove many fewer miles, gas stations stayed open and only cut 5 percent of jobs. Electronic-store employment also fell about 5 percent — people increasingly staying at home had little reason to buy clothing, but they needed electronics for home-office setups and/or entertainment — and food-and-beverage-store employment fell 1 percent. Employment at general-merchandise retailers rose 5 percent.

Similarly, within the health-care sector, the report tells us which economic activities are still going forward and which are being postponed. Dental offices, as I noted, cut more than half of their jobs because nonurgent medical procedures are being postponed across the country and most dental-office activity is not urgent. (I, personally, was scheduled for a dental cleaning in March, which I do not expect to have done very soon.) Physicians’ offices are less disrupted than dentists’ offices, but they still cut nearly 10 percent of jobs. Even hospitals cut employment by almost 3 percent, as they canceled elective surgeries and faced a cash crunch related to the loss of income from those elective surgeries.

As grim as this report is, it was apparently less grim than many market participants feared, and so the Dow Jones Industrial Average opened up more than 200 points following its release. The biggest question about the report is what’s going to happen to all the workers who lost jobs as the economy begins to reopen and return toward normal. The optimistic scenario is that reopening the economy will look like reopening a summer resort town in the late spring: Everything has been boarded up for a few months, and yet the workers and the managers and the customers come back on schedule and things look pretty much like they did a year ago. Many of the newly jobless workers are on furlough from their prior employers — in some cases, as with workers furloughed from Macy’s and Disney, even still receiving health benefits from those employers — so they have a clear destination to return to. And the government has taken extensive steps to ensure that economic participants will have the financial resources to consume once they feel it is safe to do so. While states’ issuance of unemployment checks has been slow-going, it’s getting better, and the enhancement of unemployment in the CARES Act means many households, especially at the lower end of the income spectrum, will see more than 100 percent of their income lost in the crisis replaced, putting them in a relatively strong position to go out and consume again once there are more goods and services to buy safely, if they are able to get their jobs back in the next few months.

But just because some governments begin allowing businesses to reopen, it does not mean those businesses will have access to the workers and customers they need for reopening to make financial sense. Businesses that do return are likely to do so gradually, with limited staffing to align with limited customer demand and/or capacity constraints that are necessary to comply with virus-mitigation measures. And if jurisdictions reopen without truly having the coronavirus under sufficient control — or even if they are simply unlucky — the attempt at getting back to normalcy may not take, with customers and workers being too fearful to come out and governments needing to reimpose restrictions that were once lifted. The longer reopening takes, the more likely it is that businesses or workers will make the choice that it is better to sever the employment relationship and look toward new options than to wait and try to restart what they were doing before. And that will require a slow and economically costly process of re-matching between workers and businesspeople, involving new relationships and possibly new skills. Most problematically, many firms are likely to be unable to persist financially through this crisis and therefore won’t reopen even if there would be plenty of demand for their products and services when conditions are better. Workers at those firms will need to find new jobs, which may be a slow and difficult process.

Another worrying sign in this jobs report is a significant loss in state and local government employment. Unlike the federal government, states and localities generally cannot run significant budget deficits. Coronavirus-relief legislation has provided extensive funding to states to compensate them for costs associated with fighting the virus but has not materially addressed the severe losses of tax revenues that they face as workers lose income (and pay less income tax) and consumers shop less (and pay less sales tax). States and localities have been waiting and hoping for additional federal aid to smooth out these losses and save them from needing to sharply cut back on public services and lay off many more workers. If that aid is not forthcoming, there will be another shoe to drop: much more severe job losses in the public sector, which will further crimp consumer demand and slow the recovery of the private sector.

Here’s Where the Jobs Crisis Is Hitting Hardest