Dramatic Stock Rise Over-shadows Record 55 Million Rise In Jobless Claims (#GotBitcoin?)
More than 3 million workers file for jobless benefits as coronavirus hits the economy. Dramatic Stock Rise Over-shadows Record 55 Million Rise In Jobless Claims (#GotBitcoin?)
The number of Americans filing for claims was nearly five times the previous record high. The surge was for the week ended March 21 and could rise further. Pennsylvania, Ohio and California were among 10 states reporting more than 100,000 claims, leaving unemployment systems overloaded.
Millions of U.S. businesses have announced layoffs or furloughs as their cash flows dry up. Several state and local authorities have ordered nonessential businesses to close in response to the coronavirus pandemic, bringing the great American job machine to a sudden halt.
Until March, U.S. employers added jobs for a record 113 straight months, causing payrolls to grow by 22 million. In the process, millions of people—including low-wage hourly laborers, disabled people, minorities, former inmates and others—found work.
The unemployment rate, which was 3.5% in February, had been at levels not seen since the 1960s. Wages started to accelerate in the last two years after lagging during the early stages of the expansion that followed the 2007-09 recession.
The strong labor market kept the U.S. economy humming for a decade—straight through a European debt crisis, Japan’s tsunami, a Chinese economic slowdown, a domestic manufacturing slump, volatile energy prices and a global trade war.
Millions of Americans, already fearful the new coronavirus could infect them or their families, now have two new worries: When will the job machine start again? And can they hold out until it does? Much will depend on how long the virus crisis lasts and whether federal and state unemployment insurance programs can adapt quickly to fill the immense gaps building in household cash flows until the virus recedes.
“We haven’t seen this big of a free fall before,” said Keith Hall, former director of the Congressional Budget Office and adviser to President George W. Bush. “Not even during the Depression…It’s really like an instant Great Recession.”
Mr. Hall said the jobless rate in the coming months could approach the 20% that some economists estimate occurred during the Depression. Northern Trust Chief Economist Carl Tannenbaum said if half the workers in hard-hit industries, such as restaurants, retail and personal services, are laid off the unemployment rate could rise 10 percentage points, to more than 13%. That is well above the post World War II record high of 10.8% at the end of the 1981-82 recession.
The number of jobless claims filed last week in Pennsylvania increased by 363,469 to 378,908 with 5.8% of the labor force seeking assistance.
Those figures didn’t capture everyone seeking assistance. Denzel Buie said he was stymied by crashing websites and unending phone-call waits when attempting to file a claim.
The 25-year-old was laid off from his union construction job Friday when local authorities shut down projects, including the welding and wall building he was doing at Swarthmore College in Pennsylvania. At the start of last week, the state ordered restaurants and bars to shut down.
The increase in claims last week was 17 times higher than the previous record one-week jump. In recessions claims gradually rise, allowing states to shift resources. Now, more claims were filed last week than for all of April 2009, the peak month for job loss during the 2007-2009 recession.
Mr. Buie said his layoff was a serious blow to his family, which includes a 3-year-old daughter. His wife, a secretary, was laid off a week earlier when the allergist’s office where she worked suspended operations.
“It’s not like I can go get another job,” Mr. Buie said. “It was a massive layoff—the entire construction industry in Philadelphia shut down. All I can do is stay home and pray I don’t get sick, because if I go to the hospital, that’s another bill.”
Ohio Gov. Mike DeWine mandated bars and restaurants to close dine-in services on Sunday, March 15. The state had 187,784 new jobless claims last week.
Job losses swept across the nation hitting states with varying mandates for social distancing. California, with tough restrictions, had 186,809, Texas, with less, had 155,657 and New Jersey, had 155,454.
In Rhode Island, 6.4% of the state’s labor force—nearly 1 in 15 workers—sought benefits, the highest share in the country. The state’s governor announced that, effective Tuesday, March 17, there would be “no on-premise food consumption” at restaurants, bars and coffee shops.
In Nevada nearly 6% filed claims. The initial wave of layoffs hit the hospitality, restaurant and tourism industries, the lifeblood of Las Vegas, the hardest. Casinos closed March 17.
The claims data likely don’t fully capture the severity of the layoffs. Workers aren’t required to file for claims the week they are let go. If a person is ill or busy caring for children or family members, they may put off filing for benefits, especially if the process requires a lengthy wait.
New York state, one of the areas hardest hit, had a relatively small level of claims for its population, less than 1% of its labor force.
In addition, more companies laid off workers this week as additional states ordered nonessential businesses to close.
Economists are divided on whether the downturn is short-term disruption or the start of a prolonged recession.
If the nation can get back to business quickly, restaurants, airlines, hotels, and others might quickly hire back the workers they have let go or furloughed in the shock.
With support from government-support programs, including the $2 trillion rescue program being considered in Congress, the jobless rate could theoretically surge and then recede. That is what happened in the 1980s, unlike the long periods of high unemployment in the 1930s and after the 2007-09 financial crisis.
But there are other scenarios. If infection and death rates associated with the coronavirus grow untamed, social distancing—steps to stem the spread of the virus such as keeping 6 feet apart, avoiding nonessential travel and gatherings of more than 10 people—could prolong the economic pain.
Even if the federal government moves away from its push for social distancing—as President Trump has suggested he is considering—states, cities, businesses and individuals could still decide they have no other choice.
The cash crunch now hitting businesses and households also could induce them to pull back further, starting a downward cycle that feeds on itself. All of that could dent business and household confidence, leaving long-lasting economic scars.
Getting back to work thus hangs on how quickly the virus itself is tamed.
“This is happening with dizzying speed, and therein lies my concern,” Northern Trust’s Mr. Tannenbaum said. “The shock and awe from the forthcoming employment numbers could be damaging to the nation’s psyche.”
Large corporations were initially reluctant to lay off workers aggressively, in part because they expected the virus to pass quickly and didn’t want to part with employees. Finding and keeping good workers in what was a tight labor market had been hard.
Now, pressures to fire people are building beyond the industries most directly exposed. General Electric Co. ’s jet-engine business said Monday it would lay off about 10% of its U.S. workforce, or about 2,500 employees. Medical offices not tied to treating the virus, including dentists and physical therapists, are shutting and letting workers go. Those providing in-person services, such as barbers, massage therapists and housecleaners, are seeing business evaporate.
The job market isn’t uniformly dark, in part because the repercussions of the crisis are spreading unevenly. Walmart Inc., Amazon.com Inc., and CVS Health Corp. are among about a dozen large companies that have said they are seeking to hire nearly 500,000 workers in coming weeks. The companies are managing a surge in demand for food and other household products that have taxed their stores and warehouses.
“We are hiring,” says Jeff Stevenson, who runs a wine marketing business that focuses on remote sales called VinoPRO Inc. “We literally had our single largest sales day of the year last Wednesday.”
Though those mini-booms are encouraging, economists don’t expect them to fully counter the pressures millions of other employers face to lay off workers as sales and cash flows dry up.
Joe Olivo is president of Perfect Communications, a small New Jersey commercial printing company that produces direct mailings for universities and nonprofits and promotional material for retail businesses. In February, business was booming. Revenue was up 28% from a year earlier and he was looking to add five more people to his payroll. Under pressure to retain workers and respond to rising minimum wages in the state, he pushed up pay between 2.5% and 11% for his workforce in 2019.
Then, in a matter of days, orders dropped 70%. He thought he would draw in $10 million in revenue this year; now he sees around $5.8 million, much of it already made. That won’t be enough to cover his costs. He has already let five part-time workers go and cut shifts to about 30 hours a week for the other 50. He told his banks he won’t be able to make payments this month.
“Right now the lenders are saying, ‘We get it,’ ” he said. But without cash flow, difficult decisions loom about whether to let more people go. “I am working hard not to do that.”
Jacqueline Martin, a massage therapist based in Albuquerque, N.M., typically gives up to 16 massages a week, charging at least $50 for a one-hour session. She hasn’t worked for much of this month and isn’t eligible for unemployment insurance under existing programs.
“Massage is touch, and that’s how this is spreading,” Ms. Martin said. “I can’t Skype my massages.”
Among many other measures, Congress is considering expanding coverage to include self-employed people like Ms. Martin.
Mr. Hall, the former CBO director, is among the economists who expect the economy to recover at a slower pace than it contracts. But he pointed to a reason for hope: The labor market has defied expectations in the recent past, drawing a larger share of Americans into the workforce than many expected and reaching low unemployment levels few thought possible.
“We kept getting fooled,” he said. “We kept thinking the labor market couldn’t keep improving, but it did. Let’s hope that the surge in labor-force participation is a permanent one and once we get through this those people will be back to work.”
U.S. Jobless Claims Top 20 Million Since Start of Shutdowns
Another 5.2 million Americans filed for unemployment benefits in latest week.
More than 22 million workers have sought unemployment benefits during a month of coronavirus-related shutdowns, a record-shattering total that reflects a broad shock for the U.S. labor market.
Another 5.2 million Americans filed for unemployment benefits last week, the Labor Department said on Thursday, adding to three prior weeks in which millions of people filed for jobless claims. Since mid-March, about 13% of the labor force has sought jobless assistance, far outpacing any prior four-week stretch on record. Last week’s total decreased from figures that approached 7 million in the prior two weeks, suggesting the wave of workers filing for benefits has passed its peak.
“Claims are now falling, having peaked…two weeks ago,” said Ian Shepherdson, economist at Pantheon Macroeconomics. “But the weekly level is still almost unfathomably high.” He said Google search data for “file for unemployment” suggests claims will fall again this week.
Jobless claims are applications by laid-off workers for unemployment-insurance payments—not all of which are approved. Each claim is made by an individual person and that person can’t file another claim until their previous request was either rejected or their benefits expire.
Before the pandemic, the largest number of Americans to ask for unemployment benefits in a four-week stretch was 2.7 million, or 2.4% of the labor force, in the fall of 1982.
U.S. stock markets wavered between gains and losses on Thursday, with the Dow Jones Industrial Average recently down 0.8%. The S&P 500 was 0.2% lower and the Nasdaq Composite up by 0.6%.
Thursday’s report also showed 12 million Americans received unemployment payments in the week ended April 4, a record. That is up from 7.4 million the prior week, which exceeded the highest level set in the 2007-09 recession.
Many Americans are receiving enhanced larger jobless-benefit payments and additional workers are eligible to receive unemployment insurance under the federal stimulus package signed into law in March. The expansion of benefits could make it more attractive for workers to apply, keeping claims at very high levels.
Laid-off workers in 29 states should be receiving the extra $600 in weekly benefits on top of state payments, Labor Secretary Eugene Scalia said Wednesday. Other states will take longer to deliver the larger payments because they are relying on decades-old computer equipment. States will owe catch-up payments to workers backdating to the first week of April.
Mr. Scalia established new criteria to ensure that certain gig-economy workers who can’t find work would be eligible for expanded unemployment benefits under the stimulus bill, according to a Labor Department spokesperson, making many ride-share workers eligible for assistance. Before the benefits expansion, 88% of workers were covered by unemployment insurance.
Economists estimate the bulk of job losses occurred in industries that were ordered by government officials to close, including restaurants, hotels and mall retailers. States including Georgia, Michigan and Texas indicated in Thursday’s report that recent layoffs were occurring in accommodation, food service and retail sectors, but also noted job loss in manufacturing, health care, administrative support and waste-management jobs. Thursday’s report doesn’t give specific figures by industry.
Gregory Daco, chief U.S. economist of Oxford Economics, projects that in the April jobs report, 8 million to 10 million jobs could be lost in other sectors—including lawyers, architects, consultants and other business-service providers, among outpatient health-care employees and in information sectors, such as media and telecommunications. The level of job destruction among just those mainly white-collar industries could be on par with the total jobs lost in the 2007-09 recession, he said.
Google’s parent company, Alphabet Inc., said it would slow hiring as a result of the coronavirus pandemic.
In a memo to employees on Wednesday, Alphabet CEO Sundar Pichai said the company would “significantly slow down the pace of hiring, while maintaining momentum in a small number of strategic areas. He added, “Just like the 2008 financial crisis, the entire global economy is hurting, and Google and Alphabet are not immune.”
The government’s claims report doesn’t specify if layoffs were temporary or permanent, but other data suggests many workers expect to return to their jobs when allowed to do so. Nearly half of workers who reported themselves as newly unemployed in March said they were on a temporary layoff, up from 29% in February. In the states of Colorado and Washington, which require large employers to specify whether layoffs are temporary or permanent, 70% this year have been temporary. In the prior recession, less than 1% were.
More than one in five workers in Hawaii, Michigan and Rhode Island have filed for jobless benefits in the past four weeks, the highest rates of filing in the country.
The most claims were filed in California, 2.8 million, representing 14.5% of the state’s labor force. The next-highest totals were in Pennsylvania at 1.3 million, or 19.8% of workers, and New York at 1.2 million, or 12.4% of the labor force. The relatively low share filing in New York could suggest more claims are coming from one of the hardest-hit states.
Rhode Island may provide an early glimpse of the effect of the stimulus package on claims. The state received about 37,000 applications for unemployment benefits from April 7 through last Saturday, 22,000 of which were from workers applying for expanded assistance under the emergency federal relief.
As claims have increased, many Americans say they are unable to navigate overwhelmed systems.
Sonya Stalnaker, of Winter Garden, Fla., lost her job as a painter at a resort on March 16 and said she has been trying to apply for unemployment benefits without success. After filling out an online application, Ms. Stalnaker received a message directing her to call to verify her identity. Despite multiple attempts, she hasn’t been able to reach a state Labor Department representative.
Ms. Stalnaker, 48 years old, said she depleted her savings while waiting to get through the system. She is seeking relief on her cellphone bills and hoping to keep her utilities running.
“I’m just trying to keep my head above water and not drown,” she said, adding that she has turned to her church for financial support. “It’s just pinching pennies right now.”
How long weekly jobless claims remain in the multimillions will give some insight into the degree to which job loss is spilling beyond initial, hard-hit industries to other sectors of the economy.
“It might take until mid-May or longer before we see claims declining” to much lower levels because additional workers are eligible for benefits and others are still waiting for help, University of Michigan labor economist Daniil Manaenkov said. “It could take until we see the economy partially reopen.”
Persistently high claims would indicate layoffs spreading across industries and the economy will need a prolonged period, perhaps years, to regain lost jobs. However, the high level of people seeking claims doesn’t mean monthly employment data will change by the same magnitude.
That is because some of those seeking benefits in recent weeks may have been jobless before the pandemic and are only now seeking aid. Others filing claims might not be counted as unemployed under a statistical definition that requires a survey respondent to be actively seeking work. Laid-off workers may instead be counted as out of the labor force, perhaps because they aren’t looking for work because of fear of illness or because of family-care responsibilities.
Typically, payrolls don’t drop as much as claims rise, because often people who lose a job will make a claim and find a new position within a few weeks, Mr. Sheperdson said. But this month, he expects most of the people who have made claims to hit the payroll number, because any hiring occurring now is trivial compared with the scale of the losses.
Navy Federal Credit Union economist Robert Frick said the claims figures suggest the unemployment rate in April will be in the 18%-to-20% range. That would easily be the highest level on records back to the 1940s, but would mean the jobless rate stays below estimates of peak unemployment during the Great Depression, before comparable data was kept.
David Smith, a graphic designer in Wilmington, Del., is among those who expect to return to work but are facing hardship in the interim. He has tried unsuccessfully to apply for unemployment benefits online over the past two weeks.
“It’s all online and there’s nobody there to answer the phone, and I just got automated emails back,” the 42-year-old said. Mr. Smith also has yet to receive a federal stimulus check.
The uncertainty caused him to be more careful with spending. “I have to say no a little more,” he said, for instance if his children ask him to buy a new videogame. “I’m getting a little concerned because unemployment’s not working. It’s also out of my hands. We have to do what’s safe.”
Millions of U.S. Workers Filed for Unemployment Benefits Last Week
Workers have filed more than 26 million claims since start of coronavirus shutdowns, but pace of new applications tapered in most states last week.
About 4.4 million Americans sought unemployment benefits last week as the coronavirus pandemic continued to hurt the labor market, though the rapid pace of layoffs appeared to be easing.
The millions of Americans who sought unemployment benefits last week continued a historic labor-market decline, bringing the total claims for the past five weeks to more than 26 million, the Labor Department said Thursday. Jobless claims, which are laid-off workers’ applications for unemployment insurance payments, had reached nearly seven million at the end of March as the coronavirus led to widespread business closures.
“There was an immediate wave of layoffs as a result of the crisis,” said Daniel Zhao, senior economist at Glassdoor. “Even though people may have been laid off weeks ago, we might only be seeing the impact now in the numbers.”
Forty-three states reported claims declined from a week earlier, though they remained at high levels. While California continued to see the most claims, with 530,000, that marked a 19% decline from the previous week. New claims in New York and Missouri fell 50% versus the week earlier.
