Left Menu
Development News Edition

3.3 million seek US jobless aid, nearly 5 times earlier high

PTI | Washington DC | Updated: 26-03-2020 21:17 IST | Created: 26-03-2020 21:17 IST
3.3 million seek US jobless aid, nearly 5 times earlier high

Nearly 3.3 million Americans applied for unemployment benefits last week — nearly five times the previous record set in 1982 — amid a widespread economic shutdown caused by the coronavirus. The surge in weekly applications was a stunning reflection of the damage the viral outbreak is inflicting on the economy. Filings for unemployment aid generally reflect the pace of layoffs.

Layoffs are sure to accelerate as the US economy sinks into a recession. Revenue has collapsed at restaurants, hotels, movie theaters, gyms, and airlines. Auto sales are plummeting, and car makers have closed factories. Most such employers face loan payments and other fixed costs, so they're cutting jobs to save money. As job losses mount, some economists say the nation's unemployment rate could approach 13% by May. By comparison, the highest jobless rate 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 US economy will experience the largest economic contraction on record with the most severe surge in unemployment ever." The economic deterioration has been swift. As recently as February, the unemployment rate was at a 50-year low of 3.5%. And the economy was growing steadily if modestly. Yet by the April-June quarter of the year, some economists think the economy will shrink at its steepest annual pace ever — a contraction that could reach 30%. In its report on Thursday, the Labour department said 3.283 million people applied for unemployment benefits last week, up from 282,000 during the previous week. Yet 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 crush of applicants and have frozen up.

That logjam suggests that Thursday's report actually understates the magnitude of job cuts last week. So does the fact that workers who are not on company payrolls — gig workers, free-lancers, the self-employed — aren't currently eligible for unemployment benefits even though in many cases they're no longer able to earn money. With layoffs surging, a significant expansion of unemployment benefits for the millions who will lose jobs as a result of the coronavirus outbreak was included in an economic relief bill nearing final approval in Congress. One provision in the bill would provide an extra USD 600 a week on top of the unemployment aid that states provide. Another would extend 13 additional weeks of benefits beyond the six months of jobless aid that most states offer.

The new legislation would also extend unemployment benefits, for the first time, to gig workers and others who are not on company payrolls. Separate legislation passed last week provides up to USD 1 billion to states to enhance their ability to process claims. But that money will take 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 entire workforce applied for jobless 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 attendant 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.

She was also concerned that even a full unemployment benefit of $275 a week would be less than half of what she earned at her job and insufficient to provide for her children, ages 10 and 7. “I'm still in a state of shock,” Morancy said.

She said she has heard that airline employees might continue to receive salaries if Congress provides financial assistance to the airlines. Yet even so, it's not clear that employees like her who work for contractors — Eulen America, in her case — would be eligible. “If these companies are going to get a bailout, why not include us?” Morancy said. Even for those able to file 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 employers to verify their work and earnings history. Only then can the employee's weekly unemployment benefits be calculated.

Worsening the problem, most state agencies that handle unemployment claims are operating at historically low funding levels and staffing that are intended to handle a trickle of claims. Just weeks ago, the job market was in the strongest shape it had been in decades. Ellen Zentner, an economist at Morgan Stanley, said in a note to clients that 17 million jobs could be lost through May -- twice the entire 8.7 million jobs that were lost in the Great Recession. She expects the unemployment rate to average 12.8% in the April-June quarter, which would 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 close to normal, she projects: The unemployment rate could still top 5% at the end of next year..

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.


TRENDING

OPINION / BLOG / INTERVIEW

Maritime transport post-COVID 19: Disruptions ahead in business models, techno-investments, regulations

Cargo shipping is a crucial part of the global supply chains and is likely to become more resilient along with efforts to make supply chains resilient but cruise liners could face much more disruptive changes....

Asia-Pacific response to COVID-19 and climate emergency must build a resilient and sustainable future

... ...

Videos

Latest News

EXCLUSIVE-Airbnb to restrict bookings on its platform in Britain

Home rental firm Airbnb will block British bookings on its platform for the vast majority of customers on Thursday, allowing only key workers to stay in properties for as long as emergency government coronavirus restrictions are in place. T...

Coronavirus brings UK housing market to "near standstill" - RICS

Britains housing market has been thrown into the deep freeze by measures to slow the spread of the coronavirus, and is unlikely to have recovered a year from now, according to the Royal Institution of Chartered Surveyors.While British peopl...

Zimbabwe reopens produce markets after protests by drought-hit farmers

Adjusts headline By Farai Shawn MatiasheMUTARE, Zimbabwe, April 8 Thomson Reuters Foundation - Zimbabwe has reopened fresh produce markets after pressure from farmers who struggled to sell their harvest under restrictions aimed at stemming ...

As delivery workers emerge as frontline soldiers, India's government warms to e-commerce

Three days after India imposed a nationwide lockdown, Devender Singh revved up his motorcycle to deliver meat and eggs to customers - but his heart was in his mouth as he closed in on a police barricade on a deserted New Delhi road.Beatings...

Give Feedback