CFE Analysis

The Year of the Pink Slip

How bad a year was 2020?

During the year, the United States economy lost a net 9.4 million jobs — 6.2% of the jobs it had at the end of 2019. That is by far the largest annual decline since 1950. 

The years that included the financial crisis more than a decade ago had seen the largest losses of jobs, with a 3.7% decline in 2009 following a 2.6% fall in 2008. The year just ended was a little worse than the two of them combined.

Those figures are for civilian non-agricultural jobs, and compare seasonally adjusted figures for December of each year to the same figure from a year earlier. 

The Covid-19 pandemic was the major cause of the decline, of course, and some of the lost jobs will return as various companies and industries are able to restart operations this year. But it still reflects how painful the losses were. 

The losses were harshest for women, who lost 6.8% of their jobs compared to 5.5% for men. Some industries that employ many women, such as restaurants and hotels, were among the worst hit.

The chart shows the only 15 years since 1950 when total employment fell. Political partisans may notice only one of them had a Democrat in the White House. That was 2009, the first year of Barack Obama’s first term. Democrats were President in 30 of the 56 years in which employment rose.

The December numbers released Friday will be revised several times as better data becomes available, which means the 2020 figure will likely change, although not enough to affect its ranking.

The 2020 decline was not the worst since the government began reporting the figures, in 1939. The decline was a bit smaller than the 6.3% fall reported in 1945. But the reasons for that year’s figure were far different. Then the end of World War II caused the government and defense contractors to need fewer workers. These figures are for civilian employees, excluding those serving in the armed forces. The 1945 decline would presumably be larger if it included soldiers and sailors being discharged

In 1946, as industry ramped up to produce peacetime goods, total employment rose 10.9%, an increase far above any seen since, and the postwar boom began.