Applicants for unemployment benefits totaled 6.6 million last week as the coronavirus outbreak continued to ravage nearly every corner of the U.S. economy, the Labor Department reported Thursday.
The speed and scale of the job losses is without precedent. In just two weeks, the pandemic has left nearly 10 million Americans out of work, more than in the worst months of the last recession. Until last month, the worst week for unemployment filings was 695,000 in 1982.
"What usually takes months or quarters to happen in a recession is happening in a matter of weeks," said Michelle Meyer, chief U.S. economist for Bank of America Merrill Lynch.
Even the figures on jobless claims are an incomplete reflection of how fully the pandemic has brought commerce to a halt. Many people who have lost jobs or income did not initially qualify for benefits. Others, encountering state unemployment offices that were overwhelmed by the deluge of claimants, were unsuccessful in filing.
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Congress has stepped in with a $2 trillion emergency outlay that aims to keep both families and businesses solvent. But economists say the aid can, at best, limit the damage -- and may not even be enough to do that, as the tendrils of the pandemic reach deeper into the U.S. economy.
The effect was initially concentrated in tourism, hospitality and related industries. But now the pain is spreading much more widely. The Institute for Supply Management said Wednesday that the manufacturing sector, which had recently begun to recover from last year's trade war, was contracting again. Data from employment site ZipRecruiter shows a steep drop in job postings even in industries usually insulated from recessions, like education and health care.
Law firms, technology startups and other white-collar employers that were initially able to keep workers on payrolls and let them work from home are now laying people off as revenue dries up.
Even ZipRecruiter is not immune -- the company cut hundreds of jobs this week as the steep drop in job postings cut into its business.
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"People are being way too sanguine about a lot of the white-collar industries," said Martha Gimbel, an economist and labor market expert at Schmidt Futures, a philanthropic initiative. "This thing is going to come for us all."
Employers are slashing their payrolls to try to stay afloat because their revenue has collapsed, especially at restaurants, hotels, gyms, movie theaters and other venues that depend on face-to-face interaction. Auto sales have sunk, and factories have closed.
Roughly 90% of the U.S. population is now under stay-at-home orders, which have been imposed by most states. This trend has intensified pressure on businesses, most of which face rent, loans and other bills that must be paid.
The reversal in the job market has been dizzying. Four weeks ago, weekly unemployment claims amounted to only 211,000, near a 50-year low. Since then, they have jumped 30-fold.
"Four years of jobs gains have evaporated in the span of two weeks," said Daniel Zhao, an economist at the jobs website Glassdoor.
Mercedes Addington lost her job on March 23 at a company that sells trucking parts and supplies in Kansas City, Kan. Even though the business was considered "essential" during the crisis and orders were still coming in, the company laid off most of its employees.
Addington was on the phone with a customer placing an order when she saw everyone around her packing up their things. She put the phone briefly on mute and asked what was going on and a colleague told her they had all been fired.
"I am very frustrated and scared. I have bills to pay soon and I was counting on this money to get by," Addington said. "If I don't risk it and go back to work somewhere, I'm not sure that I'll still have a home to come back to."
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Requests for jobless aid soared in all 50 states last week. In California, nearly 900,000 people sought benefits, almost four times the previous week's figure, and equivalent to 5% of the state's workforce.
If laid-off workers cannot pay their bills, there could be a cascade of further layoffs and business failures. The greater the damage, the less chance of a quick economic rebound once the health crisis eases.
"The deeper the layoffs get, the longer the recovery will take," said Julia Pollak, a labor economist for ZipRecruiter.
The congressional legislation passed last week was meant, in part, to prevent that cascade. The government will provide businesses with low-interest loans -- which in some cases could turn into grants -- to help them avoid layoffs and keep the lights on. And the law temporarily expanded the unemployment insurance system to cover more workers and offer them more generous benefits.
The economic rescue package also added $600 a week in jobless aid, on top of what recipients receive from their states. This will enable many lower-income workers to manage their expenses and even increase their purchasing power and support the economy.
It also makes many more people eligible for jobless aid, including the self-employed, contractors, and "gig economy" workers such as Uber and Lyft drivers.
"The huge volume of new claims suggests that at least some states are being as inclusive and expansive as possible in defining who qualifies," said Rebecca Dixon, executive director of the National Employment Law Project. "That's important."
Kathryn Lickteig, a cook in Kansas City, signed up for unemployment compensation last week after the city shut down dine-in restaurants. She is hopeful that the extra $600 will help her ride out the shutdown instead of having to look for an interim job.
"It has eased my mind so much," she said. "I do not have to actively go out and expose myself to the public and possibly get sick. I can stay home now and do my part in social distancing."
But even before the eligibility expansion, the unemployment system was strained by the surge in job losses. State unemployment offices have reported record levels of calls and online inquiries, and jobless workers have struggled to get through to file claims.
Today, the government will issue the March jobs report, which economists forecast will show a loss of 145,000 jobs. That report is based on data gathered mostly before the spike in layoffs began two weeks ago. Though relatively small, that loss would still end a record-long 113-month streak of job growth.
Some employers are trying to maintain ties to the workers they're letting go so they can more quickly rehire them once the viral outbreak has passed.
Several large retail chains are furloughing workers -- a form of temporary job cut that often maintains health insurance -- rather than laying them off. And many small businesses, too, are keeping in touch with workers they have dismissed.
Retailers have furloughed nearly 1 million workers this week during an unprecedented shutdown of shopping in America, according to data compiled by Bloomberg.
Macy's, Neiman Marcus Group, Ross Stores Inc. are among the latest major chains to announce that they are halting pay for their workers while maintaining benefits. Nonessential retail stores are closed across much of the U.S. in a bid to halt the spread of coronavirus. The total of furloughed workers now stands at about 900,000.
"Anyone who's trying to lay off workers is already thinking about how they can bring them back," said Jania Bailey, chief executive officer of FranNet, a consultancy that works with franchise companies.
One of them is Tracy True, who said she is keeping in touch at least once a week with the 10 furloughed employees of her clothing store in Vestavia, Ala..
"As soon as we're given the all clear," True said, "we'll be back."
Information for this article was contributed by Ben Casselman and Patricia Cohen of The New York Times; by Christopher Rugaber of The Associated Press; by Kim Bhasin of Bloomberg News; and by Heather Long of The Washington Post.
A Section on 04/03/2020