“Rolling shock” as job losses mount
Scattershot reopenings of retail stores, nail salons and restaurants around the country have not halted the flood of layoffs, with the government reporting Thursday that nearly 3 million people filed unemployment claims last week, bringing the two-month tally to 36.5 million.
The weekly count of new claims has been declining since late March, but that hopeful flicker barely stands out in an otherwise grim and chaotic economic landscape.
“This is a very protracted, painful situation for the labor market,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, “and I just don’t see anything positive.”
A new survey by the Federal Reserve found that in households making less than $40,000 a year, nearly 40% of those who were working in February lost their jobs in March or the beginning of April.
And despite feverish attempts by states to keep up with the onslaught of claims, many workers remain supremely frustrated, either by their inability to submit applications or by payment delays.
In places where the fitful process of reopening has started, workers who have been called back to their jobs often face reduced hours and paychecks as well as a heightened risk of infection. Declining to return, however — whether because of health concerns or the need to care for children while schools are closed — is likely to put an end to any jobless benefits.
“It’s a very tough choice for those in the service industry and those at the lower end of the pay scale,” Farooqi said. “Do you go back and risk getting sick, or have no money coming in?”
Lags in reporting data make it hard to calculate just how many workers may have been rehired after the most recent shelter-inplace restrictions were lifted. But Michelle Meyer, head of U.S. economics at Bank of America, said she doubted that callbacks to work outnumbered additional layoffs from other sectors. The slowdown has been rippling beyond the early shutdowns in retail and hospitality to professional business services, manufacturing and health care.
“In a sense, it’s a rolling shock,”
she said.
Georgia, one of the first states to reopen, is an example.
“The reopening is bringing people back to work, reducing the total amount of people receiving unemployment insurance,” Meyer noted. “But the number of initial jobless claims is still rising, which suggests there is still residual weakness in the economy.”
For millions of Americans, those benefits have provided a crucial lifeline. Unemployment programs alone delivered $48 billion in payments in April, according to the Treasury Department.
But many are still waiting for relief. According to a poll for The New York Times in early May by online research firm SurveyMonkey, more than half of those applying for unemployment benefits in recent weeks were unsuccessful.
And as of last week, 20 states and the District of Columbia and Puerto Rico had not paid out any money under the Pandemic Unemployment Assistance program that Congress passed in March to help gig workers not normally eligible for state jobless benefits.
Only half of Floridians with certified unemployment claims have begun to receive benefits.
Some of those being called back to work have never seen a penny of government aid.
Jason Cooper, 43, went back to his serving job at Savour restaurant in Tallahassee, Florida, in early May without ever receiving the jobless benefits he spent weeks trying to track down.
He was furloughed March 14 and tried for the next month to file for government aid. In mid-April, a few days after he successfully submitted a claim, his employer secured a loan and began paying workers again.
Cooper was lucky — he had some savings that helped cover four weeks without income, and he temporarily moved in with his mother in St. Augustine, Florida. He plans to wait out the pandemic before trying to go to a state office to claim the backdated benefits he believes he is owed.
“It was so difficult to get through the first time that I have no real faith that the system is going to work anytime in the near future,” he said.
At first, Cooper was concerned about returning to work, but now he feels comfortable in the small restaurant, where employees are not wearing masks but are using single-use gloves for serving. Tables have also been spaced farther apart.
“It feels shockingly normal,” he said.
Other workers who have been called back say they are scared of getting sick but feel they have no choice. Some states are taking a hard line. Nebraska posted a notice online declaring that failing to return to work “could be considered fraud” and potentially disqualify people from receiving benefits. In South Carolina, workers are not eligible for benefits if they don’t work because they are isolating themselves to avoid exposure to the virus or have to care for children while schools are closed. Iowa has an online form for “employers to report unemployed claimants who have refused legitimate job offers.”
Sarah Parker, 26, a customer service manager at a store in Chillicothe, Ohio, was asked by her employer last week to prepare to return to work in a small shopping center.
“On one side, I really love my job — it’s my favorite place to be,” she said. “On the other hand, I’m petrified. I’m afraid I’m going to put myself at way more risk working harder for less pay.”
She estimates that her new paycheck will be half of the approximately $800 a week that she received in government aid but said she did not want to subsist on benefit payments.
After the pandemic grabbed hold in March, Washington began sending $1,200 stimulus checks to most households. Congress also enacted emergency benefits that expanded unemployment insurance to gig workers and others not covered under state programs and provided a weekly supplement of $600 through July. To help laidoff workers who exhausted their state benefits, the government extended unemployment insurance for 13 weeks.
For many low-wage workers who applied successfully, the additional $600 meant their weekly income matched or even exceeded their regular paycheck. Many would prefer to wait for the health risks to recede but fear losing their benefits.
Kelty Stanton, an 18-yearold community college student, said she was happy to be asked to return to her job next week at a restaurant and grocery near Titusville, N.J., but that she was stunned when she read an email outlining the terms.
To stay on as an employee, she was required to return a signed and dated copy of an attached letter or risk being fired. Her company said that if she declined to go back to work, New Jersey’s unemployment department would be notified and her benefits removed.
The letter stressed that the company was committed to a safe and healthy workplace, with “frequent disinfection of surfaces, social distancing rules, reduced customer capacity, staggered shifts.”
“I’m relieved that I have a job again,” Stanton said, “but at the same time, I also feel unsafe going back. I’m nervous and kind of anxious. But it’s not like they’re giving me much of a choice.”
She said she planned to buy some masks and extra hand sanitizer before she starts Monday.
Some employers are asking returning workers to sign waivers absolving companies of liability if their workers get sick.
A survey released last week by the National Federation
of Independent Business, a trade group that has supported lower taxes and deregulation, found that 68% of small-business owners were worried about increased liability claims if they reopened. This week, social media users shared a letter from Las Vegas restaurant chain Nacho Daddy that asked returning employees to promise not to take legal action if they contracted the virus at work.
The president of Nacho Daddy, Paul Hymas, said in an emailed statement Wednesday that the company had since removed that liability language from its hiring process.