Business

1.5 Million Filed State Unemployment Claims Last Week

Although the first wave of reopenings is returning workers to restaurants, retailers and other businesses hit hard by the coronavirus pandemic, layoffs are seeping through sections of the job market that previously escaped major damage.

On Thursday, the Labor Department said more than 1.5 million Americans filed new state unemployment claims last week — the lowest number since the crisis began, but far above normal levels.

A further 700,000 workers who were self-employed or otherwise ineligible for state jobless benefits filed new claims for Pandemic Unemployment Assistance, a federal aid program.

The overall number of workers collecting state benefits fell slightly in the most recent seasonally adjusted tally, to 20.9 million in the week ended May 30, from a revised 21.3 million the previous week.

“We’re slowly seeing the labor market recovery begin to take form,” said Robert Rosener, an economist at Morgan Stanley, pointing to an “initial reopening bounce.”

But, he added, “there’s still an enormous amount of layoffs going on in the economy.”

On Monday, BP said it would lay off 10,000 people worldwide, mostly office-based workers. The entertainment promotion giant AEG told employees that it would carry out layoffs, furloughs and salary reductions on July 1. Job losses were announced this week at the University of Denver, the nonprofit group UJA-Federation New York, and the city of Peoria, Ill., among others.

The weekly report on unemployment claims comes after the government reported that jobs rebounded last month and that the unemployment rate fell unexpectedly to 13.3 percent. Correcting for a classification error, the actual rate was closer to 16.4 percent — still lower than in April, but higher than at any other point since the Great Depression.

Jerome H. Powell, the Federal Reserve chair, warned on Wednesday that the economic pain could last for years and that there would be “a significant chunk” — millions of workers — “who don’t get to go back to their old job, and there may not be a job in that industry for them for some time.”

Mr. Powell said that “it’s possible Congress will need to do more,” but a divide has arisen on Capitol Hill over whether to extend a $600 weekly supplement to state unemployment benefits beyond July 31, as Democrats advocate, or to pare or halt it, possibly replacing it with government incentives to return to work, as some Republicans have proposed.

Unemployment remained below 4 percent for much the year before the pandemic began. Reopening efforts will quickly reinstate a third of the workers who lost their jobs, said Beth Ann Bovino, chief U.S. economist at S&P Global. Hiring efforts, like a recent push by the broadband and cable company Charter Communications to fill thousands of positions, will help nudge the jobless rate down.

But a return to the labor market conditions that preceded the pandemic is unlikely before 2023, Ms. Bovino said.

“We’re expecting a long haul,” she said. “When people start talking about a V-shaped recovery, it’s like claiming success with the patient still on the table.”

From March through May, 30 percent of lost jobs came in the food service industry, Ms. Bovino said. Ten percent stemmed from retailers. But as states try to stoke the economy by gradually lifting restrictions on those businesses and others, the shock of the pandemic is increasingly reverberating through sectors like manufacturing and professional services.

With last week’s new filings, more than 44 million people have applied for state jobless benefits since mid-March. In addition, as of May 23, 9.7 million people were collecting Pandemic Unemployment Assistance benefits, the government said Thursday. Unlike the figure for state claims, the number for pandemic assistance is not seasonally adjusted.

In the third quarter, more employers than in the first half of the year expect to shrink payrolls, while fewer companies plan to increase hiring, according to a survey of 7,700 U.S. businesses by the employment agency ManpowerGroup. Seasonally adjusted hiring plans are the weakest in a decade.

“These knockdown effects are starting to ripple through industries that initially seemed more secure, but are now facing a second wave of job losses,” Ms. Bovino said.

Some companies let employees go recently after suddenly losing major contracts. Others laid off workers who were furloughed and had expected to return to their jobs.

The construction engineering firm in Boston where Christian Lecorps was an electrical engineering contractor spent much of the spring operating as if the pandemic would end quickly, even mulling whether to hand out bonuses and raises, he said.

But work slowed in recent weeks. On Friday, Mr. Lecorps, 29, was laid off over Skype. On Tuesday, he dropped off his laptop at the office and began preparing to file for unemployment benefits.

Hunkered down in his mother’s home in Brockton, Mass., he hopes to use his spare time raising money for his start-up, which aims to bring renewable energy to developing countries. But investors do not appear to be in a spending mood. He fears that if he is unable to quickly replace his income, his credit may suffer.

“The funds I have will only last me until the end of this month,” he said. “Repairing this situation is going to take a lot longer for people like me, who are trying to get back on their feet.”

Some jobless workers are not represented in the government count, which skips people who have tried to apply for benefits but failed, as well as those who were out of work but did not file for aid. Some states report claims as they are submitted, while others count them as they are reviewed. As some workers come close to exhausting their benefits, not all states have set up extension programs to pick up the slack.

Many states are still working through a backlog of claims, leading some desperate workers to submit multiple applications. Others, like Artemus Whitmore, feel guilty asking the government for help at all.

Mr. Whitmore, 45, was furloughed on Sunday after his employer, which makes paper for surgical gowns, disinfectant wipes and corporate offices, ran out of orders. He expects to return on Tuesday, though he is worried that his job might be jeopardized by slumping demand as more clients move to remote working arrangements.

“I’ve always been the provider, and I want to make sure I can keep that up,” said Mr. Whitmore, a father of four who lives in Port Huron, Mich. “That’s where the guilt comes from — I understand that I’ve paid into the system, and so has my company, but is it really going to hurt me to lose a week’s pay when others need it?”

While companies are bringing back workers like Mr. Whitmore in anticipation of new business from the reopening efforts, other employees will have far longer to wait, as their employers adapt to changing consumer habits and working arrangements.

“Even if restrictions are lifted, people are still going to be reluctant to engage in the kinds of activities they engaged in before, and that’s going to continue to be reflected in our economic statistics for a long time,” said Cathy Barrera, founding economist of the Prysm Group. “The more quickly companies can adapt, the quicker the recovery will be.”

As businesses weigh their options, many workers are nervous about picking up where they left off.

Semaj Watts, a recent college graduate in Las Vegas, was starting to take on more responsibility as a social media coordinator for the Girl Scouts of Southern Nevada when she and her colleagues were told to work from home.

Work began to dry up, and in April, she was furloughed. With coaching from her roommate, who was then unemployed, she applied for and received state benefits, which she supplemented with money she had saved for a car. She spent her days gardening, watching television and worrying that her unemployment might stretch into the fall and damage her career momentum.

Until the furlough, she said, “I had finally done everything that I’m supposed to — I graduated college, I moved out, I had a real job, I was starting my life.”

When Nevada businesses began to reopen. Ms. Watts, 24, got her hair and her nails done. In the last week of May, she returned to the office.

But her relief at getting her job back was tainted with horror. Dealing with social media for work meant that Ms. Watts, who is African-American, was repeatedly exposed to the video of the killing of George Floyd, who died while a white police officer knelt on his neck. The resulting unrest around the country, and the violence that sometimes accompanied it, left her terrified to leave her apartment.

“I went from being so excited to being so scared, and that’s a lot,” she said. “It’s been the most emotionally draining, scariest time in my life by far.”

As seen on nytimes Image Credits nytimes

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