A few states that had previously reported smaller filing rates noted sharp rises last week. Initial claims in West Virginia and Connecticut more than tripled. Florida’s volume increased 180% as more than 500,000 workers filed for unemployment.
U.S. stocks wavered Thursday after the data showed weekly unemployment claims had eased slightly. The Dow Jones Industrial Average added 39 points, or less than 0.2%, paring gains of more than 400 points earlier in the session. The S&P 500 and Nasdaq Composite ended little changed.
The U.S. unemployment data came as surveys of purchasing managers showed business activity in the U.S., Europe and Japan collapsed in April during global restrictions on movement and social interaction aimed at limiting the spread of the virus.
The surveys showed drops in services activity that were unprecedented in the history of the reports, even in the wake of the global financial crisis. Manufacturing activity is also contracting, though not quite as severely.
Some economists expect a fresh surge of claims in future weeks as workers who were previously unable to file because of backlogged state systems are counted, and as states begin to accept applications from people who are newly eligible under a $2 trillion stimulus package, such as independent contractors and self-employed individuals.
“These unbelievable numbers are masking a lot of the true demand, and that’s what we’re going to continue to see play out over the next month,” said Maria Flynn, president of Jobs for the Future, a workforce development nonprofit.
Washington state’s claims decreased sharply last week, according to Thursday’s report. But the state said it saw more unemployment-benefits applications on Saturday night through Sunday than during its biggest week on record, as it launched a “massive update” to its computer systems to start processing expanded unemployment benefits.
Gig-economy workers, self-employed people and those seeking part-time work were among those newly eligible to apply as the state began implementing a key provision of the law.
Rhode Island also experienced a sharp increase in claims when it began accepting applications included in the expanded unemployment assistance, offering a glimpse at the potential impact of the stimulus bill on claims.
The number of workers receiving unemployment insurance continues to rise as states process applications. In the week that ended April 11, a record 16 million Americans received unemployment payments, up from 12 million the previous week. The data date back to 1967. So-called continuing claims are reported with a one-week lag.
Dennis Fithian, 49 years old, of Detroit, was able to register for unemployment insurance benefits relatively quickly after he was laid off from his job at sports radio station 97.1 The Ticket in early April.
Despite high claims volume in Michigan, Mr. Fithian said his wife was persistent in helping him apply online. “She would get up at 2 or 3 in the morning and keep hitting ‘refresh’ until she was able to get in,” he said.
View From The States
Most states reported fewer new applications for unemployment benefits last week, with a few states noting sharp increases that had previously seen smaller rates.
The couple’s biggest immediate concern is losing his health insurance at the end of April—a worry made even more acute by the fact that his 14-year-old daughter suffers from a rare, incurable disease. “I mostly worked for the love of the job. It wasn’t for the great money, so we’ve always budgeted. But just looking at the summer ahead, the health insurance—that’s going to get really pricey,” he said.
The steepest employment losses appeared to occur between mid- and late March, when the economy shed about 13 million jobs, largely in leisure and hospitality, according to Federal Reserve research. By comparison, about 9 million jobs were lost over the course of the 2007-9 recession.
Oxford Economics estimates that the pandemic will result in 27.9 million lost jobs, including between 8 million and 10 million in industries such as manufacturing and construction that most states haven’t ordered to close.
The federal stimulus package was designed to blunt the economic damage from the coronavirus. Labor Secretary Eugene Scalia said Thursday 44 states were paying recipients an additional $600 a week in enhanced unemployment benefits on top of usual state payments.
The extra $600, which is paid in addition to regular unemployment benefits, could lead to a larger weekly paycheck than many lower-wage workers would typically earn. For others, like Joshua Price, of Syracuse, N.Y., it amounts to much less than they were previously making.
Mr. Price, 46, began receiving unemployment benefits in late March after he lost his homebound math teaching job due to government-mandated public school closures.
He gets a total of $1,104 in weekly benefits, including the extra $600 a week, which works out to 56% of his previous income.
Mr. Price normally tries to save $750 a week, but with tax bills and insurance bills, he is now saving very little.
“I don’t believe I should have to go into my savings to pay bills when it’s a government-mandated work stoppage,” Mr. Price said.
Over 3.8 Million Americans Filed For Jobless Benefits Last Week As States Struggle With Coronavirus Claims Surge
Archaic technology hamstrings systems for processing benefits; ‘not really acceptable now’.
Nearly four million people filed for unemployment benefits last week, bringing total claims to more than 30 million as states struggle to process an unprecedented wave triggered by the coronavirus pandemic.
The latest weekly report on U.S. jobless claims showed that 12.4% of the U.S. workforce was covered by unemployment benefits in the April 18 week, a record dating back to the early 1970s. The surge in unemployment-insurance claims started six weeks ago when shutdowns to contain the virus became widespread.
Americans also cut back on spending by 7.5% in March, the biggest monthly decline on record back to 1959, and saw personal income fall by 2%, the largest decrease since 2013. Stock markets slipped on the data’s accounting of economic damage from the virus.
A day after pledging to maintain aid for the U.S. economy, the Federal Reserve said it would expand a $600 billion lending effort aimed at small and mid-sized businesses. State and local governments also continued work to reopen economies, with Los Angeles saying it would offer free virus testing to all residents and Florida detailing its plan to relax stay-at-home orders and let businesses reopen.
As shutdowns to contain the pandemic hit in March, Connecticut was more than halfway through a multiyear modernization of its unemployment insurance system when a sudden surge in unemployment claims caused the state website that accepts applications to freeze.
Labor department personnel worked all night trying to figure out what had gone wrong and realized the website could only handle up to 8,300 applications in a single day, a fraction of what residents were now trying to submit. After fixing that problem, they tried to figure out what might break next, said Danté Bartolomeo, deputy commissioner of Connecticut’s labor department.
“You can’t look ahead to see what will fail and what won’t fail,” she said.
The onslaught of claims would have been a challenge under any circumstance for states to manage.
In this case, the challenge is proving even greater because many states’ unemployment benefit systems are hamstrung by archaic, decades-old technology. Coping with relief legislation that provides an additional $600 a week in benefits and making independent contractors such as Uber drivers eligible has created additional strains.
In the years before the pandemic, computers that process claims were functioning, so upgrading technology wasn’t a priority, state labor department officials say. That has changed, though.
“All that old-school technology just completely doesn’t work anymore,” said Scott Jensen, director of the Rhode Island labor department. “This current crisis is making the weaknesses of these systems very concrete.”
The consequences are now materializing. Hundreds of thousands of Americans are still waiting to receive unemployment payments at a time when many are falling behind on bills and can’t quickly find new jobs due to widespread business shutdowns.
The administrative problems mean the official tally of claims is almost certainly an undercount. About 600,000 people tried to apply for benefits in the week ended April 23 but were unable to file due to long waits or other reasons, according to Alexander Bick, an economics professor at Arizona State University, and Adam Blandin, an economics professor at Virginia Commonwealth University, based on a survey they conducted with about 3,000 individuals.
In the same week nearly five million people had applied but were awaiting a decision on their eligibility and about 2.6 million successful claimants were still waiting for their first payment, they estimated.
There are signs that the volume of initial claims is starting to ease. Last week’s national level of claims was down 44% from the peak of 6.9 million touched in the week ended March 28. Claims in 46 states have declined since the last full week of March.
Two exceptions are Georgia and Florida, where initial claims have been elevated in recent weeks. In Florida, 939,000 claims have been filed in the past two weeks, the most in the nation. The Walt Disney World theme park in Orlando, Fla., furloughed workers who were previously being paid last week. In Georgia, more than 5% of the state’s labor force sought unemployment benefits last week, the highest share in the country.
For now, front-line administrators in state labor departments, who have become a lifeline to millions of furloughed workers, are working to keep up with the demand for benefits as phone lines are jammed up and websites are inundated.
New Jersey’s labor department has distributed hundreds of laptops so more claims specialists can process applications from home. It has also upgraded its processing systems and expanded its website’s capacity. The state put out a request for volunteers who know how to work with the decades-old Cobol computer coding used by legacy systems in New Jersey and elsewhere.
“Literally, we have systems that are 40-plus years old,” Gov. Phil Murphy, a Democrat, said in April. “There will be lots of postmortems, and one of them on our list will be, ‘How the heck did we get here where we literally needed Cobol programmers?’”
New Jersey resident Amber Monserrate said she has a past-due electricity bill and rent to pay but still doesn’t know when she will receive unemployment benefits.
Ms. Monserrate, a mother of four boys and her family’s main breadwinner, started applying for unemployment in mid-March, when she was laid off from her job as a waitress due to the pandemic and her hours—and paycheck—for her other job driving a school bus were greatly reduced. She now works one day a week delivering meals to families from the school district. She calls the New Jersey Department of Labor and Workforce Development every day to find out what the holdup is, but hasn’t been able to get through.
“I’m reading that the system is over 40 years old. It’s pen-and-pencil type stuff,” she said. “That’s not really acceptable now, when you have people that are relying on these services.”
Florida’s technology has been particularly challenged. The state in April started accepting paper applications to help deal with the claims volume.
Between March 15 and April 25, Florida had confirmed more than 800,000 unique jobless claims through its regular online platform, its mobile site and paper applications. But just 200,000 of those had received unemployment payments, according to the state’s Department of Economic Opportunity website.
The poor state of many states’ unemployment insurance systems is in part a legacy of the last recession, which strained their finances, including the trust funds that collect unemployment insurance payroll taxes to finance benefits. States faced tax increases and spending cuts aimed at shoring up budgets. Upgrading computer systems wasn’t a spending priority, according to state officials.
Michele Evermore, a senior policy analyst at the left-leaning National Employment Law Project, said the federal government could have provided more funding to states for technology upgrades, but at least some of the responsibility falls to the states.
“More states should have applied for and modernized their systems by now,” Ms. Evermore said.
Eugene Scalia, the U.S. Labor Secretary, said each state made its own decisions about its specific computer system and that the federal government was doing as much as it could during the pandemic to support the states.
Connecticut, plagued by sluggish economic growth in recent years, has grappled with multibillion-dollar budget deficits that left little money available for technology investments. The state did, however, dedicate significant resources to a modernization of its unemployment-benefits system, which started a few years ago and was scheduled to wrap up in May 2021.
“It’s not as if we weren’t aware that we had a problem in the making,” said the state labor commissioner, Kurt Westby. “We’ve been diligently scurrying to get this new system in place.”
The May 2021 completion date may be pushed back, Mr. Westby said, because workers assigned to that project are now helping process claims.
There are signs states are working through their backlogs. In Connecticut, technological improvements that automated a key part of the claims sorting process have helped reduce the backlog, Ms. Bartolomeo said.
Rhode Island used some of the federal funds awarded early in the pandemic to fix old technology, unlike many other states, which used the money to hire staff to field calls and audit claims. This month, it launched a cloud-based application to process claims in conjunction with Amazon Web Services and a nonprofit called Research Improving People’s Lives.
When Rhode Island began accepting applications from independent contractors under the federal stimulus bill, it received more than 11,000 initial claims on the first day from such workers all at once. That would have crashed the old system, a labor department spokeswoman said.
For the bulk of states, though, it has proven a technological challenge to implement the expanded assistance included in the Cares Act, signed into law in late March. Such changes include revamping their online systems to process benefits applications from gig-economy workers and other individuals newly eligible for unemployment insurance. The U.S. Labor Department said as of April 23, 10 states had set up their systems to begin accepting applications from gig-economy and other workers.
In the week after the federal government made funds available to states for an extra $600 a week in unemployment benefits, only 29 had the capacity to start making payments. All 50 states now do, according to the Labor Department.
Connecticut started sending out the extra $600 in the past week, after confronting the challenge of altering its computer system, which was set up to process unemployment benefits that max out at $649 a week.
The extra $600 pushes the highest eligible payout to $1,249, but Connecticut’s computer system was designed to handle only up to three-digit payments. Pushing up the maximum to four-digits would require reviewing and modifying well over 100 mainframes, Ms. Bartolomeo said.
Jobless Americans across the U.S. are feeling the impact of payment delays.
Ms. Monserrate, who lives in Edgewater Park, N.J., stopped paying her car insurance to save money since she isn’t driving, and her family is receiving food-stamp aid through the Supplemental Nutrition Assistance Program. But not knowing when she will receive unemployment benefits is causing stress.
“How are we going to pay these bills that are racking up?” she said. “I can’t catch up on everything, it’s just not possible.”
A spokeswoman for the New Jersey Department of Labor and Workforce Development said all payouts are backdated to when an individual first became unemployed.
“Workers who are having trouble filing or claiming benefits will receive every penny they deserve,” she said. “We recognize it may not be as quickly as they—or we—would like.”
April Unemployment Rate Rose To A Record 14.7%
Unprecedented 20.5 million jobs shed as coronavirus pandemic hit the economy.
The April unemployment rate surged to a record 14.7% and payrolls dropped by a historic 20.5 million workers as the coronavirus pandemic hit the economy, wiping out a decade of job gains in a single month.
Employment fell sharply in all broad business sectors last month and across all groups of workers, with particularly large increases in unemployment among women, college dropouts and Hispanics.
The U.S. jobless rate eclipsed the previous record rate of 10.8% for data tracing back to 1948, though it was well below the 25% rate economists estimate was reached during the Great Depression. The job losses due to business closures triggered by the pandemic produced by far the steepest monthly decline on records back to 1939. By comparison, nearly 2 million jobs were lost in one month in 1945, at the end of World War II.
“It’s absolutely striking—and sobering,” said Adam Blandin, economist at Virginia Commonwealth University. “This puts even more emphasis on the economic damage caused by this virus.”
Many economists project April will be the worst single month of job loss during the pandemic, and the pace of layoffs has already shown signs of easing this month. But they say it could still be many months before the labor market returns to a point when U.S. employers consistently add jobs, and it probably will take years for the economy to fully replace the jobs lost in April.
The Labor Department survey of households showed a large number of workers who said they were “employed but absent from work.” Many of those should have been counted as a temporary layoff, which would have caused the unemployment rate to be almost 5 percentage points higher, the department said.
U.S. stocks rose, gaining after the jobs numbers weren’t quite as bad as feared and signs of an easing in trade tensions between Washington and Beijing.
The job losses and high unemployment mark a sharp pivot from just a few months ago, when the economy was pumping out hundreds of thousands of new jobs and joblessness was hovering near 50-year lows. The jobs bust has been widespread.
Leisure and hospitality businesses, among the first to be affected by coronavirus-related shutdowns, saw particularly heavy losses, cutting 7.65 million jobs. The health-care, education, retail and professional services industries all experienced major losses.
Among mostly white-collar jobs, consultants, accountants and lawyers all saw job losses.
Average hourly earnings increased by 7.9% in April from a year earlier, likely reflecting that many low-wage workers lost their jobs, while more white-collar employees worked from home.
Numerous companies in several business sectors have recently announced expected layoffs or possible cuts, including technology companies such as Airbnb Inc., which said it would lay off 1,900 people, and ride-sharing company Uber Technologies Inc., which said it was laying off 3,700.
The longer-term severity of the employment crisis depends on factors such as the path of the coronavirus and how fast consumers start to visit businesses and open up their wallets, as the economy reopens. Such reopenings are already materializing in South Carolina, Georgia, Texas and elsewhere, though often with restrictions.
Further, the sharp rise in unemployment last month mainly reflected temporary, as opposed to permanent, layoffs. Of Americans who newly lost their jobs in April, 88% reported being on temporary layoff, meaning they are more likely to quickly return to their jobs when the crisis ends. In March, 47% of the newly unemployed were on temporary layoff, while 29% were in February.
Rebecca Smith, 47 years old, was temporarily laid off from her New Jersey bus-driving job in mid-March and hopes to be back behind the wheel by June. After surviving Covid-19, the disease caused by the new coronavirus, she is looking forward to returning to work and seeing colleagues.
“I’m eager to see my extended family,” she said.
General merchandise stores, including warehouse clubs and super centers, were one of the very few bright spots in Friday’s jobs report, with employment increasing by 4.7% in April from a month earlier.
It will likely take a while for industries directly affected by the coronavirus, including restaurants, hotels and transportation, to recover.
Colby Hill Inn, in Henniker, N.H., is normally fully booked on weekends, but guests canceled all room reservations because of the pandemic. “Without that income coming in, it is really hurting us,” said Jefferson Brechbühl, a co-owner of the inn.
The inn would typically operate with about 20 employees during its busy season, which starts this month. But after furloughs, the inn is instead offering restaurant takeout services with six workers, including some who have seen their hours cut.
Mr. Brechbühl said reopening guest rooms would be critical to bringing back employees such as a sous-chef who is making more money on expanded unemployment benefits than he would at his job. So far, the lodge is mainly funneling these food-service revenues toward guest-room refunds, he said.
