Record 22 million have sought US jobless aid since virus

The wave of layoffs that has engulfed the U.S. economy since the coronavirus struck forced 5.2 million more people to seek unemployment benefits last week, the government reported Thursday.

Posted: Apr 16, 2020 12:53 PM
Updated: Apr 16, 2020 1:04 PM

WASHINGTON (AP) — The wave of layoffs that has engulfed the U.S. economy since the coronavirus struck forced 5.2 million more people to seek unemployment benefits last week, the government reported Thursday.

Roughly 22 million have now sought jobless benefits in the past month — easily the worst stretch of U.S. job losses on record. It means that roughly one in seven workers have lost their jobs in that time.

The grim figures point to an economy that is tumbling into what appears to be a calamitous recession, the worst in decades. The nation’s output could shrink by roughly 10.5% before it starts to rebound, according to Ryan Sweet, an economist at Moody’s Analytics. That would be more than double the contraction that occurred during the 2008-2009 recession, which was the worst downturn since the Great Depression of the 1930s.

All businesses deemed nonessential have been closed in nearly every state. Deep job losses have been inflicted across nearly every industry. Some economists say the unemployment rate could reach as high as 20% in April, which would be the highest rate since the Depression. By comparison, unemployment never topped 10% during the Great Recession.

Layoffs are spreading well beyond service industries like hotels, restaurants, retail stores and entertainment, which have absorbed the brunt of the job cuts, into white collar professional occupations, including software programmers, legal assistants and sales people. Workers in other occupations, like construction, are also suffering.

Up to 50 million jobs are vulnerable to coronavirus-related layoffs, economists say — about one-third of all positions in the United States. That figure is based on a calculation of jobs that are deemed non-essential by state and federal governments and that cannot be done from home.

“This crisis combines the scale of a national economic downturn with the pace of a natural disaster,” said Daniel Zhao, senior economist at Glassdoor. “And that’s really unprecedented in American economic history.”

All told, nearly 12 million people are now receiving unemployment checks, essentially matching the peak reached in January 2010, shortly after the Great Recession officially ended. That figure is less than the number of applicants in part because it lags behind the number of first-time jobless claims figure by a week. And many people who apply for unemployment aid are turned down and don’t actually receive checks.

Many of the jobless whose applications for unemployment aid haven’t been accepted are likely self-employed and gig workers. The government’s $2.2 trillion economic relief package provides jobless benefits to those groups for the first time. But most states have to set up new computer systems to process those claims — a process that could take weeks in some cases.

The rescue package also established a $350 billion loan program to small businesses, with the loans forgiven if companies retain or rehire their workers. But Michelle Meyer, chief U.S. economist at Bank of America, said that so far there’s little evidence that the program has stemmed job losses. Meyer said she thought some companies may feel that laying off workers is a better option, given that the government has added $600 to the weekly unemployment aid that states provide. The total jobless benefit could replace all or even more than a low-income worker’s normal paycheck.

On Thursday, the small-business aid program ran out of money after more than 1.6 million loans were approved, though it isn’t clear that much of the money has yet been disbursed. Members of Congress are seeking a deal for additional funding.

In recent days, economic reports have contributed to a bleak economic picture. Sales at stores and restaurants fell by the most on record in March, the government said Wednesday. U.S. industrial output fell by the most since 1946. And home building plunged 22% in March from the previous month.

Retailers and other service companies keep cutting jobs. The electronics chain Best Buy said this week that it will furlough 51,000 of its hourly employees, including nearly all its part-time workers. Royal Caribbean Cruises will cut one-quarter of its 5,000 corporate employees.

But now, job losses are not only deepening but also broadening, a trend that is sure to continue the longer the economic downturn lasts. The software company Toast, which works with the restaurant industry, last week cut half its workforce — 1,300 people — citing a dizzying drop in restaurant sales. Yelp, the customer review site, cut 1,000 jobs. Groupon, the online discount company, shed 2,800.

Some law firms have been forced to reduce their staffs, too. One victim was Fern Weinbaum, 68, who was furloughed last month from her job as a legal secretary at a small law firm in Manhattan. Weinbaum still hasn’t received her unemployment benefits, which she is counting on to help pay her monthly rent of $1,100.

“I am very anxious, I need the money,” she said. “It’s very frustrating.”

The delays in many states in processing applications for contractors and gig workers is a problem for people like Celia Rocha, 44, who lost what she called her “dream job” as a studio assistant to an artist in Los Angeles after California ordered all non-essential businesses to close last month. Rocha, who had worked as a contractor for three years, said she applied for benefits but was inexplicably turned down. When she has called the state’s phone line to ask questions, she has received only a recording directing her to the website.

“It’s really frustrating that you can’t talk to someone and have your questions answered,” Rocha said. “There’s no information about when we can apply for this” on the state’s website.

On Wednesday, California said it was intending to have a website for the self-employed and contractors active by Monday.

___

AP Writers Anne D’Innocenzio in New York and Susan Haigh in Hartford, Connecticut, contributed to this report

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