Another measure of the labor market preferred by some economists is the employment-population ratio, which divides the number of Americans by the number of employed people. There, the U.S. also suffered its largest monthly decline on record, falling to 51.3 percent, the lowest number in the history of the statistic. It’s conceivable that next month’s report will, for the first time in history, show that the majority of Americans are not officially employed.
“There is no good news in this jobs report, but it’s important to remember that these are not normal times, and these are not normal job losses,” Adam Ozimek, the chief economist at Upwork, told me. “The task for policy makers is to ensure that when the economy opens back up, these 20.5 million jobs and the companies that employed them have not disappeared. If even a fraction of them do not, a major recession will be all but unavoidable.”
This crisis represents a unique and existential threat to America’s small businesses. Almost half of all job losses in April occurred in leisure and hospitality, where small businesses are overrepresented in places such as restaurants and stores. The decimation of small business would have several long-lasting implications. It would destroy jobs that would be unlikely to return quickly, delaying a recovery and creating a crisis of economically and psychologically ruinous long-term unemployment. It would trigger an extinction-level event for entrepreneurs, who might be less likely to take a risk in the future. And restaurants, cafés, theaters, community centers, and specialty shops that embody the civic memory of a neighborhood would be wiped off the face of the street. This would be a first-order economic tragedy, but it would also be a social calamity.
Annie Lowrey: The small-business die-off is here
How do we stop one horrible month from becoming a 10-year depression? The most obvious solution to bring the global pandemic to a halt would be a medical deus ex machina, like effective antiviral treatments or accelerated vaccine development and manufacturing. But pharmaceutical science works on a multiyear time horizon, and the survival of millions of American businesses and tens of millions of jobs is endangered right now.
The White House and most Republicans seem to think that this crisis will be solved by loudly announcing the reopening of the economy. But this is a dangerous misunderstanding of what’s actually driving the recession: It’s the pandemic, stupid. The shutdowns themselves had “little or no impact on economic activity” according to an analysis by a team of economists at Harvard. Several papers now show that the decline in spending and employment in most cases occurred before states officially shut down their economy. Governments didn’t close state economies on their own, and they can’t open the economies on their own, either.