The April unemployment rate masked the current degree of joblessness. Some Americans whose jobs were cut aren’t actively looking for work because many companies have implemented hiring freezes, or they worry a return to work would raise their exposure to the coronavirus.
Although the regular unemployment rate excludes these so-called discouraged workers, another unemployment measure, called the U-6, captures them. That rate hit 22.8% in April, well above the 17.2% peak right after the 2007-09 recession.
Unemployment jumped most for Americans with lower levels of education. The rate for high school dropouts rose to 21.2% in April from 6.8% in March. For those with a college degree, the rate increased to 8.4% in April from 2.5% in March.
Lower-income Americans are most vulnerable to the effects of job losses, said Steve Preston, chief executive at Goodwill Industries International.
“They have no resources. It takes time to get unemployment, if they qualify,” Mr. Preston said, referring to financial benefits that states offer to those out of work. He added most people coming to Goodwill’s job centers for help are seeking support filing for unemployment benefits.
Lynne Reback of Sanford, Fla., filed for unemployment benefits on March 15 after she was laid off from her bartender job at the Orlando International Airport. But she didn’t receive her first payment of $275 until April 16. The following two weeks she received a $600 payment, less than the $875 she was expecting.
She said she is worried about making her mortgage payments and the possibility of a housing foreclosure. “We don’t want to lose it, but at the same time, we don’t know how long this will take,” she said.
The widespread nature of the job losses extended to health care, as those not working to fight the pandemic are seeing fewer patients for routine checkups and, in some cases, only offering emergency procedures.
Steep job losses in industries such as health care where women are represented in high numbers likely contributed to a sharper rise in unemployment among women than men. The jobless rate for women climbed to 16.2% in April, compared with a rise to 13.5% for men.
Friday’s report showed the number reporting themselves as employed fell by 22.4 million. The share of the population working fell to a record low of 51.3% in April after steadily rising from about 58% since the last recession to just above 61% in February.
Many companies and Americans are now drawing on federal and state aid.
Valori Wells, owner of Stitchin’ Post, a quilting-supplies store, said small-business loans through the federal government’s Paycheck Protection Program allowed her to bring back three employees who were laid off as a result of the pandemic.
The business, based in Sisters, Ore., is operating with eight employees—down from 13—who are filling shipping orders and handling social media, among other tasks.
Ms. Wells said she hopes to bring back all of her workers, but is unsure when she will be able to.
“I can’t predict what’s going to happen,” she said. “All I can do is hope that at some point I can get back to some sense of normalcy within our business—or new normalcy.”
Workers File 2.4 Million Unemployment Claims
Pace of weekly claims continues to ease from late March peak; self-employed receiving coronavirus-related benefits aren’t counted in wave of filings.
Workers filed another 2.4 million unemployment claims last week, a slight drop-off in the wave of historically high weekly filings since the economic fallout from the coronavirus pandemic began.
Weekly claims continued to log in at high levels, though they are down since an initial surge in layoffs drove claims to a peak of nearly 7 million at the end of March, according to Thursday’s Labor Department report.
Meanwhile, the ranks of workers receiving benefits swelled in early May. In the week ended May 9, the number of so-called continuing claims—a proxy for overall levels of unemployment—increased to 25.1 million from 22.5 million a week earlier. Continuing claims figures lag by a week from initial claims filings.
The claims totals exclude hundreds of thousands of self-employed and gig-economy workers receiving unemployment benefits for the first time through a temporary coronavirus-related program. The omission of self-employed workers means the actual number of workers seeking claims has been higher since the federal program called pandemic unemployment assistance, included in a stimulus package approved in late March, got under way.
“The pandemic unemployment assistance program is giving us a view into a segment of the workforce that’s harmed during a recession that we don’t typically get,” said Dante DeAntonio, an economist at Moody’s Analytics. “It gives us a better handle on the scope of what’s happening.”
While layoffs appear to have subsided in recent weeks, the number of people without work continues to remain at record-high levels. As of the beginning of this month, a large share of workers eligible for unemployment benefits were drawing on them in states across the nation, with particularly big parts of the workforces in Nevada, Michigan and Washington claiming benefits.
Still, the bulk of states saw fewer new applications for unemployment benefits last week, with particularly steep declines occurring in Georgia, New Jersey and Kentucky.
Many states reported fewer layoffs in early May at restaurants and health-care companies, the report said.
States have been paying out unemployment benefits to newly eligible workers such as independent contractors and self-employed individuals in recent weeks. As of Tuesday, 43 states were making such payments, a U.S. Labor Department spokeswoman said.
Arizona mailed out unemployment checks to 165,000 individuals early last week who were eligible for unemployment under the self-employed program.
New Jersey processed 135,000 such applications between April 26 and May 9. Officials expect that number to increase significantly over the next two weeks as they fine-tune their processing of these claims.
“I think we’re starting to hit our stride,” said Robert Asaro-Angelo, New Jersey’s Labor Department commissioner. “People are starting to receive their payments.”
It isn’t clear how many self-employed Americans and people seeking part-time jobs, who also were previously ineligible for unemployment benefits, were applying for benefits as of early May. Many states aren’t yet reporting these claims to the U.S. Labor Department.
The rollout of the program is helping put money into the hands of Americans like Kathy Faber, 59 years old, of Bristol, Conn., who owns a bridal and evening-wear shop that was forced to temporarily close in late March due to the pandemic.
In some states more than a fifth of the eligible workforce was out of work and receiving unemployment benefits in the week ended May 9.
Ms. Faber said she spent weeks trying to apply for pandemic unemployment assistance in Connecticut. After the state began accepting applications on April 30, Ms. Faber was approved and her benefits, which she said total a couple hundred dollars a week after taxes.
“Obviously it’s not the income you get when you’re working,” she said. “But it takes care of the electric bill, the phone bill. I’m happy that I got anything because usually for the self-employed, you’re on your own.”
Some states recorded large initial surges in claims under the self-employed program that have since subsided. Rhode Island, for instance, began accepting applications earlier than most other states and saw more than 11,000 people apply for the pandemic claims in a single day in April. As of last week, the state reported only hundreds of these claims were filed daily.
States vary in the level of demand they are likely to see based on the composition of their labor force. In California, about 8% of workers get income from self-employment and are likely eligible for pandemic unemployment assistance—nearly double the share in Utah—according to economists Andrew Garin and Dmitri Koustas in a University of Chicago report.
A bill passed by the Democratic-controlled House last week would extend enhanced unemployment benefits into early next year. Republicans, who control the Senate, have been cool to the idea, though some have offered support for modifying the aid.
In a conference call with House Republicans on Wednesday, Senate Majority Leader Mitch McConnell (R., Ky.) indicated he wouldn’t support an extension of the $600 a week boost in unemployment insurance.
“This will not be in the next bill,” Mr. McConnell said, according to a person briefed on the call. Mr. McConnell said one issue with the current level of benefits is that it pays people more to remain unemployed than they would earn if they went back to work, according to the person.
Sen. John Thune (R., S..D), the No. 2 Senate Republican who is responsible for counting votes, said there is no consensus in his caucus on this issue. “We have some who, you know, think obviously that is going to have to be extended in some way, because we’re going to run through the 13 weeks”
States are still confronting snags in implementing the self-employed benefits. Illinois, for instance, experienced a data breach last week at its website used to apply for the federally funded claims, which made public the personal information of some applicants.
The Illinois Department of Labor said in a statement it was working with Deloitte to “run a full-scale investigation into the matter.”
Arkansas’s website to apply for such claims also experienced a data breach. A spokeswoman for the state’s Labor Department said it “took the system offline” upon discovery of the incident last Friday.
More broadly, state labor departments have struggled to process the surge in claims due to the volume and faulty computer systems.
Although many states are working with outdated technology to process the onslaught of claims, Mr. Asaro-Angelo of New Jersey said his state’s biggest challenge is actually the high demand for experienced claims specialists.
“The real bottleneck is when humans need to be involved,” he said. “As much as we’re trying to supplement and augment all of our staff and capabilities, the actual process of going into someone’s unemployment-insurance claim and fixing it requires someone who’s gone through a background check, who’s had weeks or months of training.”
In New York, more than 560,000 previously ineligible workers have received unemployment payments under the expanded benefits.
Unemployment Rate Rose In All 50 States In April, Labor Department Says
Nevada had the highest rate at 28.2%, and Connecticut was lowest at 7.9%
Nevada registered the highest unemployment rate in the U.S. last month at 28.2%, the Labor Department said Friday in a report detailing the impact of the new coronavirus and related lockdowns on the job market in all 50 states.
The jobless rate rose in all 50 states and the District of Columbia last month, and 43 states recorded the highest level on record since 1976. The rate in three states exceeded 20% in April, well above the national rate of 14.7%, which was the highest on record since 1948.
Friday’s report offers the first state-by-state look at how the coronavirus pandemic had a differing, but widely devastating impact, across the country last month. In total, U.S. employers cut more than 20 million jobs in April, but the employment loss wasn’t evenly distributed.
After Nevada, the two states with the highest rates of joblessness were Michigan, at 22.7% and Hawaii, at 22.3%. Rates rose by at least 10 percentage points in 20 states.
Nevada’s heavy dependence on hospitality and tourism is the main reason for the state’s high unemployment rate, said Jeremy Aguero, a principal analyst with Las Vegas-based economic research firm Applied Analysis.
Nearly a quarter of the state’s labor force was employed in the hospitality and leisure industry before the pandemic began, according to the Labor Department. That industry, which normally employs about 350,000 in the state, lost roughly 40% of its workforce in March and April.
Nevada Gov. Steve Sisolak ordered casinos to close March 17, effectively shutting down the tourism industry.
“Nevada remains among the least diversified economies of its size in the country,” Mr. Aguero said. He said the downturn in tourism has also rippled out to affect hotel and restaurant suppliers and other businesses that depend on hospitality workers spending their earnings locally.
Hawaii faced similar challenges. Employment in leisure and hospitality, which accounted for about one in five Hawaiian jobs last year, declined by 56% in April, according to the Labor Department.
States that are heavily dependent on manufacturing also saw big job losses. General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV all closed plants in Michigan mid-March, causing a ripple effect of layoffs at suppliers in the state and elsewhere. Michigan’s employment in manufacturing industries fell 57% in April, according to Labor Department data.
Auto makers on Monday began restarting their U.S. factories, though two later were halted, one as a result of a worker’s illness and the other as a result of a parts shortage.
In Washington state, the unemployment rate rose to 15.4% in April from 5.1% in March. Boeing Co. closed its largest Seattle-area factory temporarily in late March after about two dozen workers in the region tested positive for the new coronavirus and one person died. The plant reopened last month with additional safety precautions, but the company warned of future layoffs because declining air travel has lowered demand for jetliners.
Connecticut had the lowest unemployment rate last month at 7.9%. The next lowest rates were in Minnesota, 8.1%, and Nebraska, 8.3%.
The unemployment rate represents the people without jobs but actively seeking employment as a share of a state’s overall labor force. Separate Labor Department data show that many people who recently lost jobs dropped out of the labor force because they were either not seeking work or were unable to report to a job in mid-April, the period the survey determining the jobless rate asked about.
Nonfarm payrolls fell in every state in April, according to the Labor Department.
The largest declines occurred in populous states: California lost 2.3 million jobs, New York 1.8 million, and Texas 1.3 million. The states with the largest percentage declines were Michigan at 22.8%, Vermont at 19.6% and New York at 18.8%.
New York has the highest number of Covid-19 cases and related deaths among U.S. states, according to the Centers for Disease Control and Prevention. Covid-19 is the illness caused by the coronavirus.
Easing Unemployment Claims Show Slower Pace of Layoffs
U.S. workers seeking assistance remain historically high, but number receiving benefits fell for the first time since February.
The number of workers receiving unemployment benefits fell for the first time since February and new weekly claims continued to ease, offering evidence that layoffs related to the coronavirus pandemic are slowing.
Initial claims for unemployment benefits declined to a seasonally adjusted 2.1 million last week from 2.4 million the prior week, the Labor Department said. The level of claims is still 10 times prepandemic levels but has fallen for eight straight weeks.
Meanwhile, the number of workers receiving jobless payments for the week ended May 16 was 21.1 million, down 3.9 million from the prior week.
The level remains well above the record before this year—6.5 million in 2009—and underscores that tens of millions remain jobless.
Commerce Department data on Thursday showed gross domestic product—the value of all goods and services produced across the economy—fell at a downwardly revised 5.0% annual rate during the first quarter, overlapping in March with when the pandemic hit the economy.
Corporate profits declined sharply to start the year, the Commerce Department also said, and orders for long-lasting durable goods, such as machinery and trucks, fell 17.2% in April from a month earlier.
Fewer workers on unemployment rolls adds to evidence that while layoffs have been steep and are continuing, some Americans are getting back to work. That suggests the U.S. labor market is at an inflection point where new layoffs are largely offset by hiring and workers are being recalled to their old jobs.
Crystal Hollings, of Pascagoula, Miss., is among those returning to work.
She was laid off from the Goodwill Ocean Springs Mega Store for several weeks this spring, but recently returned to prepare the thrift shop for a June 1 reopening. Unemployment benefits allowed Ms. Hollings to pay bills, but she was relieved to return to a job she said lifted her and her family out of homelessness in 2016.
“I love what I do and I love being around people,” she said. “I’m just trying to make it safe and clean for all our customers to come back.”
The store will require employees to wear masks and gloves and stay 6 feet from customers. When Ms. Hollings reapplied for employment she sought, and received, a promotion to assistant manager. Not all of her former co-workers returned, she said.
“Some didn’t want to come back because they’re still iffy on the pandemic,” said Ms. Hollings. “I wanted to come back the next day [after her layoff]. I’m not one to sit at home.”
As states allow businesses to reopen and citizens to move more freely, many companies are recalling workers, though often fewer than they laid off in March or April. Restaurants, hit hard by the crisis, face months of adjustment as the virus upends the industry’s business model.
Employees reported for 17% more shifts for the seven days ended May 24 than they did six weeks earlier, when job activity bottomed out, according to Kronos, a Massachusetts workforce management software company.
And some firms have begun hiring. Job search site Indeed.com said job postings have increased during the past three weeks, though the total is still down 35% from a year earlier.
Companies are also bringing back workers to qualify for government loan forgiveness, though some have warned they may need to lay off employees again when that support runs out.
Still, companies are continuing to announce layoffs. Boeing Co. said this week that it will shed more than 13,000 employees and American Airlines Inc. said it would cut its management and administrative staff by 30%, amounting to more than 5,000 workers.
Others are planning to increase staffing levels. Amazon.com Inc. plans to keep most of the U.S. jobs it added to meet demand in March and April as housebound Americans turned to online deliveries. Walt Disney Co. said it plans to begin reopening its Florida theme park at reduced capacity in mid-July.
“I think we’ve hit the bottom, as far as layoffs,” said Marianne Wanamaker, a labor economist at the University of Tennessee. “Auto factories and suppliers have called back workers and you’re seeing states that shut down construction allowing those projects to restart,” she added.
Many economists say it will take many months, if not years, to replace all the jobs lost this spring. Forecasters at the University of Michigan project the pandemic-related shock will result in about 30 million total jobs lost, with about a third of those returning this summer.
The expected long recovery underscores the depth of the economic contraction the virus caused. Most economists expect a bigger contraction in the second quarter, when lockdowns continued for weeks before states started slowly reopening their economies in May.
Some businesses are starting to see increased, though still halting, demand for their products.
Tents Unlimited, an event rental company in Torrington, Conn., recently recalled three laid-off workers after it qualified for a federal loan and the state allowed restaurants to start serving patrons outside last week. That caused a rush in orders for tents and tables, said Brittany Sherwood, who owns the business.
The company still has one employee on layoff and has forgone hiring about six temporary workers it would have needed to staff the usual crush of spring weddings and corporate events.
“It’s going better—it was pretty bleak before,” Ms. Sherwood said. The restaurant orders don’t replace all the lost work “but it helps pay the bills.”
The company’s sales are still down 80% from last year, but she is hopeful it can survive until 2021, which she expects to be a spring busy with rebooked weddings.
The primary claims totals from the Labor Department exclude self-employed and gig-economy workers receiving unemployment benefits for the first time through a temporary coronavirus-related program.
New claims to that program fell slightly in the week ended May 23 to 1.19 million from 1.25 million. Unlike the regular claims program, pandemic assistance data isn’t seasonally adjusted.
Many states have only started paying benefits through the new program in recent weeks, suggesting recent claims likely reflect a backlog built since March. It is also likely some applying for the relief program earlier sought assistance through state programs and had applications rejected.
U.S. Unemployment Rate Fell To 13.3% In May
Payrolls rose by 2.5 million, suggesting jobs are returning.
The U.S. labor market snapped back to life in May, restoring a chunk of the jobs it lost in the first two months of the coronavirus pandemic while facing big obstacles in the months ahead.
