Record 6.6 Million Americans Filed For Unemployment Last Week

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As Geller Report previously reported last week, the numbers are worse than that.

U.S. Jobless Claims Surge With Tally at 10 Million in Two Weeks

By Sarah Chaney and Eric Morath, WSJ, April 2, 2020:

A record 6.6 million Americans applied for unemployment benefits last week, marking a drastic downturn in the U.S. labor market caused by the new coronavirus.

The large number of claims was double the 3.3 million sought benefits two weeks ago as the U.S. shut down parts of the economy in an effort to contain the virus. Jobless claims, a proxy for layoffs, provide temporary financial assistance for workers who lose their jobs.

“The speed and magnitude of the labor market’s decline is unprecedented,” said Constance Hunter, chief economist at KPMG LLP. Ms. Hunter said she expected that millions more claims will be filed in the coming weeks and projects 20 million jobs will be lost. “We didn’t see this in the global financial crisis. We didn’t see this in the Great Depression. There’s been a total decimation of consumption.”

States indicated people from a wide array of industries—including restaurants, retail, trade and construction—sought unemployment benefits, showing the toll from the coronavirus is gripping a growing share of the U.S. economy.

There are several reasons why unemployment claims are likely to remain high in the coming weeks. For one, the federal rescue package signed into law last week increases the pool of workers who can tap benefits by making independent contractors and self-employed individuals eligible. Further, states have continued to tighten restrictions, Florida, Georgia, Mississippi, Nevada and Pennsylvania on Wednesday issued statewide stay-at-home orders.
Why Unemployment Means More Money for Some Under Stimulus Bill

Under the new coronavirus stimulus package, some workers may earn more money from unemployment benefits than what they earned before being laid off. WSJ’s Gerald F. Seib explains why that is the case. Photo: Anna Watts for The Wall Street Journal

Many states haven’t fully processed all unemployment-benefit applications due to the deluge, though initial claims were dramatically higher in many states last week than two weeks ago.

The largest number of claims were filed in California last week, followed by Pennsylvania, and New York.

Renee Munholand, a theater worker who helps hang lights and audio equipment for events in Seattle, successfully filed for unemployment after the city’s concerts and corporate events ground to a halt. She received her first two unemployment checks, which totaled about $1,200, on March 24.

The money is helping, she said, enabling her to make minimum payments on credit cards, buy food and make rent. She said she is keeping her heat turned down to trim costs.

“Depending on how long this goes, it could eventually start to be crippling,” she said.

Who’s Hiring and Who’s Firing: How Firms Are Reacting to the Coronavirus

The increase in unemployment claims is set to drive up the unemployment rate, which was hovering near a 50-year low as recently as February, by several percentage points.

Joe Brusuelas, chief economist at RSM US LLP, said the unemployment rate rises by 1 percentage point for every 1.5 million initial jobless claims. That means two weeks of claims near 3 million could lead to a jobless rate of 7.5%.

Layoffs have been particularly widespread among small businesses. Such firms operate on lower cash reserves and quickly resorted to layoffs, according to researchers at the University of North Carolina’s Kenan-Flagler Business School. They estimated that up to 6.6 million small-business employees were immediately laid off when state governments in March began mandating businesses close to contain the virus’s spread.
Most of the restaurants and retail businesses in Portsmouth, N.H., have closed, with some offering takeout orders.
Photo: Charles Krupa/Associated Press

Employees at small businesses tend to be lower-skill workers who suffer most from layoffs, said Paige Ouimet, a finance professor at the University of North Carolina at Chapel Hill’s business school.

“It’s sort of a double whammy that we’re expecting the biggest layoffs to occur for the type of worker it’s going to be most painful for,” she said.

Carol Schroeder, co-owner of Orange Tree Imports, a housewares shop in Madison, Wis., laid off 20 employees last week when the store closed to comply with state orders. Among those dismissed were workers she employed for three decades.

“I told them to go apply for unemployment insurance,” she said. “We’ve paid into it for 45 years, now’s the time to use it.” She plans to seek federal loans so she can pay workers’ health insurance and said she is confident they will return when her business reopens.

The roughly $2 trillion stimulus package passed by Congress and signed into law by President Trump last week is intended to help ease some of the financial pain many laid-off Americans are experiencing.

Labor Secretary Eugene Scalia earlier this week said funds to increase unemployment payments by $600 a week—more than double the existing maximum in some states—will be distributed to states this week, but he didn’t know when states would make such payments to individuals.

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