3.2 Million New Unemployment Claims as Layoffs Persist
3.2 Million New Unemployment Claims as Layoffs Persist
Layoffs continue to tear through the country, enveloping more industries even as states take tentative steps toward reopening the economy, with the government reporting on Thursday that an additional 3.2 million jobless claims were filed last week.
The weekly tallies have declined since reaching a peak of 6.9 million claims in late March, but the numbers are still stupefying: more than 33 million people have joined the unemployment rolls in seven weeks. In many states, more than a quarter of the work force is jobless.
Economists expect the monthly jobs report from the Labor Department, due Friday, to show that the unemployment rate in April was 15 percent or higher — a Depression-era level. The figure will almost certainly understate the damage.
Workers in the restaurant, travel, hospitality and retail industries were among the first to lose their jobs when the outbreak forced business shutdowns. But recent weeks brought scores of layoffs that affected engineers at Uber, advertising account executives at Omnicom, designers at Airbnb and other office employees.
“We’re still seeing a massive wave of layoffs taking over the U.S. economy,” said Gregory Daco, chief U.S. economist at Oxford Economics. He described the latest job losses as a “secondary wave of the coronavirus recession.”
“We don’t know what normal is going to look like,” said Martha Gimbel, an economist and a labor market expert at Schmidt Futures, a philanthropic initiative.
Many businesses, particularly small ones, may not survive, while others are likely to operate with reduced hours and staff. The job search site Indeed reports that postings are down nearly 40 percent from a year ago.
Now the question is how much of the economy’s tailspin can be offset by the patchwork efforts underway to revive everyday commerce — and how quickly.
In Indiana, more than half a million people have filed for unemployment benefits. But the state began loosening stay-at-home orders on Monday, and officials say they expect that many restaurant workers will be among the first to return to their jobs.
Utah began reopening businesses last Friday, so jobless claims filed this week “might be the first indication of some change,” Brooke Porter Coles, a spokeswoman for the Utah Department of Workforce Services, said in an email.
Alaska was one of the first to begin reopening its economy, allowing limited gatherings at graduations, day camps, gyms and other sites starting on April 24. But officials there are nervous about the summer, when 86 percent of the state’s visitors arrive, mostly on cruise ships. Several major cruise lines have canceled trips to Alaska through the end of the year, and many seasonal jobs are expected not to materialize.
Nonetheless, as restrictions are lifted, employees who refuse calls to return to work without “good cause” will lose access to unemployment benefits, state officials have said.
In addition to weighing the risk of exposure to the virus, some laid-off workers who are called back face the prospect of making less than they do on unemployment — including a temporary $600 weekly supplement that was enacted in a flurry of federal emergency legislation.
Michele Capamaggio, 38, said she returned to her retail job in a small North Carolina town on Wednesday to avoid being put on a flexible schedule or fired, losing access to her benefits. The store is limiting its open hours, so she is earning a fraction of the income she received from the government while furloughed.
“Basically, I had to go back,” Ms. Capamaggio said over direct messages on Twitter during a 30-minute work break. “Just hurts that I could be making $900 a week at home but will only make $500 a week busting my butt at work and putting myself at risk.”
Most Americans remain uneasy about reopening, with 67 percent saying they would be uncomfortable going into a store and 78 percent saying they would be uncomfortable eating at a restaurant, according to a survey that The Washington Post and the University of Maryland released Tuesday.
“States want to relaunch their economies, but they’re going to be doing so in an environment of high unemployment, reduced income and fear,” Mr. Daco of Oxford Economics said. “It’s not a matter of saying, ‘Hey, go out and spend.’ It’s a matter of people being able to and wanting to.”
He said many who managed to stay on a payroll had lower incomes. A lot of companies have scheduled them to work part time, reduced wages or deferred paychecks. Others are experimenting with job sharing.
Still, there are workers eager to return to their jobs.
Nicky Koutsoumbas, 19, earned more from government aid in April than she did in an average month working at a camera shop in Las Vegas, receiving $700 a week in unemployment benefits and $1,200 in stimulus money from the I.R.S. That helped pad her savings, which she hopes to use to move out of her parents’ house.
“I thought about the money — it crossed my mind,” she said when the shop asked her to return this week. “But I want life to go back to normal, to go to work, to be surrounded by my co-workers, to have something to do.”
But even as people like Ms. Koutsoumbas venture back into the work force, jobless claims keep pouring in. Unemployment offices have scrambled to hire more workers, upgrade computers and add call centers, but are still struggling to process the crush. Applicants complain they have trouble just getting into the system. Many who filed successfully for benefits say there are gaps in their payments, even if they certify their jobless status each week.
Checks have also been slow in coming.
Alexander Talley, 28, filed for unemployment benefits almost eight weeks ago, immediately after he was furloughed on March 13 from his serving job at a high-end restaurant in Palm Beach Gardens, Fla. He received nothing until April 28, when $1,300 in retroactive payments from the Florida Department of Economic Opportunity appeared in his bank account.
So far, only 43 percent of the more than one million Floridians filing verified claims have begun to receive benefits.
“It was absolutely terrible,” Mr. Talley said of filing his claim and waiting for the payment. He didn’t have a laptop, so he had to conduct the process on his iPhone. Often, he said, he felt lost. “The only information I was able to find to keep myself from going absolutely crazy was Twitter and Facebook.”
He began receiving the weekly $600 federal supplement last week.
His landlord threatened to end his month-to-month lease after he and his partner at the time were able to pay only a portion of April’s rent, so Mr. Talley’s father stepped in with the rest. His parents have sent Amazon and Publix gift cards and cash, and he has taken advantage of food giveaways of rice and pasta. A few weeks ago, he signed up for food stamps.
“We don’t live a luxurious, lavish lifestyle by any means, but we take care of our bills and we keep the fridge full,” Mr. Talley said. “We went from that to instantly not knowing where our income is coming from.”
Keeping their residents afloat while the economy is shut down is putting enormous strain on states. Nine, including California, Illinois, New York, Ohio and Texas, have borrowed from the federal government to reinforce their unemployment insurance trust funds. In the wake of the last recession, 36 states had to borrow $40 billion.
“States will be able to make these payments but will spend many years paying off these debts,” said Jared Walczak, director of state tax policy at the Tax Foundation. “Employers are going to have to pay higher taxes in the future” to repay those debts, which could be a drag during a recovery, he said.