After two months of carnage, employers added 2.5 million jobs last month, the most jobs added in a single month on records dating from 1948. The jobless rate fell to 13.3% from April’s 14.7%, a post-World War II high.
Employment remained down by nearly 20 million jobs, or 13%, since February, the month before the pandemic prompted states to shut down huge segments of their economies. By comparison, the U.S. shed about 9 million jobs between December 2007 and February 2010, a period that covered the recession caused by the financial crisis.
Hurdles remain, including the prospect of a second virus outbreak, pandemic-related safety regulations and social unrest from the May 25 killing of George Floyd.
But the jobs report boosted hopes that the economy has moved beyond the worst fallout from the pandemic and may recover more quickly than expected. Stocks surged on the news, with the Dow Jones Industrial Average climbing more than 3%, the S&P 500 up nearly 3% and the Nasdaq heading toward a closing high.
“This is definitely in the right direction and suggests the U.S. economy may be faring better than some of those worst-case scenarios,” said economist Lindsey M. Piegza of financial firm Stifel Nicolaus & Co. “But it remains to be seen if this is indicative of an ongoing positive trend or if this reflects the bare minimum of the labor force needed to reopen the economy.”
Economists still expect a slow and choppy recovery. Government aid programs for households and businesses—which have pumped trillions of dollars into the economy—will start to run out this summer and fall. Many consumers and workers remain fearful of the virus and are staying at home. And protests and looting following the killing of Mr. Floyd, a black man who died in police custody in Minneapolis, led many businesses to board up and close.
Still, a significant number of Americans appear ready to come back to the marketplace, and businesses are eager to reopen to accommodate them. Restaurants and bars added 1.4 million workers last month—more than half the overall job gain—as new virus infections eased and many states began lifting shutdown orders. Other industries adding workers included construction, health care and retailers—among the industries that had been quickest to let go of workers in March and April.
“The No. 1 customer call that comes in is not, ‘Can I place an order?’ It’s, ‘Do you have dining?’” said Matt Friedman, chief executive of Wing Zone, an Atlanta-based restaurant chain. In recent weeks the company added five to 10 workers to each of its two taverns in Georgia that recently reopened after being shut down since March.
Mr. Friedman cautioned, however, that the two restaurants are operating at far below capacity to comply with rules to prevent further spread of the virus, including increased the space between tables. That will limit, for now, how fast he can rehire. “It’s almost like if you took a football team and put half the players on the team on the field,” he said.
Sung Won Sohn, an economist at Loyola Marymount University, said the aid that Congress approved to help households is stoking demand. While 21 million workers remained employed last month, research suggests that more than half of those laid off during the pandemic are earning more than they did at their jobs, thanks in part to stimulus checks and extra $600 a week in unemployment pay approved by Congress.
“People have been cooped up in houses and apartments for weeks and they’re anxious to get back,” Mr. Sohn said. “They have money to spend—disposable income.”
Despite last month’s gains, the jobless rate is still historically high—nearly four times the rate in February. Jobs remain down by 19.6 million from February.
In May, a broader measure of unemployment—including jobless workers, those working part time and those who have given up the job search because they are too discouraged—stood at 21.2% in May. Many other workers have taken pay cuts. Gregory Daco, chief U.S. economist at Oxford Economics, estimates that at least half of the workforce has lost a job, lost hours or took a pay cut.
The jobless rate for Latinos was 17.6% and for African-Americans 16.8%, far higher than for Asians at 15% and whites at 12.4%. Women were more likely to be unemployed than men.
In Portland, Ore., Kate Rafter had spent five weeks on a furlough when she returned to work the first week of May at a nonprofit that takes children on field trips around the Pacific Northwest. Two days after she returned, her boss told her she was being laid off. Many parents had canceled plans to send their children on trips given the risk of catching the virus. The nonprofit said it could no longer afford to keep Ms. Rafter on as a business-systems analyst.
Now, she is living off unemployment benefits and the stimulus check Congress provided to many households. She is hopeful, though, because she has seen a number of job postings in her field. “I think I’ll be able to find something,” she said. She has spent recent weeks knitting hundreds of masks which she has donated and decluttering her parents home.
There is at least one big sign that much of the economic damage from the pandemic will be temporary: More than 80% of the people who lost jobs during the pandemic expect the loss to be temporary.
Those permanently separated from their jobs totaled 3 million in May, a low level compared with prior downturns. In October 2009, when unemployment peaked after the financial crisis, there were 8.3 million such workers.
Manufacturers also are adding jobs. Tuff Shed Inc., a Denver-based manufacturer of backyard storage sheds, has called back the 500 employees it furloughed in late March, one-third of its total workforce. The privately held company is now trying to hire about 300 more employees for its 52 production sites as demand surges for its prefabricated wooden buildings.
Tuff Shed’s buildings are being used as makeshift offices and home-school classrooms by families marooned in their homes by the pandemic, said Phil Worth, the company’s vice president of marketing. The most popular office shed measures 10 feet by 12 feet, about the size of a bedroom, with prices starting at about $4,300.
Tuff Shed’s May sales were up 26% from a year earlier and soared 90% from April, Mr. Worth said. Home Depot accounts for about half of its sales.
“The amount of demand is shocking,” he said. “We definitely want to add production capacity. People don’t want to wait a long time once they’ve made a decision to buy a building.”
Nearly 90% of Fiat Chrysler Automobiles NV’s hourly factory workforce in North America has returned to work, the company said in a statement. Fiat Chrysler and its U.S. competitors General Motors Co. and Ford Motor Co. restarted factory work in North America on May 18 and have since been ramping up production.
Job postings rose in the past week by 10%, according to an analysis of internal data by ManpowerGroup North America, a job-placement company. Some of the highest demand is for workers in information technology, including for software developers, said Becky Frankiewicz, the group’s president. She suspects that is because many businesses are now using apps for delivery services, or software such as Zoom to hold virtual meetings. “As states start to reopen we’re seeing an increase in demand,” she said. “When will we be back? We got here overnight. We won’t return overnight.”
Friday’s report, based on a survey of households and businesses in mid-May, offered a snapshot of the labor market before protests and looting after the death of Mr. Floyd.
Penn Quarter Sports Tavern in Washington, D.C., laid off all 28 employees in early March after city leaders ordered nonessential businesses to close during the pandemic. When the city began the first phase of reopening last month, the restaurant rehired about half of its employees in the hopes of reopening the bar this week, said owner Mike Brand.
But protests and looting prompted him to board up his business and delay the opening by at least a week.
“We had every intention to be operating right now but now we’re back stuck in the mud,” Mr. Brand said. “This extra week, maybe two with the riots, it’s taking a huge financial chunk.”
He said he has been trying to rehire more of his former employers but he has run into a hurdle: Many of his servers and bartenders have declined offers to come back to work, he said. Some are fearful of catching the virus; others don’t want to give up their unemployment benefits, which currently pay them more than they would earn at the restaurant. He believes that as enhanced unemployment benefits—the federal payments of $600 a week—expire, he will have an easier time finding workers.
The May Jobs Report ‘Misclassification Error’ Explained
New numbers from the U.S. Labor Department Friday surprised economists when the jobless rate dropped from 14.7 percent in April to 13.3 percent in May. But there was a note on the official report called a “misclassification error” that makes last month’s unemployment rate up to three points higher. The Wall Street Journal’s chief economics commentator Greg Ip joins Hari Sreenivasan to explain.
“New numbers from the Labor department yesterday surprised economists when the jobless rate dropped from 14.7% in April to 13.3% in May.
Stocks rose and President Trump called reporters to the Rose Garden to announce the unexpected good news even though tens of millions of Americans are still out of work.
But there was a note on the official report—pointing out a “misclassification error” — an error that makes last month’s unemployment rate as much as three points higher.
The Wall Street Journal’s Chief Economics Commentator Greg Ip explained what was wrong with the numbers.”
“So the numbers are a little bit distorted because of the unusual circumstances of the pandemic.
People who are on temporary layoff are supposed to be classified as unemployed. For reasons that we’re not really sure a lot of those people were, in fact, classified as employed.
Now, the Bureau of Labor Statistics is aware of that problem. They told us that if you adjust for that error, then the unemployment rate is actually higher.
How much higher? Well, the month of May, it would have been three percentage points higher but in the month of April it would’ve been five percentage points higher.
So what do we take from that? Well, unemployment rose a lot more in April than we thought. But it also fell more in May than we thought.”
“When we talk about numbers like 13 or 16 percent, compare that to where we were just six months ago.
I know around, you know, January, February, we were down in the three percent area. Now we’re dealing with unemployment rates that are the highest since the Great Depression.
However, let’s put that in context. We had 20 percent unemployment rates for years back in the 1930s. We’ve only had these double digit unemployment rates for a few months.
I have to emphasize, we do not have good models for understanding where the economy is going at a time like this. It’s just too soon to say how long we’ll be dealing with this historic level of unemployment.“
U.S. Unemployment Claims At 1.5 Million Edge Lower But Remain Historically High
At 1.5 million, fewest weekly applications since mid-March, but shows pace of layoffs is no longer significantly easing.
The number of workers applying for and receiving unemployment benefits has stabilized at historically high levels, signs that while the labor market is healing hundreds of thousands of workers are still losing their jobs each week.
New applications for benefits edged lower by 58,000 to a seasonally adjusted 1.5 million in the week ended June 13, the Labor Department said Thursday. While it is the fewest weekly applications since mid-March, it also showed the pace of layoffs is no longer significantly easing.
The number of Americans receiving benefits payments fell by 62,000 to 20.5 million in the week ended June 6. Those continuing claims are reported with a one-week lag. A stable level of people on benefit rolls suggested that new layoffs are being offset by employers hiring or recalling workers as states have allowed more businesses to reopen in recent weeks.
Other signs of economic growth have emerged, including a May rebound in retail spending that followed record declines. But with the economy having slipped into recession this year, many firms have remained cautious about rehiring, leaving millions of people out of work since the pandemic hit.
Employers added to payrolls in May but only offset about one in 10 jobs lost in April and March. Recent data indicate a higher volume of workers are moving in and out of jobs, said Roiana Reid, an economist at Berenberg Capital Markets.
“You’re going to see elevated levels of layoffs because some businesses will permanently close,” she said. “But hiring and rehiring will outweigh that this summer, especially as you see big cities, such as New York, reopen.”
The level of new weekly jobless claims is well down from a peak of 6.9 million in late March, according to the Labor Department. But the recent total of 1.5 million is still well above the highest week on record before this year: 695,000 in 1982.
Most states reported fewer unemployment applications last week, but some, including Texas, New York, New Jersey and Nevada, reported an increase in initial jobless claims.
The number of Americans receiving continuing unemployment benefits has plateaued near 20 million for several weeks and is down from a peak of nearly 25 million in early May, according to the Labor Department. But joblessness remains at historically high levels. Before this year, the most Americans receiving unemployment benefits in a single week was 6.6 million in 2009, according to Labor Department records back to 1967.
The economy remains unsettled, said Michelle Holder, an economist at John Jay College in New York. She said unemployment-insurance applications and recipient levels were likely to only slowly ease in the coming weeks now that the initial wave of layoffs has passed.
“It will be a while before we reach Great Recession levels,” she said, referring to the 2007-2009 recession, “much less pre-pandemic levels.”
Unemployment benefits have been expanded to those who were previously ineligible for such aid, including self-employed and gig-economy workers. Last week, 761,000 sought benefits through that program, which is accounted for separately from the regular unemployment insurance program and not adjusted for seasonality. For the week ended May 30, the latest available data, the number receiving payments through the program fell by 445,000 to 9.3 million.
Ms. Holder said having nearly a third of all receiving some form of unemployment benefits falling into that category was significant. How quickly those workers are able to return to employment will influence the speed of the economy’s recovery.
“These are the type of people you want working in a robust economy,” she said. “They start businesses and have an entrepreneurial spirit.”
The federal government is paying $600 in additional unemployment benefits on top of amounts approved by states, allowing many workers to earn more than they did at their jobs. The extra payment is set to expire at the end of July, though Congress is debating whether to extend them or provide other aid.
The enhanced benefits have attracted some who might not have otherwise applied for aid. Not all initial benefits applications are approved, and it is likely that some Americans have applied more than once since mid-March. Rules for applying in some states have changed, and some workers have been recalled to jobs and subsequently laid off again.
Many Americans remain frustrated with the unemployment system which was overwhelmed with claims this spring, creating backlogs of applicants.
Elizabeth Dunn, of Waukesha, Wis., applied for unemployment benefits in March after losing her job at a movie theater. The 53-year old received a single payment, but nothing else the past three months. A spokesman for the state labor department said Ms. Dunn’s claim is under review because she voluntarily quit a job earlier this year. Workers who leave jobs voluntarily are generally ineligible for unemployment benefits.
Ms. Dunn said she did briefly hold a job as an elder-care assistant but quit in February before the pandemic. She didn’t feel comfortable working with older adults with significant medical problems, and she had the movie theater job she liked better.
The state won’t pay Ms. Dunn benefits while her case is under investigation, leaving her in limbo.
Without jobless assistance or work, Ms. Dunn said she is struggling to pay rent and other bills. She was told the theater hopes to reopen later this month, but hasn’t set a definite date.
“It’s frustrating because I’d still have a job if the theater wasn’t shut down due to Covid,” she said.
U.S. Initial Unemployment Benefits Steady At 1.5 Million In June
Job market’s slow recovery faces new infections that could impede getting people back to work.
The number of workers seeking jobless benefits has held steady at about 1.5 million each week so far in June, signaling a slow recovery for the U.S. economy as states face new infections that could impede hiring and consumer spending.
Applications for unemployment benefits were slightly below 1.5 million last week, at 1.48 million, the Labor Department reported Thursday. While weekly totals have gradually eased from a late March peak of nearly 7 million, they also remain well above the prepandemic record of 695,000 in 1982.
Meanwhile, the number of people receiving benefits, an indicator for overall layoffs, totaled 19.5 million in the week ended June 13, down slightly from previous weeks.
Economists say the sluggish improvements in claims tallies dim prospects for a quick recovery. Further, a recent increase in coronavirus cases could affect efforts to reopen the economy—and get people back to work and spending money.
“We’re seeing a slowdown in layoffs, but hiring hasn’t picked up a tremendous amount,” said Nick Bunker, economist at the job site Indeed. “The recovery from this is going to potentially be a very long slog if we can’t get the virus under control quickly.”
U.S. stocks were volatile on Thursday as investors faced a cloudy economic outlook and slowed down reopenings in several states, including Texas. An afternoon rally erased the morning’s declines, and the Dow Jones Industrial Average ended the day up 299.66 points, or 1.2%. The S&P 500 and Nasdaq Composite mirrored that move.
States where the coronavirus is spreading the most are experiencing a slowdown in economic activity, according to Jefferies. The number of hours worked at small businesses hit its most recent peak in mid-June and has since dropped off in places including Texas and Arizona, according to scheduling and hiring software provider Homebase.
Visits to restaurants, shopping centers and other recreational locations have been rising nationwide but seem to have peaked or plateaued in states with rising infection rates, according to Google Mobility data.
“It is clear that the public is not psychologically immune to Covid-19, and will retrench as the virus starts spreading again, regardless of government restrictions,” said Aneta Markowska, Jefferies economist.
Apple Inc. has said it would temporarily close some stores in coronavirus hotspots across a handful of states, including Florida and Texas. Walt Disney Co. said it would postpone the scheduled reopening of its park in Anaheim, Calif., which had been set for July 17.
Macy’s Inc. is laying off roughly 3,900 corporate staffers as the retailer, like other businesses, confronts a slow recovery.
The claims trend mirrors shifts in other segments of the economy, indicating conditions have improved since hitting a low earlier in the crisis but have much ground to regain.
For instance, new orders for durable goods—products designed to last at least three years—increased 15.8% in May from the previous month. But the rebound in overall orders wasn’t enough to make up for March and April losses. In dollar terms, new orders registered at levels last seen in 2010, according to Commerce Department data released Thursday.
New orders for nondefense capital goods excluding aircraft—a closely watched proxy for business investment—advanced only 2.3%.
Separately, the Commerce Department in an updated report affirmed its earlier reading that the U.S. economy in the first quarter contracted 5% at a seasonally and inflation-adjusted annual rate. Economists project that the second quarter, which ends next week, will see the biggest quarterly economic contraction in records dating back to 1947.
“I don’t think a V-shaped recovery is realistic at all,” said John Johnson, chief executive of Edgeworth Analytics, a data consulting firm. “Hopefully we can mitigate the economic damage.”
Federal Reserve Chairman Jerome Powell told the Senate Banking Committee last week that, assuming the virus remained under control, the economy could move through three phases.
