America’s labor market is hurting. But this jobs report won’t show the worst of it

The March jobs report, which will be released Friday, marks the beginning of the post-outbreak US labor market. But it won’t be able to tell us just how bad things are likely to get.

In recent weeks, companies have been laying off thousands of employees throughout the country and across industries — with the hospitality, leisure and travel sectors hit hardest as Americans stopped traveling or even leaving their homes.

Now the focus turns to the March jobs report, due Friday at 8:30 am ET, the first from the Bureau of Labor Statistics since COVID-19 began sweeping across America.

Economists polled by Refinitiv expect a drop of 100,000 jobs in March, bringing the 10-year stretch of continuous increases in monthly job numbers to a screeching halt. It also would push the unemployment rate to 3.8%.

In comparison, the economy added 273,000 jobs in February, when the unemployment rate stood at 3.5%, near a 50-year low.

The BLS surveys on which the jobs report is based were conducted in the second week in March, when the outbreak’s impact on American businesses and workers was still muted.

Since then, initial claims for unemployment benefits have skyrocketed. Over the past two weeks ended March 28, nearly 10 million people filed for unemployment benefits — 3.3 million Americans in the first week and 6.6 million in the following one. That’s 6% of the American workforce.

Both numbers were historical records at the time they came out. State labor departments are struggling to keep up with the onslaught of workers in need of government assistance.

The March report’s drop in jobs “will likely be dwarfed by job losses closer to 10 million in April, with the unemployment rate rising above 10%,” said economists at Citi in a note.

The April jobs report is due on May 8, and will be a far better measure of the pandemic’s impact on the labor market. Last week, James Bullard, president of the Federal Reserve of St. Louis, said the unemployment rate could soar as high as 30%.

“Sadly we’re only at the start of this process. There are around 18 million jobs, mostly in the service sector, at risk from social distancing,” said James McCann, senior global economist at Aberdeen Standard Investments, in emailed comments. McCann thinks unemployment could climb as high as 12% overall.