Private payrolls drop by historic 20.2M in April: ADP

Yahoo Finance’s Kristin Myers joins Zack Guzman to discuss how the coronavirus is impacting private payrolls in April and expectations for Friday's jobs report.

Video Transcript

ZACK GUZMAN: We did, however, get the update from ADP in terms of private payrolls and unemployment there. And that update was not optimistic in terms of what we will be getting on Friday. For that story, I want to get to Kristin Myers, who has the details from the ADP report. Kristin?

KRISTIN MYERS: Hey, Zack. So as you mentioned, not at all optimistic, the numbers that we got out of that ADP jobs report today. Actually painting a pretty bleak picture when it comes to the state of the economy, in terms of how we're dealing with unemployment, and employment in general. So to talk about that private payrolls number-- we saw a loss from March to April-- I want to be very clear, just one month-- 20.2 million jobs lost in just that month. Again, that's the US non-farm private payroll sector.

Now businesses of all sizes-- we know, we've been discussing it a lot-- have been greatly impacted over the last couple of weeks. But large companies-- that's 500 employees and more-- have really been slammed over the last month. What we're seeing there is just about 9 million jobs lost just from large companies alone.

Now if want to look at sectors here-- leading the way there, we've got the service providing sector or industry. Over 16 million jobs lost there, Zack. I mean, so that is a really hard-hit sector, industry. And it comes as no surprise.

Leisure, hospitality really coming in second, but pretty far behind when we compare it to that 16 million number. We've got about 8.6 million job losses there. So this really is painting a picture. As you're mentioning, we're getting that jobs report out on Friday. Really should be painting a picture for you here, and for everyone at home, really just what we should be expecting on Friday.

We've been talking a lot about the numbers. We've got 30 million on the unemployment rolls already so far. That number could really increase.

I remember when we were talking just the other day about the Penn Wharton Budget Model. It actually projected roughly 14 to 18 million jobs being lost if all the states didn't reopen their economies, which as we know, they're not. We're seeing partial reopenings around the country, but many states are still on lockdown.

I'm looking at the map here. We still have California shut down and restricted, Nevada and New York, of course. And then, of course, we also have those partial reopening of like Texas, of Georgia, Louisiana, for example. Those economies are starting to reopen.

And the reason for that being, Zack, is that the economy right now is in a way on its knees. We have a lot of people out of work. We have states like California, potentially now Illinois and Connecticut, that have to borrow money from the federal government to pay people out for their unemployment benefits-- their state unemployment benefits, I should say.

And this is really causing people, or rather officials, to question what should the policies be going forward? Should we be reopening the states? What should the next stimulus packages look like?

So we're seeing governors of states, as I was just mentioning, deciding whether to reopen, to do a partial reopen, or to stay in lockdown over the next coming weeks and months as they start to see their own coronavirus curves start to flatten, hopefully, and be on the decline. But we're also seeing just out of the White House and on a policy level from government officials deciding what to do going forward.

So out of the White House, the priorities there seem to be stimulus in the form of tax cuts-- suspending payroll taxes for everyday people. So we're going to see a payroll tax holiday, so to speak, potentially. We're also seeing tax cuts for businesses and investors.

And the idea there out of the White House is really trying to spur growth instead of providing direct support. Now this shouldn't fly, I don't think too well with Democrats, which have really been pushing hard for direct relief to folks-- particularly to women, to minorities, to communities of color, and also to those frontline workers that are also immigrants, both undocumented and documented immigrants.

So we're going to have to see going forward in the next coming days, I should say, and weeks as those stimulus debates really start to pick up, exactly how government officials are going to decide to really get the economy back on its feet again. Because, I mean, 30 million-- if we're going to be adding another 20 million people there, I mean, we're going to start to see states really, really start to struggle soon.

ZACK GUZMAN: Absolutely. And as we mentioned on yesterday's show, California being the first to tap those federal dollars. And it seems as if eight states likely to follow there. But, of course, once we get that official unemployment number update this Friday, expected to be 16%, that could add a little bit more urgency to some of the states grappling there. But Kristin Myers, thank you for bringing us that.