The first one, a sharp contraction, could then lead to the second—a bounce back marked by large increases in re-employment. Mr. Powell said it was possible the economy was in the beginning of that second phase, but he warned that the third phase of recovery would require Americans to regain their confidence engaging in activity that requires close indoor contact or large outdoor gatherings.
The Labor Department will publish data on June hiring next week. Employers added to payrolls in May. Still, overall employment was down by about 20 million compared with February.
“There’s still this two tracks of this ongoing hemorrhaging of jobs while we also see a lot of people getting rehired,” said Heidi Shierholz, senior economist at the Economic Policy Institute.
Some policy makers pointed to strong job growth in May as evidence the federal government doesn’t need to extend an extra $600 in weekly unemployment benefits, which are slated to expire at the end of next month. That $600, which comes in addition to benefits provided by states, was included in a federal stimulus package to help laid-off workers weather the crisis.
Earlier this week, new findings from the Brookings Institution concluded that states with more-generous jobless benefits experienced faster recoveries, including greater rehiring and fewer layoffs. On the other hand, the Congressional Budget Office projected extending the extra $600 in benefits through next January would lead to a decline in employment for the remainder of this year and all of next.
The government also expanded unemployment benefits to include those who were previously ineligible for such aid, such as self-employed and gig-economy workers. Last week, 728,000 people sought benefits through that federal program, which are tabulated separately from regular state claims.
U.S. Unemployment Rate Fell To 11.1% In June
Jobs report doesn’t reflect recent business closures in response to the coronavirus and related layoffs.
Unemployment fell and the U.S. economy regained 4.8 million jobs in June, but the recent surge in coronavirus infections could throw the recovery off course.
The job growth followed May’s payroll gain of 2.7 million and showed people were getting back to work and the economy was healing faster than anticipated.
Still, the U.S. labor market is operating with about 15 million fewer jobs than in February, the month before the pandemic struck the U.S., while the country faces an increase in coronavirus cases that has led some states and businesses to change course on reopenings.
There already are signs the economy could be affected by the virus surge that started in late June, after surveys were completed for the jobs report. Restaurant seating in several large cities declined at the end of the month and credit-card spending eased, said Sung Won Sohn, an economist at Loyola Marymount University.
Mr. Sohn said the data suggested that consumers, the driving force behind the U.S. economy, started to grow cautious as cases increased. “Normally we should be celebrating a gain of 4.8 million jobs, but there are dark clouds ahead of us dashing hope of a V-shaped recovery,” he said.
The June unemployment rate fell to 11.1% from 13.3% in May, even though there were significantly more workers who were accurately counted as unemployed in June compared with previous surveys during the pandemic, according to the Labor Department.
U.S. stocks rose as the employment figures brought reassurance that the economic recovery was continuing.
Still, the jobless rate remains at historically high levels. Until March, before the pandemic drove the U.S. into a deep recession, the unemployment rate was hovering around a 50-year low of 3.5%.
Hiring last month was supported by business reopenings and government aid. States across the U.S. reopened restaurants, gyms and salons that had been shut for several weeks to contain the virus’s spread. Small businesses that tapped federal loans through the Paycheck Protection Program continued to recall workers.
Job gains in leisure and hospitality—a sector hard hit by the shutdowns—accounted for about 40% of June’s employment growth. Restaurants and bars were the main driver. But those workers are particularly vulnerable to renewed layoffs because a recent rise in cases in several states is causing governors to halt or roll back reopenings.
In recent days, Texas required that bars close and Florida imposed new restrictions on bars. New York City delayed the reopening of indoor dining at restaurants. Thursday’s jobs report, which is based on survey data largely collected in mid-June, doesn’t reflect those recent government-mandated business closures and related layoffs.
The number of new applications for jobless benefits—a proxy for layoffs—fell by 55,000 to 1.43 million last week, the Labor Department said in a separate report Thursday. The number of people receiving unemployment benefits, meanwhile, rose slightly by 59,000 to 19.3 million for the week ended June 20.
Unemployment claims have come down from a peak of nearly seven million in late March but have stabilized near a historically high 1.5 million, an indication that companies continue to cut jobs.
“We’re in the beginning of a slow recovery,” said Marianne Wanamaker, a labor economist at the University of Tennessee, who previously served as an economist in the Trump administration. “I think the recovery will stall out if we don’t get control of the virus.”
The Congressional Budget Office, in new economic forecasts released Thursday, said it expected the unemployment rate to fall to 10.5% by December, down from an earlier forecast of 11.5%.
Gross domestic product, a broad measure of economic output, is expected to climb 12.4% in the second half of the year, but not enough to offset the losses from the first half of the year, the report said. GDP is projected to shrink 5.9% in the fourth quarter compared with a year earlier, CBO said, and grow 4.8% next year.
Worker shifts rose 2.4% in the week ended June 28 from the prior week, but the gains were smaller in some states where coronavirus cases rose. Shifts last week increased 1.8% in California, 1.6% in Texas and 0.6% in Florida, according to Kronos, a Massachusetts workforce management software company.
Tubing rental company Texas Tubes won’t be open to send customers floating down the 2-mile Comal River this Fourth of July weekend—normally one of the busiest times of the year for the New Braunfels, Texas, company.
Last week it had to cease operations and lay off its staff of about 30 when Gov. Greg Abbott ordered the halt of water-recreation outfitters, said Texas Tubes’ owner, Coley Reno.
“Our season is only so long, so if this thing goes to September, then we’re done for the year,” Mr. Reno said. He added that the tubing center’s closure would hit the small Texas city’s tourism economy because there would be fewer out-of-town guests to dine at restaurants and sleep in Airbnbs.
Employers in sectors such as retail, health care and manufacturing added jobs in June.
Companies recalled workers who were temporarily laid off due to the pandemic, helping drive down the number of unemployed Americans on temporary layoff by about five million from May to June. Meanwhile, the number who permanently lost their jobs rose by about 600,000 over that period.
At the beginning of the pandemic, customer traffic declined and hiring froze at Teriyaki Madness, a Denver-based franchised restaurant chain.
“But then people kind of woke up and said, ‘This could last for a while,’” said Michael Haith, the company’s chief executive.
Consumers started ordering more online and driving in for curbside pickup of teriyaki chicken-and-rice bowls, helping boost same-store sales. Now the fast-casual chain is adding 10 stores that will need 25 employees each in positions such as cook, cashier and general manager.
President Trump celebrated the employment figures. “Our economy is roaring back,” he told reporters at the White House, adding that he was “really happy.”
Mr. Trump said voters should be wary of replacing him in the November elections, saying that doing so would hurt the economy. He played down economic threats from the increasing spread of coronavirus. “The crisis is being handled,” Mr. Trump said.
Former Vice President Joe Biden, the presumptive Democratic presidential nominee, in a statement said the president was ignoring the recent rise in coronavirus cases and overall state of the economy.
“We’re still in a deep, deep job hole because Donald Trump has so badly bungled the response to the coronavirus and now he has basically given up on responding at all,” Mr. Biden said. “There’s no victory to be celebrated. We’re still down nearly 15 million jobs and the pandemic is getting worse.”
Declines in unemployment last month were uneven across racial groups. The jobless rate for white workers fell 2.3 percentage points to 10.1% in June. The unemployment rate for Black workers decreased 1.4 percentage points to 15.4%. The rate for Latino workers fell below that of Black workers, declining 3.1 percentage points to 14.5%.
The economy entered a recession in February and appeared to begin a recovery as early as April. The speed at which businesses hire and consumers spend depends, in large part, on the course of the virus. Many Americans remain hesitant to shop in stores or eat at restaurants as cases increase.
Stephanie Casebeer, 45 years old, has been temporarily out of work during the pandemic as a group fitness instructor at Miami-area gyms.
She said many of her students have indicated they aren’t ready to return to in-person workouts, and gyms have continued to delay reopening yoga and cycling classes as coronavirus cases in Florida rise. She worried it would be tough financially for gyms to rely on virtual classes.
“It’s made me nervous,” she said. “How am I going to make my living doing what I enjoy for the next couple of years?”
Ms. Casebeer said she is eager to return to teaching classes even though she makes more on unemployment benefits, which include an extra $600 a week from a federal stimulus bill, than she would as a group-fitness instructor.
“I like what I do enough to not necessarily care about keeping the extra $600,” Ms. Casebeer said. “I want to go back to work, and I want to go back to work safely.”
The June jobs report will likely inform congressional debate over the next federal coronavirus relief bill. Republicans and Democrats have been at odds over whether to extend the additional $600 a week in jobless benefits, scheduled to run out at the end of July.
Republicans have pointed to stronger-than-expected job growth as evidence workers no longer need expanded unemployment benefits. Democrats have argued that millions of people remain jobless and need extended aid to keep paying bills.
Some small businesses are already running through loans from the Paycheck Protection Program, which was designed to help companies keep workers on payrolls.
“Many owners received their loans in April and can no longer afford to keep workers past June,” the National Federation of Independent Business said.
Jennifer Cumming owns Foundational Concepts, two physical therapy clinics in Overland Park, Kan., and Kansas City, Mo. She was able to use the federal small-business loans to rehire employees this spring after they were furloughed at the onset of the pandemic.
But when the federal funds—which lasted eight weeks—expired in mid-June, Ms. Cumming wasn’t able to guarantee stable paychecks for three of the company’s 10 employees, who quit as a result. Ms. Cumming said she didn’t plan on immediately replacing all of them, given the recent climb in coronavirus cases in her area.
“We want to be smart and not overextend ourselves,” she said.
Rise In Weekly Unemployment Claims Points To Faltering Jobs Recovery
Initial claims climb for first time in nearly four months to 1.4 million amid uptick in coronavirus cases.
Filings for weekly unemployment benefits rose for the first time in nearly four months as some states rolled back reopenings because of the coronavirus pandemic, a sign the jobs recovery could be faltering.
Initial unemployment claims rose by a seasonally adjusted 109,000 to 1.4 million for the week ended July 18, the Labor Department said Thursday, halting what had been a steady descent from a peak of 6.9 million in late March, when the pandemic and business closures shut down parts of the U.S. economy.
The increase followed a period where claims had settled around 1.3 million a week, well above the pre-pandemic record of 695,000 in 1982.
The data also show that unemployment rolls have shrunk in recent weeks. Taken together, claims and benefits totals suggest new layoffs are being offset by hiring and employers recalling workers, though at a slower pace than a few weeks ago.
“The reopening across the country has been very bumpy,” said Michelle Holder, an economist at John Jay College in New York, before Thursday’s data. “I think unemployment applications are going to be sticky at this level because many states are seeing a reassertion of the virus.”
Last week’s increase in applications came after several states imposed new restrictions on businesses such as bars and restaurants when coronavirus cases rose.
The number of people receiving benefits through regular state programs, which cover the majority of workers, decreased by 1.1 million to 16.2 million for the week ended July 11. The decline extends the recent trend, with the number receiving benefits the lowest reading since the week ended April 11. Those so-called continuing claims are reported with a week lag.
Employers added a combined 7.5 million jobs in May and June after shedding 21 million jobs in March and April, separate Labor Department data showed.
On an unadjusted basis, the level of claims was mixed across states last week, falling in some states where virus cases have risen, including in Florida and Texas, and rising in others, including California and Louisiana.
The elevated level of claims indicate many workers are being laid off, perhaps for a second time, and that parents who want to work are unable to access child care, Ms. Holder said.
California is among the states that imposed new restrictions to deal with a surge in cases of the new coronavirus. The latest restrictions caused Jessica Jenkins, a 30-year-old stylist, to lose her job last week for the second time this year.
Ms. Jenkins, an independent contractor who rents a booth at Bloom Salon in downtown Napa, had been back at work for five weeks, following a monthslong shutdown that began in mid-March. Being out of work again “is definitely uncomfortable,” Ms. Jenkins said. “I don’t know how long [this shutdown] is going to be or how much it’s going to affect my business.”
Ms. Jenkins said coronavirus precautions, which required that stylists space out customers and disinfect chairs and other equipment after every use, meant before the second shutdown she was working longer hours and making about half the money she was before the pandemic.
The self-employed, gig workers, parents who can’t find child care and others who qualify under special pandemic programs are able to tap unemployment benefits under a law passed in March, even if they don’t qualify under regular state programs.
Last week, 975,000 workers applied for benefits through the new Pandemic Unemployment Assistance program, a modest increase from the prior week. But the number receiving payments through the program fell by nearly 800,000 in the July 4 week to 13.2 million, according to the latest available data, which isn’t adjusted for seasonality. Economists caution that accounting for the new program is inconsistent across states.
A decreasing number of Americans receiving benefits indicates that recalls and new hiring are outpacing fresh layoffs—suggesting U.S. employers are likely to add jobs to total payrolls for the third straight month in July.
Greystone Lodge on the River in Gatlinburg, Tenn., temporarily shut its doors on April 1, but didn’t lay off employees. General Manager Jackie Leatherwood said the 241-room hotel wanted to be loyal to longtime employees and avoid a scramble for staff before its busy summer season.
Greystone reopened on May 1, and since hired four additional employees, including a front-desk clerk and a laundry attendant, and has several openings, Ms. Leatherwood said. Business picked up in June as visitors returned to the nearby Great Smoky Mountains National Park. She said July so far “looks really good.”
Other businesses are facing renewed challenges with a rising number of virus cases.
The Midnight Cowboy cocktail bar in Austin, Texas, had to close its doors and put five employees back on furlough when the state ordered bars to shut down for a second time in late June. Another four employees have been on furlough since mid-March. Bill Norris, co-owner at the bar, said that during the weeks it was open, revenue was about half of what it was during a comparable period last year.
“We were scraping by,” Mr. Norris said. He said he expects the bar will eventually reopen, when state rules allow it to and when customers are ready to come back. But he said he worries about furloughed employees.
“To know that you can’t support people who’ve been the heartbeat of your business is crushing,” Mr. Norris said.
The tens of millions of workers covered by a range of unemployment insurance programs face the prospect of a significant reduction in benefits at the end of this month, when a $600 weekly benefits enhancement is set to expire. Lawmakers are negotiating over whether and how to extend those benefits, with the possibility of passing a temporary extension while talks continue over a longer term solution. State programs alone pay about $350 a week, on average.
The federal government paid $18.3 billion in enhanced compensation for the week ended July 18, the Labor Department said. That is the equivalent of 30.5 million $600 payments, though some of the total amount could reflect back payments.
University of Michigan labor economist Don Grimes said if the amount offered under unemployment insurance is reduced, the number of Americans receiving benefits is likely to decline, but not necessarily the number of new applications.
“The $600 additional weekly payment may have encouraged people to stay on unemployment,” he said. “But if someone loses their job they will file for unemployment benefits whether the value of those benefits is $300 a week or $900 a week.”
U.S. Jobless Claims Fell To 1.2 Million In Latest Week
Layoffs continue to be elevated across the U.S. economy as recession drags on.
Filings for jobless benefits fell to their lowest level since the coronavirus hit the U.S. in March—a sign layoffs eased somewhat in a still struggling labor market—but remained at historically high levels for the 20th straight week.
Initial unemployment claims fell by a seasonally adjusted 249,000 to 1.2 million for the week ended Aug. 1, the Labor Department said Thursday, well above the pre-pandemic record of 695,000 in 1982. The decline came as an extra $600 a week in pandemic-related unemployment benefits ended.
The number of people receiving benefits through regular state programs, which cover the majority of workers, also decreased, by 844,000 to 16.1 million for the week ended July 25. Those continuing claims, reported with a week lag, fell to lowest level since April.
“It’s promising that initial unemployment claims number ticked down, but we’re certainly not out of the woods,” said AnnElizabeth Konkel, an economist at job search site Indeed.com. “The magnitude of layoffs is so much higher than in the pre-Covid era.”
The Labor Department separately will release its broadest picture of July employment on Friday in the monthly jobs report. Economists surveyed by The Wall Street Journal forecast the report to show 1.5 million jobs were added last month and the unemployment rate fell to 10.6% from 11.1% in June.
Those numbers, if they bear out in the report, would be a marked slowdown from the pace of gains from the prior two months. Overall employment would also remain well below pre-pandemic levels when the unemployment rate hovered around a 50-year-low.
That report will be a snapshot of the labor market in mid-July, and it won’t reflect last week’s decline in unemployment applications.
Before last week, applications had plateaued in recent weeks, halting what had been a steady decline from a peak of 6.9 million in late March.
Analysts were split on the degree to which the end of enhanced unemployment benefits caused the decline in new applications. Lawmakers and the White House continue to negotiate benefit levels as part of a broader stimulus package.
“The elimination of those benefits—which has gotten widespread press coverage—may have discouraged some workers from filing,” Nancy Vanden Houten, economist at Oxford Economics, wrote in a note to clients. “If that’s the case, claims may increase when those benefits are renewed.”
