WASHINGTON >> Nearly 3.3 million Americans applied for unemployment benefits last week – nearly five times the record before setting in 1982 – amid an economic downturn caused by the coronavirus.
The wave of weekly applications has been a stunning reflection of the damage the viral epidemic is inflicting on the economy. Unemployment assistance filings usually reflect the pace of layoffs.
The layoffs are sure to accelerate as the American economy enters a recession. Revenue fell to restaurants, hotels, cinemas, lounges, and airlines. Auto sales are plummeting, and carmakers are closing factories. Most of these employers face loan payments and other fixed costs, so they are cutting back on saving money.
As job losses mount, some economists say the nation’s unemployment rate could approach 13% in May. By comparison, the highest percentage of job losses during the Great Recession, which ended in 2009, was 10%.
“What seemed impossible just two weeks ago is now reality,” said Nancy Vanden Houten, an economist at Oxford Economics, a consulting firm. “The U.S. economy will experience the largest economic contraction in record and the most severe wave of unemployment ever.”
The economic deterioration was rapid. As recently as February, the unemployment rate was at a 50-year low of 3.5%. And the economy has been growing steadily if modestly. But by the April-June quarter of the year, some economists think the economy will shrink at its fastest annual pace – a contraction that can reach 30%.
In its report today, the Department of Labor said 3,283 million people applied for unemployment benefits last week, up from 282,000 during the previous week. But many people who have lost jobs in recent weeks have been unable to file for unemployment aid because state websites and phone systems have been overwhelmed by a demise of applicants and have been frozen up.
That logjam suggests that today’s report actually understates the magnitude of last week’s work cut. Thus, the fact that workers who are not on payroll companies – gig workers, freelancers, self-employed workers – are not currently eligible for unemployment benefits even though in many cases they cannot earn money.
With the termination expanding, a significant expansion of unemployment benefits for the millions who will lose jobs as a result of the coronavirus outbreak has been included in an almost final approval economic relief bill in Congress. A provision in the bill would provide an extra $ 600 a week on top of the unemployment aid that states provide. Another would extend the additional 13 weeks of benefits beyond those six months of unemployment aid that most states offer.
The new legislation would also extend the benefits of unemployment benefits, for the first time, to gig workers and other non-payroll companies.
The separate laws passed last week provided up to $ 1 billion to states to improve their ability to process claims. But this money is taking time to be disbursed.
In California, claims for unemployment benefits more than tripled last week to 187,000. In New York, they rose by a factor of five to 80,334. Nationwide, about 2.25% of the workforce all applied for unemployment aid last week. In Nevada, the figure was 6.8%, in Rhode Island 7.5%.
Jessy Morancy of Hollywood, Florida, was laid off Friday from her job as a wheelchair assistant and customer service agent at Fort Lauderdale Airport. Morancy, 29, called the state unemployment office Monday to try to file for unemployment benefits, but encountered just a recorded message telling her to call back later.
He was also concerned that even a full unemployment benefit of $ 275 a week would be less than half of what he earned from his work and insufficient to provide for his children, ages 10 and 7.
“I’m still in a state of shock,” Morancy said.
He said he heard that airline employees could continue to receive wages if Congress provided financial assistance to airlines. But even so, it’s not clear that employees like her who work for contractors – Eulen America, in her case – would qualify.
“If these companies are going to get a bailout, why not put us up?” Morancy said.
Even for those who are able to make a claim, the benefits will take time to kick in. It typically takes two to three weeks before applicants receive any money. State agencies must first contact their former employer to verify their employment and salary history. Only then can the employee’s weekly unemployment benefit be calculated.
The problem is exacerbated, most state agencies that handle unemployment claims are operating at historically low levels of funding and staff intend to face a claim. Just weeks ago, the job market was in the strongest form it had been in decades.
Kim Boldrini-Sen, 41, has also vowed to even file her claim. She has tried in two states: In Connecticut, where she works as an acupuncturist in a private practice, and in New York, where she lives and has her own acupuncture business.
In Connecticut, he thought his application was being submitted. But when she returned last week to re-file as applicants are required to do each week, she found there was no record of her initial filing. After taking an hour to re-fill, he received a pop-up notice that he was eligible to do so online.
In New York, the state’s website repeatedly crashed when it was halfway through completing its request. When she finally managed to squeeze submissions, she received a pop-up saying she was carrying on the phone. That hasn’t worked well, either.
“I called at all hours of the day, he said. This has been my life for a week, and I still can’t get to anyone.”
On Monday, the New York State Department of Labor tweeted, “If you haven’t been able to find our phone and / or online system this week, please keep trying.”
The agency said on Twitter: “We are working as hard as we can to ensure that all benefits are paid and appreciate your patience.”
Ellen Zentner, an economist at Morgan Stanley, said in a note to clients that 17 million jobs could be lost in May – twice all 8.7 million jobs lost in the Great Recession. It expects the unemployment rate to average 12.8% in the April-June quarter, which could be the highest level since the 1930s.
Still, Zentner also expects the economy to start recovering by the second half of the year. It will take time for things to return to something near normal, he projects: The unemployment rate could still top 5% by the end of next year.