Others disagreed. “For those who are unemployed, they need every dollar possible…and claims numbers remain at extremely elevated levels,” said Andrew Stettner, a senior fellow at the left-leaning Century Foundation who studies the unemployment system.
He said last week’s drop wasn’t large enough to attribute it to the cutoff of the $600 weekly enhancement.
Without the $600 weekly boost, payments dropped to the level set by states, which averaged $332.11 a week, for the 12 months ending June 30, according to the Labor Department.
Other data also point to an easing of hiring. Payroll processor ADP said Wednesday private-sector payrolls grew by 167,000 last month.
Employees reported for 1% more shifts in July from the month before, a slowdown from a 5.9% increase in June and an 8.7% gain in May, according to Kronos, a Massachusetts workforce management software company. The number of job postings remains well below last year, according to Indeed.com.
“The labor market is still underwater,” said Monica Garcia-Perez, a labor economist at St. Cloud State University in Minnesota.
After employers shed 21 million jobs earlier this year, hiring surged in May and June, adding a combined 7.5 million jobs, according to the Labor Department. That was largely because workers temporarily laid off were recalled, she said.
Ms. Garcia-Perez said gains aren’t likely to persist at that rate, and the future path of hiring will be closely tied to whether or not the virus is controlled and people have confidence to resume normal activities. “If we see a new wave of cases this fall and new restrictions, you’ll see layoffs move back up,” she said.
However, some businesses say the decreased unemployment benefits are spurring new job searches.
Patti Mellard, chief executive of Key Staffing in Topeka, Kan., said the employment firm has seen a rise in applicants in the past week since the $600-a-week federal benefit ended.
The company is seeking to fill customer-service, accounting and warehouse jobs, she said, adding that some prospective workers are concerned about becoming ill with the virus or say they don’t have available child care.
One option is customer-service jobs, which can be done at home. Those jobs start at $12 to $15 an hour, she said. That is slightly less than a person would have received with the enhanced unemployment benefit.
“There are a lot of jobs to fill in Topeka,” Ms. Mellard said.
However, thousands of others are still losing their jobs months after the pandemic-induced economic downturn began.
Shana O’Mara has been receiving unemployment benefits since early July, after the expiration of a government loan that was sustaining her Tempe, Ariz., travel agency. She stopped drawing a salary from her business to keep it alive, but has continued to work without pay helping customers rebook and cancel trips.
She said her most recent weekly unemployment benefit payment fell to $214 after taxes, from $748 the preceding week, reflecting the July 31 expiration of an additional $600 in pretax federal benefits.
“I don’t think anyone can live on $800 a month,” she said. Her family has stopped ordering takeout, and she called her auto lender and credit-card issuers asking for deferrals.
She said the enhanced benefits allowed her to keep serving her clients, rather than seek out a job. For now, she is trying to keep her business, the Pixie Planner, afloat until more customers want to travel to Disney World and board cruise ships.
“It’s hard to see the end of this,” she said. “And it’s especially frustrating because it doesn’t feel like we have the support of our government.”
Some workers who don’t qualify for benefits under regular state programs—such as the self-employed, gig workers and parents who can’t find child care—are able to tap unemployment benefits under a law passed in March. Those programs continue through the end of the year, but at a lower payment level with the expiration of the $600-a-week enhancement.
Depending on individual circumstances, the programs can pay as little as half of the regular state amount, or less than $150 a week in some states.
The number applying for the largest of those programs fell last week as well.
Weekly Unemployment Claims Drop Below One Million For First Time Since March
Number of people collecting unemployment benefits through regular state programs also fell at the beginning of August.
U.S. unemployment claims fell below one million last week for the first time since the coronavirus pandemic struck in March, as the deeply wounded labor market continues to regain some footing.
New applications for unemployment benefits dropped to a seasonally adjusted 963,000 in the week ended Aug. 8, the Labor Department said Thursday, marking the second weekly reduction in filings. The number of people collecting unemployment benefits through regular state programs, which cover the majority of workers, also decreased to about 15.5 million at the beginning of August.
But both figures remain well above even the worst figures before the pandemic struck, with the number of people receiving benefits more than double the 6.6 million reached in 2009.
Unemployment remains elevated as other measures of the economy, including consumer spending, also lag behind levels from before the coronavirus hit. An increase in coronavirus infections across much of the country continues to threaten economic gains as states put in place new restrictions aimed at containing the pandemic.
Still, the decline in jobless claims indicates layoffs are easing and hiring is picking up, said Julia Pollak, economist at job site ZipRecruiter.
“There may now just finally be enough activity to make businesses feel confident enough to try to open their doors, even though they’re running at a low capacity in most cases,” she said.
The drop in claims could also reflect waning fiscal support by the government, Ms. Pollak said. The late-July expiration of an extra $600 a week in federal jobless benefits—added in March under a virus-relief package—puts much less money in unemployed individuals’ pockets, possibly discouraging them from seeking benefits.
Without the $600 weekly boost, payments dropped to the level set by states, which averaged about $330 a week for the 12 months through June, according to the Labor Department.
Gus Faucher, economist at PNC Financial Services Group, said the income boost helped prop up outlays for many households. Without it, some consumers will likely cut back on their spending this month.
“That is going to be a drag on the recovery,” he said.
The Commerce Department releases fresh figures on retail sales Friday, and economists estimate sales rose at a slower pace in July than in the spring. Newer data suggest retail spending weakened this month, likely a result of the expiring unemployment aid.
With Congress unable to agree to extend the aid, President Trump signed an executive action Saturday that authorized states to extend a federally funded $300 in benefits and provide an extra $100 in state-funded benefits. States likely won’t start implementing the supplemental benefits for weeks, and funding could be exhausted a month and a half later, a senior Labor Department official said this week.
Actual claims figures—numbers not adjusted for seasonal factors—dropped as well, falling by 156,453 to 831,856. Economists have been watching for distortions in the seasonally adjusted figures, given the scope of shifts in economic data caused by the pandemic.
Some workers who don’t qualify for benefits under regular state programs—such as the self-employed, gig workers and parents who can’t find child care—can collect benefits under a federal stimulus bill passed in March. About 10.7 million individuals were collecting benefits through this program at the end of July, a decline from the previous week’s 13 million.
Economists are watching claims figures to see if they will tick back up once the new federal unemployment aid kicks in. Many people who have returned to the workforce are also finding that new jobs can be short-lived as the U.S. struggles to contain the virus.
A Cornell University survey that showed about 31% of workers who were placed back on payrolls after an initial layoff were laid off a second time.
Fort Lauderdale, Fla., resident Zack Matthews has lost his job multiple times in recent months. Mr. Matthews was laid off from his creative director position at a telecommunications company in March. When his unemployment benefits didn’t come through, Mr. Matthews picked up a job as an overnight manager at a bar and grill in late June, but was laid off two weeks later.
Mr. Matthews started a new job at the end of July as a production manager at a photo and video studio. His unemployment benefits arrived in two lump-sum payments at the beginning of August, four months after he had first applied for them.
“It’s been quite a year,” Mr. Matthews said.
U.S. Jobless Claims Rose To 1.1 Million In Latest Week
Data indicate layoffs remain elevated as labor market slowly improves.
New applications for unemployment benefits rose last week after a series of declines, another sign the labor market’s recovery is cooling amid continuing disruptions because of the coronavirus pandemic.
Weekly initial claims for jobless benefits rose by 135,000 to a seasonally adjusted 1.1 million in the week ended Aug. 15, the Labor Department said Thursday.
The report followed others from the government and private firms showing that job gains slowed in July from June, job postings fell this week for the first time since April and several companies are planning more layoffs.
Still, the data show the job market is improving, though more slowly than in the spring.The number of people collecting unemployment benefits through regular state programs, which cover most workers, fell to about 14.8 million for the week ended Aug. 8. That marked the lowest number on benefit rolls since April. And nationally, new hiring is more than offsetting job cuts.
“The labor market isn’t bouncing back—it’s clawing back in fits and starts,” said Michelle Holder, a labor economist at John Jay College in New York.
The number of new claims rising last week shows that fresh layoffs are occurring even as the economy broadly is showing signs of recovering from the deep economic downturn caused by the pandemic and the shutdowns aimed at curbing it.
Aerospace giant Boeing Co. said this week it plans more job cuts in response to a drop in jetliner demand that it expects to continue for at least three years. Clothing retailer Rent the Runway Inc. said last week it would permanently close its five retail locations, adding to a list of store closures during the health crisis. And many municipalities have warned of layoffs in response to falling tax revenues.
Maggie Brown, 24 years old, had a public-relations job lined up this spring at New York City’s Metropolitan Museum of Art, but her start date was delayed until July. Then she was informed last month that her position was eliminated.
Ms. Brown, who previously worked as a freelance costume designer, is trying to sublease her apartment so she can move across the country to live with her parents in California. She said she was able to subsist with an extra $600-a-week federally funded payment that expired July 31, but without it her weekly unemployment benefit fell to $125 a week after taxes.
There is little costume-design work with Broadway theaters closed, and because of limited seating, even bar and restaurant jobs are hard to find.
“I’m one of the lucky ones because at least I know I can move back in with my parents and they’ll support me,” the New York University graduate said. “But it’s still hard. The old adage is that if you can make it here, you can make it anywhere. I feel like I’ve failed.”
Thursday’s report showed a mixed picture of claims across states last week. Texas, Florida, Kansas, New Jersey and New York all had notable increases in applications. Meanwhile, California, Georgia, Nevada and Pennsylvania saw fewer applications.
Claims levels have moved up and down in recent weeks, ending what had been a consistent decline from a peak of nearly seven million in late March to about one million in mid-July. The uneven pattern has played out similarly across states, and isn’t necessarily tied to the surges in coronavirus infections this summer in certain states, such as Florida and California, said Gus Faucher, economist at PNC Financial Services.
“Initially businesses were recalling a lot of workers as state restrictions were lifted,” he said. “Now businesses are dealing with the reality that there’s a lot lower demand than there was at the start of the year.”
Still, layoffs in recent months have been more than offset by businesses hiring and recalling old workers.
U.S. employers added nearly 9.3 million jobs in the past three months, separate Labor Department data showed. While that is a strong pace of hiring, it hasn’t yet replaced half of the 22 million jobs lost in March and April. And as hiring slows, it becomes more likely that many Americans will be unemployed for a longer period. The unemployment rate was 10.2% in July.
Some businesses haven’t been able to weather the economic downturn. Seth Brewer said he would be closing his Lexington, Ky., bar permanently at the end of August, which means laying off two of the six employees he had brought back to work in May. A local chef and his assistant, who have operated out of the bar’s kitchen in recent months, will also be out of work.
Mr. Brewer said the bar wasn’t breaking even in recent months, with revenue around 20% of what it was during the same period last year. Although the place, called Best Friend Bar, was able to provide sit-down service through most of July, a surge in reported Covid-19 cases in Kentucky forced it to switch back to takeout only in late July.
“We’ve been watching our numbers throughout all of this,” Mr. Brewer said of the decision to close permanently. “We didn’t have any reason to assume the picture would get rosier.”
In addition to regular state claims, Thursday’s report showed the number of people applying for special federal pandemic assistance also rose in the week that ended Aug. 15. That program is open to self-employed and other workers who aren’t eligible for state programs. In early August, more than 11 million people were receiving benefits through that program.
The July 31 expiration of the separate federally funded $600-a-week enhanced unemployment aid meant payments to those receiving support through regular state programs fell to levels approved by their states, which average a little more than $300 a week, according to the Labor Department.
Ms. Holder, the labor economist, said last week’s increase in jobless claims shows the enhanced benefit’s expiration didn’t significantly afffect the number of new applications being filed. She said she is concerned that reduced government assistance could slow the pace of the economic recovery.
President Trump signed an executive order Aug. 8 allowing states to tap disaster-relief funds to pay for a reduced $300 a week in enhanced aid on top of state benefits. Several states said this week they are moving to make such payments, but it will take weeks before workers receive the extra amount.
Eleven states have received federal approval to distribute the $300-a-week enhanced benefit, and eight more are awaiting permission to do so, federal officials said Thursday. A Federal Emergency Management Agency administrator said in a news briefing Thursday the agency expects most states to apply to participate, though a few have indicated they might not.
The disaster money is expected to provide about six weeks of enhanced payments, a Labor Department official said, depending on how many states apply.
Despite increased jobless-assistance applications, some businesses say they are struggling to find workers to fill open jobs.
The Express Employment Professionals office in Grand Rapids, Mich., a temporary-staffing firm, noted an uptick in job seekers in recent weeks, said owner Janis Petrini. But the increase was modest relative to the number of open jobs she has to fill in manufacturing and warehousing, she said. Those jobs in western Michigan are paying more than $15 an hour and don’t require previous experience, she said.
Ms. Petrini said some would-be job seekers remain concerned about safety, and others lack child care, an issue likely to persist this fall with many area schools not returning to full-time, in-person instruction.
“Who would have ever thought with the unemployment numbers we’re seeing right now that we’d have a harder time finding workers than before Covid[-19]?” she said, referring to the period when the jobless rate had touched a 50-year low.
Jobless Claims Ease, Showing Slowly Improving Labor Market
Payments from state programs down, but more people are tapping pandemic benefits.
The number of people seeking and receiving state unemployment benefits fell at the end of August, signs of a slow improvement in a U.S. labor market still deeply damaged by the coronavirus pandemic.
Weekly initial claims for jobless benefits fell by 130,000 to a seasonally adjusted 881,000 in the week ended Aug. 29, the Labor Department said Thursday. The number of people collecting unemployment benefits through regular state programs, which cover most workers, decreased by 1.24 million to about 13.3 million for the week ended Aug. 22.
The latest figures on jobless benefits are part of a mixed picture about the labor market, which remains in a deep hole because of economic disruptions from the pandemic. About 29 million people were receiving assistance from state and federal programs as of mid-August, Labor Department data showed.
The number of people seeking assistance through some pandemic-related programs also has increased in recent weeks.
Moreover, the Labor Department changed how it calculates seasonal adjustments for regular state claims starting with Thursday’s release, a move meant to better align the adjusted figures with raw numbers because of coronavirus-related distortions.
The bulk of last week’s decline in new applications for state benefits reflects the methodology change, said Aneta Markowska, chief economist at Jefferies LLC.
“Last week’s decrease is a catch up to the improvement that has been happening,” she said. “The labor market is healing, but the rate improvement is slowing and will continue to slow.”
Thursday’s report showed applications to a separate unemployment program created in March, pandemic unemployment assistance, rose solidly for a second straight week, and nearly matched applications to regular state programs, which cover about 90% of workers.
Figures on pandemic programs can be volatile because they rely on reporting from states about new programs put in place since the pandemic started.
The pandemic assistance covers gig workers, the self employed and those with special circumstances, such as being unable to report to work due to lack of child care.
That program, which is less generous than regular state programs, paid benefits to 13.6 million recipients during the week of Aug. 15, the latest available data. The figure also nearly matched those paid by state programs.
“This is seriously worrying evidence that contractors, entrepreneurs and self-employed workers are losing their income, and in some cases closing up shop for good,” said Patrick Anderson, chief executive of the Anderson Economic Group consulting firm.
Weekly applications to state programs, data with a half-century record, are down from a peak of more than six million in late March, but the recent level remains well above the roughly 200,000 claims filed weekly in February. Before this year, the most claims filed in a single week was 695,000 in 1982.
Seasonal adjustments are meant to account for regular swings in layoffs that occur during certain times of the year, such as around holidays. The coronavirus, however, didn’t align with historical patterns and likely led seasonal adjustments to overstate the actual number of weekly unemployment claims, economists say.
The Labor Department didn’t revise previously published data Thursday. Forecasting firm IHS Markit estimates that if the Labor Department had changed its data methodology at the beginning of the pandemic, the cumulative number of seasonally adjusted jobless claims could be about four million lower since mid-March.
While that would be a significant revision, it doesn’t change the overall narrative: The pandemic and related shutdowns caused layoffs to soar to levels not previously recorded in data back to the 1960s, and the amount is still likely to remain near levels associated with recessions in the near term.
Ms. Markowska expects job growth to ease this fall as most workers who were temporarily laid off are recalled and business closures and downsizing result in about seven million permanent job losses.
U.S. employers shed 22 million jobs in March and April and replaced 9 million of those the following three months. Economists surveyed by The Wall Street Journal forecast the August jobs report, to be released Friday, will show employers added 1.3 million jobs, reflecting still strong but easing job growth.
Construction and manufacturing, buoyed by a hot housing market, should add jobs at a strong rate, Ms. Markowska said, while service-sector gains should come at a slower pace, and government jobs, including at public schools, could decline in August.
Private-sector measures show the number of open jobs has plateaued and the growth in worker shifts has slowed from the spring. And several large employers have warned of job cuts.
United Airlines Holdings Inc. said Wednesday it planned to cut 16,370 staff amid a pandemic-driven slump in passenger demand, Ford Motor Co. is offering buyouts to salaried employees with the aim of cutting 1,400 workers, and cities have said they are contemplating staff cuts.
Kimberly Blevins, 37 years old, of Wilmington, Del., said she was laid off from her housekeeping job at a Holiday Inn in March, and hasn’t been able to find a job to support herself and her 3-year-old son.
“It’s flipped our world upside down,” she said. “I’ve put in applications left and right, but most companies haven’t even hired back all their old people yet.”
Ms. Blevins is receiving unemployment benefits, but after the $600 federal enhancement to benefits expired at the end of July, her weekly payment fell to $69, she said. She broke her apartment lease and moved in with her mother.
“I’m hurting my mom financially,” Ms. Blevins said. “She can’t afford to take care of us on her Social Security.”
President Trump signed an executive action last month allowing states to tap disaster-relief funds to pay for a $300 a week in enhanced aid on top of state benefits. More than 40 states have received federal approval to distribute the extra payments, according to the Federal Emergency Management Agency.
Some states, including Arizona and Louisiana, have already started delivering the money to individuals.
The Labor Department estimates it could take an average of three weeks for states to disburse the supplemental assistance. The money to fund the extra payments is limited, and could be exhausted in five or six weeks, depending on the number who qualify for such funds.
There are jobs available for unemployed workers in fields such as manufacturing, warehousing and logistics, said Deb Thorpe, president of Troy, Mich., staffing firm Kelly Professional & Industrial.
But it is hard for firms to fill such jobs, which range in pay from $13 to $17 an hour, despite a historically high unemployment rate, she said. Workers remain concerned about safety and school closures mean many don’t have child care.
Until recently, enhanced benefits meant many workers received more from benefits than they would receive in work pay. Ms. Thorpe said the no-show rate for new hires fell to about 20% after the enhanced benefits expired, from 40%, but the rate remains more than double a year ago.
“We are seeing moderate demand for workers,” she said. “And more people are coming back to work because they want financial stability—they have bills to pay.”
The Number Of People Seeking And Collecting Unemployment Benefits Has Remained At Historically High Levels
A sign the labor-market recovery is losing steam six months after the pandemic struck the U.S.
Unemployment claims were unchanged at 884,000 last week, the Labor Department said Thursday. Claims fell steadily for weeks after hitting a peak of about 7 million in March, but the pace of descent has slowed and claims remain above the prepandemic record of 695,000.
The number of workers collecting state unemployment benefits also has dropped from highs reached earlier in the pandemic, but is still elevated. So-called continuing claims increased to about 13.4 million at the end of August.
“People’s attachment to the job market right now is pretty fragile,” said Michele Evermore, senior policy analyst at the National Employment Law Project. “Clearly people are trying to get back on their feet. They’re trying to get back to work. That’s not going to be complete…until the virus goes away.”
The total number of workers receiving assistance from state and federal programs also remained high in late August, as more workers turned to pandemic-related programs for assistance.
The total of about 29.6 million people, which isn’t seasonally adjusted and lags two weeks behind new state claims figures, includes temporary pandemic programs for self-employed and gig workers in addition to those receiving regular state benefits.
The overall increase could be due to a number of factors. More states are reporting pandemic unemployment assistance numbers than earlier in the crisis, helping explain the longer-term increase in pandemic claims. Another possibility is parents who couldn’t return to work because of physical school closures could be moving from regular unemployment benefits to pandemic unemployment assistance, policy analysts said.
More individuals have run through their regular state benefits and are now relying on an extra 13 weeks in benefits provided in a federal stimulus bill passed in March. About 1.42 million people were collecting benefits through this program in the week ended Aug. 22, compared with 1.39 million a week earlier.
The unemployment rate fell to 8.4% in August from 10.2% in July and a peak of near 15% in April, when the pandemic triggered widespread business closures.
State reopenings helped boost employment this summer, and gains continued in August but at a slower pace, last Friday’s Labor Department report said.
The increase in the number of job postings, a real-time measure of labor-market activity, has markedly slowed since late July, and last week stood about 20% below 2019 levels, according to data from job-search site Indeed.com.
Some companies that reopened in late spring and early summer rehired a fraction of their furloughed workers, but aren’t registering enough foot traffic or new orders to raise employment to precrisis levels.
Marty Cunningham laid off all six part-time employees at his Springfield, Mass., cafe at the onset of the pandemic this spring. He brought back three employees when the neighborhood cafe reopened in June and hopes for business to increase enough that he can hire back more workers.
“It seems like it is incrementally getting a little better,” he said of business demand, noting he wasn’t seeing a fast recovery.
Sales have been running at about half of last year’s levels, as individuals—especially elderly ones—remain hesitant to go out amid the pandemic, Mr. Cunningham said.
Jobless claims are nearly four times levels recorded before the coronavirus upended the economy in March, an indication companies continue to cut workers.
“The fact that people are still losing jobs this late after the start of the pandemic is really distressing,” said Lowell Taylor, economics professor at Carnegie Mellon University’s Heinz College.
At the beginning of the pandemic, Congress passed a bill that included federal funding for an extra $600 a week in unemployment benefits. Those benefits expired at the end of July, and last month, President Trump signed an executive action allowing states to tap disaster-relief funds for $300 a week in enhanced aid on top of regular state benefits.
More than 40 states have received federal approval to distribute the extra payments, according to the Federal Emergency Management Agency. Some states, including Arizona and Louisiana, have already started delivering the money to individuals.
The money to fund the extra payments is limited and could be exhausted in five or six weeks, depending on the number who qualify for such funds. Texas announced on Wednesday that distribution of the extra $300 would expire for the week ended Sept. 5.
The Senate on Thursday was expected to take up a new round of stimulus that Republicans proposed earlier this week. The new GOP proposal includes $300 in weekly federal unemployment insurance through Dec. 27.
U.S. Unemployment Claims Held Steady At 860,000 Last Week
Weekly jobless claims remain high despite summer hiring.
The labor market’s recovery is showing fresh signs of losing momentum as persistently elevated applications for unemployment benefits show layoffs remain historically high despite summer hiring.
Weekly initial claims for jobless benefits fell by 33,000 to a seasonally adjusted 860,000 in the week ended Sept. 12, the Labor Department said Thursday. The number of people collecting unemployment benefits through regular state programs, which cover most workers, decreased by 916,000 to about 12.6 million for the week ended Sept. 5.
The coronavirus pandemic and related shutdowns caused both unemployment applications and payments to rise to the highest levels on record back to the 1960s this spring.
After sharply falling later in the spring and early summer, new applications have largely held steady since early August. The declining number of people receiving state benefits likely reflects that workers are finding new jobs, or are being recalled to old ones. But it also shows some workers who applied for benefits in March have hit the six-month limit set in many states.
Both figures remain above any recorded level before this year.
“While there is some rehiring going on, longer term labor market scarring is occurring as well,” said AnnElizabeth Konkel, economist at job search site Indeed. She added the economy has improved substantially since spring but “a fuller labor market recovery appears to have stalled out.”
The labor market has partially recovered from the severe downturn caused by the coronavirus pandemic and related shutdowns of businesses. Employers through August have replaced about 11 million jobs of the 22 million shed in March and April at the beginning of the pandemic. But the pace of hiring slowed later in the summer, and layoffs have remained persistent.
Companies from bakery chain Maison Kayser to apparel company Under Armour Inc. to hotel operator Marriott International Inc. are among those warning of job cuts in recent weeks. Still, layoffs this summer were more than offset by hiring. And Amazon.com Inc. this week said it plans to hire 100,000 additional employees in the U.S. and Canada.
The Labor Department’s weekly unemployment-benefits report provides data on regular state programs—which have served as an economic bellwether for a half-century—as well as details from two pandemic-specific programs first implemented in March.
The larger of those programs—available to the self-employed, gig workers and others not typically eligible for unemployment aid—paid benefits to about 14.5 million workers in the week ended Aug. 29, on an unadjusted basis, according to the Labor Department. However, analysts are skeptical about that figure.
It exceeds the number of people paid under state programs, which insure about 146 million workers. At the end of last year, there were about 10 million self-employed workers, according to the Labor Department.
State reporting and accounting errors are causing the Labor Department to overstate the figure, said Andrew Stettner, senior fellow at the left-leaning Century Foundation who studies the unemployment system. He estimated about 10 million people are being paid benefits under the program. He said such errors are to be expected from a new program that was set up quickly.
The Labor Department is monitoring Pandemic Unemployment Assistance claims data to identify potential anomalies and is working with states where the claims load appears to be overstated, a spokesman said.
The Pandemic Unemployment Assistance program is also more susceptible to fraud, said Wayne Vroman, an economist at the Urban Institute, who also studies unemployment. While state unemployment programs are tied to businesses’ tax records, the pandemic program asks self-employed workers to report their own income and other information, opening the system up to abuse.
“There has to be a lot more fraud,” Mr. Vroman said. “Eventually you’re supposed to verify eligibility against individual tax forms, but I don’t think states have time to check on accuracy of the income reporting.”
A second pandemic program pays 13 additional weeks of benefits to individuals who have exhausted their regular unemployment benefits. Enrollment in that program rose to 1.5 million in the Aug. 29 week, its highest recorded level. That is consistent with recipients migrating from state programs, where enrollment is falling.
A high number of workers tapping those emergency benefits shows many workers, particularly those that held part-time positions and those with jobs tied to still sparsely populated downtowns, malls and universities, are vulnerable, said Bradley Hardy, an economist at American University in Washington, D.C.
“Unemployment is down from its peak, but I remain concerned,” he said. “If you have the flu season combined with a potential second wave, I’d be concerned about forecasting continued improvement in the job market.”
In addition to the emergency programs, Congress had authorized federal funding for an extra $600 a week in unemployment benefits on top of amounts paid by states. Those benefits expired at the end of July. In early August, President Trump issued an executive action allowing states to tap $44 billion disaster-relief funds for $300 a week in enhanced aid.
Since then, the Federal Emergency Management Agency has distributed more than $35 billion in funds to 49 states, Guam, the U.S. Virgin Islands and the District of Columbia, an agency representative said Wednesday. South Dakota didn’t seek the funds. States are authorized to make the $300 enhanced payments for no more than six weeks.
While unemployment remains elevated, demand for labor is increasing in some industries, said Karen Fichuk, chief executive of Randstad North America.
She said her company is seeing more placements at auto-manufacturing firms, companies tied to loan refinancing, and at warehouses and call centers, the latter two reflecting growth in online shopping. Randstad has 14,000 open seasonal positions, including entry-level warehouse jobs that start at $12 an hour and call-center jobs that can be done from home and pay as much as $20 an hour.
The staffing firm is offering training to those who lost jobs in the hard-hit hospitality industry. Ms. Fichuk said their customer-service skills make those workers good fits at call centers.
“We are seeing a lot of momentum,” she said. “There’s still decreased employment in some areas, but there are plenty of pockets of opportunity.”
Jobless Rates In Northeast, West Are Highest In Nation
Despite Covid-19 outbreaks, Southern and Midwestern states saw lower unemployment rates in August than neighboring states.
Large states in the Northeast and West logged some of the highest unemployment rates in the nation in August, while many of their Southern and Midwestern neighbors saw lower rates of joblessness despite significant coronavirus outbreaks over the summer.
The jobless rate in more than half of states was below the national average of 8.4% in August, according to a Labor Department report that provides details on the job market in all 50 states.
Many of those states—including Arizona, South Carolina and Texas—recorded a surge in new coronavirus cases during the summer, according to data compiled by Johns Hopkins University. Utah and South Dakota have seen recorded cases of Covid-19, the disease caused by the new coronavirus, move higher in recent weeks.
Unemployment rates in regions across the nation moved down this summer after peaking in April, when the coronavirus first triggered widespread lockdowns across the nation. Still, jobless rates remained particularly high, on average, in the Northeast and West, and clocked in above 10% in 10 states in the U.S.
In the Northeast, earlier virus outbreaks prompted businesses to close and consumers to take greater precautions. Last month, New York had an unemployment rate of 12.5%, Pennsylvania recorded an unemployment rate of 10.3% and New Jersey’s unemployment rate was 10.9%.
Adam Kamins, an economist with Moody’s Analytics, said unemployment rates improved noticeably in the region, particularly in New York and Massachusetts. While the recession in those states is probably over, he said, “Once you’re a state that’s been particularly hard-hit, those effects linger economically.”
Daniel Adams, the owner of Kerns Avenue Bowling Center in Buffalo, N.Y., reopened this week for the first time since the spring. He said the center lost three of its five bowling leagues because of members’ concerns about Covid-19, and will be operating at 50% capacity when it opens lanes to nonleague bowlers. “The pain is just starting,” Mr. Adams said. Continuing to operate at half the building’s capacity “is not enough to sustain the business.”
Mr. Adams said he hired back about half of the employees he had before the pandemic began.
In a recent Brooklyn Chamber of Commerce survey, half of businesses reported revenues were down more than 50% compared with a year ago.
“They just don’t have the customer base and support. They’re just not going to hire as many people,” said Randy Peers, president of the Brooklyn Chamber of Commerce. “That’s a concern, clearly.”
Still, many areas of pent-up demand were unleashed after some restrictions on New York businesses were lifted, Mr. Peers said. For instance, when barber shops and nail salons were allowed to reopen, demand for those services was strong, Mr. Peers said. Consumers flocked to outdoor dining once restaurants began filling up sidewalks and streets with tables, he added.
New York’s reopening helped pull down its unemployment rate to 12.5% from a pandemic high of 15.9% in July. Massachusetts, another Northeastern state, experienced the largest monthly drop in its jobless rate of any state last month.
“It does point to the fact that that region has been able to avoid a second wave of cases and is moving towards a recovery,” said Daniel Zhao, senior economist at job site Glassdoor.
Unemployment rates are influenced by a range of factors that go well beyond the current rate of reported Covid-19 infections, said Aneta Markowska, chief financial economist at the investment bank Jefferies LLC. She said some of the states with the highest unemployment rates in August were Nevada, Hawaii and New York—all places that rely heavily on tourism.
Population density is another factor that appears to be affecting state unemployment rates, Ms. Markowska said. “As people flee large cities, demand for services is declining further in those areas,” she said, keeping unemployment levels up in places like New York City.
States with large, higher-density cities, including California and Illinois, experienced elevated levels of unemployment in August, Friday’s Labor Department report showed. The jobless rate in both those states remained in the double digits last month.
The unemployment rate reflects the number of people who don’t have jobs but are actively seeking employment, compared with the size of the state’s labor force. It doesn’t directly capture the number of people who have dropped out of the labor force because they aren’t seeking work or are unable to work during the period the survey is conducted.
For some states, a decline in unemployment rates was driven by people dropping out of the labor force. That was the case in Arizona, where the jobless rate fell to 5.9%, mostly because fewer people reported that they were actively looking for work.
“Unfortunately, that kind of decline in the unemployment rate does not signal an improvement in our labor market,” said George Hammond, an economist at the University of Arizona. “In fact, it suggests that the state is still really struggling with the economic fallout from the pandemic.”
Some states’ persistently high unemployment rates can be explained largely by their reliance on tourism and hospitality. Nevada, whose economy is primarily centered around the casino business in Las Vegas, posted a 13.2% unemployment rate. Hawaii, which requires all out of state travelers to self-quarantine for 14 days after they arrive, recorded a jobless rate of 12.5% in August.
In Florida, where the unemployment rate fell 4 percentage points to 7.4%, Don Beaudet said the furniture-manufacturing business where he is chief financial officer has struggled to keep up with a surge in demand. After a one-month closure in the spring, Mr. Beaudet said the company brought back all 185 of its employees in May and wants to hire another 15.
“To tell you the truth, business can’t be better,” said Mr. Beaudet, adding that he believes people are spending more on home furnishings because they can’t go away on vacation. “We’re getting orders in faster than we can produce.”
High Jobless Claims Suggest Slowing In Labor Market’s Recovery
Applications for unemployment benefits hold steady at just under 900,000 amid coronavirus pandemic.
The number of applications for unemployment benefits has held steady in September at just under 900,000 a week, as employer uncertainty about the economic recovery six months into the coronavirus pandemic continued to restrain hiring gains.
Jobless claims increased slightly to 870,000 last week from 866,000 a week earlier, according to Thursday’s Labor Department report. The totals remain well above pre-pandemic peaks but are down significantly from nearly 7 million in March.
The labor market has added jobs in the prior four months after steep declines in employment at the beginning of the pandemic, helping bring down the jobless rate to 8.4% in August from near 15% in April. But the pace of gains has slowed recently, and persistently elevated jobless claims in September point to continued cooling in the jobs market.
One reason is layoffs have continued at a high rate. Some employers that held on to workers at the beginning of the economic crisis are now reducing their head counts due to persistently weak demand.
A rise in coronavirus cases this summer also triggered new business restrictions and related layoffs, and some small businesses that had relied on government aid to keep workers on payrolls had to cut staff when that money ran dry. The Labor Department will provide an updated look at the jobs market in September on Oct. 2.
At the same time, many workers are also returning to their previous jobs or finding new ones, but not at a high enough rate to offset overall job losses from earlier in the pandemic. Re-employment has also contributed to a decline in the number of people collecting unemployment benefits through regular state programs, which cover most workers. So-called continuing claims decreased by 167,000 to about 12.6 million for the week ended Sept. 12.
“The labor market is not out of the woods yet. It’s still a very challenging and weak labor market, but that said…it’s moving in the right direction,” said Kathy Bostjancic, an economist at Oxford Economics.
Unemployment rates in regions across the nation moved down this summer after peaking in April, when the coronavirus first triggered widespread lockdowns. Still, jobless rates remained particularly high, on average, in the Northeast and West, and clocked in above 10% in 10 states in the U.S. last month.
Millions of workers are collecting jobless benefits through a federal pandemic program for the self-employed, gig workers and others not typically eligible for unemployment aid. At the beginning of September, about 11.5 million people were claiming benefits through this program, a decrease of about 3 million from a week earlier, driven by a large drop in California, according to the Labor Department.
Many economists are skeptical about the accuracy of pandemic claims figures, given the sharp revisions to the numbers and widespread unemployment fraud tied to the program.
Large swaths of the economy are showing signs of slowly regaining ground as the pandemic passes its half-year mark.
Consumer spending and job gains continued in August but at a slower pace than earlier in the summer. U.S. service-sector and manufacturing companies reported solid but cooling growth in September. Earlier this week, Federal Reserve officials implored Congress to enact more fiscal stimulus to boost the speed of the recovery.
Economists expect the initial hiring spurt from business reopenings to ease as state restrictions are lifted at a slower pace than in early summer.
“We’re getting to that point where the easy hiring is behind us,” said Ryan Sweet, an economist at Moody’s Analytics. “This next leg of the recovery is going to be much more driven by the underlying strength of the economy rather than businesses just recalling workers.”
Many employers brought back a portion of their furloughed employees but are finding sales are too weak to raise employment to precrisis levels.
Peter Merriman reopened four of the nine restaurants he owns across Hawaii in August, but slow sales meant he could hire back only about 40% of the staff who were working at those locations before the pandemic began. He said sales at those restaurants, which operate under the Merriman’s Restaurants brand, are down about 80% from the same period last year.
“It’s really scary,” Mr. Merriman said. “We know that we’ll eventually come back, it’s just a question of when and how.”
Many workers are experiencing monthslong spells of unemployment. In the first week of September, about 1.6 million individuals were collecting benefits through a federal program that provides an additional 13 weeks of benefits for people who run through the benefits’ duration set by states. Benefits last for six months in many states.
Taylor Bakley lost her part-time hosting job at a restaurant when the pandemic started, and hasn’t been able to find work since then. Ms. Bakley, who lives in Big Spring, Texas, said she has applied for nearly two dozen jobs since she finished high school in May, including a cashier position at the Dollar General.
“I’ve been applying like crazy, but it’s so hard to get a job right now,” she said.
Ms. Bakley, 18 years old, said she is living with her grandmother and isn’t expected to pay rent, but still has to pay her car bills and insurance and is hoping to save money for college.
In addition to the federal emergency programs, Congress also passed legislation this spring authorizing federal funding for an additional $600 a week in unemployment benefits. After those benefits expired, President Trump signed an executive order last month to replace them with an additional $300. The $300 top-off payments will only last up to six weeks, and Congress has yet to reach an agreement on a new federal jobless benefit.
U.S. Job Gains Slow As More Layoffs Become Permanent
Economy added 661,000 jobs in September; unemployment rate fell to 7.9%.
Hiring gains slowed sharply heading into the fall as more layoffs turned permanent, adding to signs that the U.S. economy faces a long slog to fully recover from the coronavirus pandemic.
Employers added 661,000 jobs in September, the Labor Department said Friday. The increase in payrolls showed the labor market continued to dig out of the hole created by the pandemic, but at a much slower pace than over the summer.
The U.S. has replaced 11.4 million of the 22 million jobs lost in March and April, at the beginning of the pandemic. Job growth, though, is cooling, and last month marked the first time since April that net hiring was below one million.
Friday’s Labor Department jobs report is the final one before the presidential election, which faces fresh uncertainty after President Trump and first lady Melania Trump tested positive for Covid-19. Mr. Trump and Democratic presidential candidate Joe Biden have promised to create millions of jobs to advance the economy’s recovery from the pandemic-induced shock in the spring.
Other signs of a slowing U.S. recovery include a drop in household income at the end of the summer and smaller gains in consumer spending, the economy’s main driver.
The unemployment rate fell to 7.9% in September from 8.4% the prior month. Though the jobless rate is down sharply from a pandemic high of near 15% in April, last month’s drop partially reflected an increase in permanent layoffs and more people leaving the labor force. That could stem from more workers quitting their job searches due to weak employment prospects or child-care responsibilities.
Large corporate layoffs are sweeping across the U.S. Walt Disney Co. earlier this week announced permanent layoffs for 28,000 theme park workers who were previously on temporary furlough. American Airlines Group Inc. and United Airlines Holdings Inc. will proceed for now with a total of more than 32,000 job cuts after lawmakers were unable to agree on a broad coronavirus-relief package.
The recent layoff announcements aren’t reflected in the September jobs report, which includes data gathered in the first half of the month.
Employers continue to bring back workers, but many factors are converging to hinder the economic recovery. For one, the initial hiring rebound from business reopenings is easing as states lift restrictions at a slower pace than earlier in the summer. Further, layoffs remain elevated compared with pre-pandemic peaks as business uncertainty persists.
“The pace of jobs recovery apparent in today’s report suggests that we will be counting the employment recovery in years, not months or quarters,” said Marianne Wanamaker, a labor economist at the University of Tennessee, Knoxville. “We’re not going to gain jobs as rapidly as we did in May and June.”
A decline in government jobs, particularly at public schools, weighed on September payrolls. Economists attributed the drop to many schools’ pursuit of online learning this fall. Large payroll gains occurred in the leisure-and-hospitality, retail and health-care sectors, some of the hardest hit at the onset of the pandemic.
The number of unemployed individuals saying their layoffs were temporary declined in September, which could reflect more people returning to work. Meanwhile, the number of workers who saw their layoffs as permanent rose for the month, a sign workers may be in for long spells of unemployment.
During the third quarter, 23% of the long-term unemployed were Latino workers and 21% were Black workers, both disproportionately large relative to their shares of the population.
“It will be much harder to bring back that workforce in an economy that’s moving into a long, slow recovery,” Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, said. “A lot of the businesses where those workers lost jobs are now gone.”
Austin Halliday, of Cleveland, Tenn., was laid off from his consulting role at a data-analytics company in June after nearly a year on the job. When he first became unemployed, Mr. Halliday said he was optimistic about quickly finding a new position. He later realized the labor market was crowded with many other people seeking employment.
Mr. Halliday said he has submitted 250 job applications since June, some for entry-level roles and others for positions requiring more experience. He said he has had a few interviews but hasn’t landed a job. The 23-year-old is collecting unemployment benefits as he lives at home with his family and hunts for work.
“Sometimes I am very motivated and thinking, ‘yeah, I can find a job somewhat soon,’” he said. “And then other times, it’s like, ‘why am I doing this?’”
New coronavirus cases were above 40,000 for the third day in a row this week, though totals have declined from a summer peak. Some consumers are hesitant to venture out and spend amid the pandemic, restraining companies’ sales and hiring plans
E.D. Mondainé, owner of Po’Shines Cafe De La Soul in Portland, Ore., had to furlough half his staff in the spring when the coronavirus hit.
The soul-food restaurant and catering company was able to bring its employee count back up this summer, thanks in part to a grant from humanitarian aid organization Mercy Corps. Mr. Mondainé said the neighborhood restaurant also gave out thousands of free meals like catfish and eggplant Parmesan during the pandemic, building awareness of its business in the community and, in turn, boosting revenue down the road.
Still, consumer caution toward the virus is keeping a lid on the company’s sales, which remain down about 30% compared with pre-coronavirus, Mr. Mondainé said. He plans to keep payrolls steady until revenue improves further.
“This isn’t going to last forever,” he said of the pandemic. “As long as we’re able to keep our heads above water, we’ll be there when it does end.”
Businesses that rehired a fraction of their workers when states lifted lockdown restrictions in early summer now need to see stronger demand to raise employment to precrisis levels, economists say. For many, though, sales remain depressed as businesses operate under capacity constraints.
Andrew Fritz, co-owner of Citizen Public House restaurant in Scottsdale, Ariz., voluntarily reduced his dining-room hours and capacity in July as new coronavirus cases in the state spiked. He said he increased those hours and rehired workers about a month later, but said the restaurant is still operating with less than half of its pre-pandemic staff. Sales over the past two months have fluctuated around half the levels seen a year earlier, he said.
Mr. Fritz said demand has been strong on the weekends, though the restaurant faces constraints on the number of people it can have in its dining room because its tables and bar seats need to be spaced 6 feet apart. During the week, he added, business has been much weaker.
“We’re shedding money every week,” Mr. Fritz said. He expects the restaurant could break even if revenue rose by another $5,000 to $10,000 a week. “But a break-even scenario is a really ugly scenario, because we’re doing it by cutting peoples’ salaries and wages and hours.”
U.S. Unemployment Claims Remain Elevated Above 800,000
Initial claims for jobless benefits show pandemic continues to batter labor market.
U.S. unemployment claims remained elevated above pre-pandemic highs last week, as layoffs persist and the labor-market recovery flashes signs of slowdown.
Unemployment claims fell slightly to 840,000 last week, Thursday’s Labor Department report said. Weekly jobless claims are down sharply from a peak of near 7 million in March but have clocked in between 800,000 and 900,000 for more than a month. Claims remain above the pre-pandemic peak of 695,000 and are higher than in any previous recession for records tracing back to 1967.
The number of people collecting unemployment benefits through regular state programs, which cover most workers, fell to 11 million in the week ended Sept. 26 from 12 million the prior week, according to the Labor Department. So-called continuing claims declined throughout the summer, indicating many unemployed people are returning to work as the recovery continues.
But some of the recent declines in continuing claims represent individuals who have exhausted the maximum duration of payments available through regular state programs and are now collecting money through a federal program that provides an extra 13 weeks of benefits.
About two million people were receiving aid through this extended-benefits program in the week ended Sept. 19, up from 1.8 million a week earlier, Labor Department data show.
“It’s more of the same, but it’s also still jaw-dropping that we have that many new claims even now as we’re six, seven months into this whole recession and recovery,” said Eliza Forsythe, an economics professor at the University of Illinois, Urbana-Champaign.
Large corporations announced job cuts last week, including American Airlines Group Inc., United Airlines Holdings Inc. and Walt Disney Co. Many of those workers will likely seek unemployment benefits in the coming weeks, but aren’t yet reflected in the most recent claims data.
Thursday’s data was complicated by California pausing the processing of new claims for two weeks. The state will use this time to clear a backlog of unemployment filings and implement fraud prevention technology, the Labor Department said. As a result, this week’s jobless claims report reflects California’s level during the last week before the pause, the federal agency said.
The labor market and economy more broadly appear to be slowing. Monthly job gains and job postings have cooled, and more layoffs are becoming permanent. Household income fell at the end of summer because of a drop in federal supplements to jobless benefits, and consumer spending is also growing more slowly.
A federally funded extra $600 in weekly unemployment benefits expired at the end of July, and President Trump signed an executive order in August to fund an additional $300 in weekly benefits. States were authorized to tap $44 billion in disaster-relief funds to pay up to six weeks in supplemental benefits from the week ended Aug. 1.
The White House and Congress continue to be at odds on how to provide a new round of economic stimulus. Mr. Trump earlier in the week halted negotiations with Democrats on a large coronavirus relief package until after the election.
Mr. Trump has since said lawmakers should pass a series of bills, including airline assistance and funds for direct checks and a small-business aid program, rather than one larger package.
Leland Lambert, age 38, of Salt Lake City, was laid off in June from his job as an operations director at a day-care center when the nonprofit exhausted federal aid through the Paycheck Protection Program, which was designed to keep workers on payrolls.
As soon as he was laid off, the Utah resident slashed spending on nonessentials like soda and Netflix and applied for jobless benefits. Mr. Lambert is collecting regular state unemployment benefits of about $550 a week while searching for a new job.
But his outlook for finding work is bleak after having applied for more than 100 jobs since June in roles such as operations management and business consulting.
“There are a ton of unemployed, and the jobs just aren’t quite there yet,” Mr. Lambert said. “Especially in the upper-management side, the competition is pretty tough.”
He decided to pursue an online master’s degree program in management and leadership while continuing to seek employment. He expects it will be several more months before a job comes his way.
Millions of workers are receiving jobless benefits through a federal pandemic program for the self-employed, gig workers and others not typically eligible for unemployment aid. In the week ended Sept. 19, there were 11.4 million individuals seeking benefits through this program.
Many economists are skeptical about the accuracy of the pandemic claims figures, though. The pandemic unemployment program has been subject to fraud, as it is more difficult for state labor departments to verify incomes of self-employed people and gig workers than regular employees, Ms. Forsythe at the University of Illinois, Urbana-Champaign noted.
U.S. Jobless Claims Rose To 898,000 Last Week
New unemployment claims continue to exceed the pre-pandemic high point.
The number of new applications for unemployment benefits rose last week to the highest level since late August, as persistent layoffs hold back the economic recovery.
Claims increased to 898,000 last week, holding above the pre-pandemic high point of 695,000, according to Thursday’s Labor Department report. After steadily declining from a peak of near 7 million in March, claims have clocked in between 800,000 and 900,000 for more than a month as companies readjust their head counts.
“Given that we’re seven months into the pandemic now, these are still incredibly high numbers for initial claims,” said AnnElizabeth Konkel, economist at job site Indeed, noting labor market indicators suggest the recovery is slowing down.
The number of people collecting unemployment benefits through regular state programs, which cover most workers, decreased to about 10 million in the week ended Oct. 3 from 11.2 million the prior week, according to the Labor Department. So-called continuing claims declined throughout the summer, indicating employers continued to hire workers.
Still, some of the recent declines in continuing claims represent individuals who have exhausted the maximum duration of payments available through regular state programs and are now collecting money through a federal program that provides an extra 13 weeks of benefits.
About 2.8 million people were receiving aid through this extended-benefits program in the week ended Sept. 26, representing the largest number since the program began this spring, Labor Department data show.
An increasing number of individuals relying on extended benefits suggests many Americans are experiencing long spells of unemployment. The extended-benefits program is set to expire at the end of this year, though.
Thursday’s data was complicated by California pausing the processing of new claims for two weeks. The state will use this time to clear a backlog of unemployment filings and implement fraud prevention technology, the Labor Department said. As a result, the figures reflect California’s level during the last week before the pause.
Large corporations have announced job cuts in recent weeks, including AT&T Inc.’s WarnerMedia, Walt Disney Co. and Allstate Corp. Many of those workers will likely seek unemployment benefits in the coming weeks.
The economy, more broadly, is flashing signs of slowdown. Monthly job gains have cooled in recent months, as has growth in job postings and consumer spending. More workers are reporting their layoffs are permanent.
A federally funded extra $600 in weekly unemployment benefits expired at the end of July, and President Trump signed an executive order in August to fund an additional $300 in weekly benefits. States were authorized to tap $44 billion in disaster-relief funds to pay up to six weeks in supplemental benefits from the week ended Aug. 1.
The White House over the weekend formally submitted a $1.88 trillion stimulus proposal, bringing the offer closer to the $2.2 trillion coronavirus aid legislation House Democrats passed earlier this month. But the parties involved were still negotiating Wednesday over the size and details of a possible deal.
Lateisha Willett, 27 years old, of Davenport, Iowa, was let go in mid-March from the call center where she worked. The additional $600 a week in federal unemployment insurance helped her endure the spring and summer. But that boost expired in July, leaving Ms. Willett to receive the state benefit of just $90 a week, plus an extra $3 granted to care for her 2-year-old son—an amount just shy of the minimum threshold to qualify for extra unemployment benefits that Mr. Trump authorized in August.
Now earning around one-fifth of what she made at the call center, Ms. Willett has fallen behind on her rent. She has applied for 30 jobs in recent months, she said, but none have panned out.
“I’m afraid that everything will just come crashing down. I’ll be evicted, and that will open another door to hell and chaos for me,” she said. “I’m not sure what I can do about it.”
Millions of workers are receiving jobless benefits through a federal pandemic program for the self-employed, gig workers and others not typically eligible for unemployment aid. In the week ended Sept. 26, there were 11.2 million individuals seeking benefits through this program.
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