Joblessness: Claims climb even as some return to work.
Initial claims top 1 million for the 16th straight week
The coronavirus pandemic’s economic toll continues to be unrelenting as businesses nationwide experience stopandstart reopening. For the 16th straight week, the number of Americans filing firsttime claims unemployment benefits topped 1 million, according to government figures released Thursday.
A total of 1.3 million newly jobless people applied for unemployment during the week that ended Saturday, the U.S. Department of Labor said. That brought the fourmonth total to 50 million initial claims for benefits. In addition, just over 1 million freelancers, gig workers and selfemployed people applied for Pandemic Unemployment Assistance, a new program created for those excluded from traditional unemployment payments.
California processed 267,123 new unemployment claims for the week, a slight decline from the prior week. It also received 100,588 claims for Pandemic Unemployment Assistance. The state said it has processed 7.5 million claims since the crisis began and paid $41.3 billion in benefits, including $3.7 billion in just the past week.
Some people are returning to work, as continuing unemployment claims fell to 18.1 million for the week that ended June 27, a drop of 698,000 from the prior week. California had 2.79 million continuing claims, down 117,000 from a week earlier. Continued claims for selfemployed people totaled 14.4 million nationally and 1.7 million in California. Continuing unemployment data lags new claims by a week.
“We’ve lost a huge number
of jobs,” said Nick Bloom, a Stanford economics professor. “Some share of it, maybe onequarter, looks like it’s coming back but the other threequarters looks like it will take an incredibly long time to return.”
Overall, he saw little to cheer.
“The relaxing of lockdown has basically stalled,” Bloom said. “From this point onwards, it’s pretty grim. (The economy is) now in a holding pattern until we find a vaccine.”
Other dark clouds loom on the horizon. Many small businesses — which employ the majority of Americans — are expected to shut their doors for good, or already have done so.
“There will almost certainly be a tsunami of bankruptcies,” Bloom said. “It’s like a horror movie where you can see the 100foot wave out at sea and it’s traveling toward you.”
Moreover, new business creation, another engine of economic growth, has dropped by about a third, Bloom said.
Some job losses stem from companies that have used up their Paycheck Protection Program funding, said Michael Bernick, former head of the California Employment Development Department and now an attorney at Duane Morris. “Companies receiving these funds were initially told that they needed to spend the money by June 30, and many have done so,” he said in an email. “Without these job subsidies, companies are not generating revenues sufficient to keep workers.”
For many unemployed people, their new life involves piecing together some work to supplement government benefits.
Victor Oliver of Oakland was working as a bar manager at two restaurants when shelterinplace orders were issued and they were forced to close. Fortunately, his girlfriend’s office job continued at home, but things were tight with a 9yearold to support.
Initially, he tried delivering meals through DoorDash.
“It sounded like it would be easy but it’s not,” he said. “You couldn’t just go in and grab the food, you’d get to the restaurants and there’s a mob of delivery people waiting and the kitchen is backed up.”
He’s started handling some sales for a liquor distributor. With restaurants and bars shut down, that was slow at first, but now restaurants have outdoor dining and can sell liquor to go.
“But I don’t know what to expect now because everything’s up in the air,” he said. “It’s a constant concern in the back of your head; you have to focus on how you can adapt.”
While hiring does continue, Bloom said, it’s shifting toward lowerwage, less skilled work.
“For every 10 jobs lost, we estimate three or four new jobs were created, but they’re all things like Instacart shoppers and Amazon warehouse workers at the low end of the labor market,” he said. “COVID is reallocating jobs across the economy.”
Despite frantic hiring, California’s unemployment system continue to experience logjams.
Luis Villavelazquez of San Francisco lost his work as a pastry chef and restaurant consultant when the pandemic hit. He applied for unemployment assistance in March but didn’t hear anything from the Employment Development Department.
Starting in May, “I did the whole ‘call every day’ thing for two months,” he said. Eventually he got an email saying an account was created under his Social Security number. But it had someone else’s name, evidently someone trying to hijack his benefits.
He’s since spent countless hours trying to call the department, filing reports with the police and the Federal Trade Commission. Eventually he contacted Assemblyman David Chiu, DSan Francisco, whose office tried to intervene with the agency. The state employment office now recognizes his issue, but because it involves identify theft, said it could take another five weeks to pay his benefits, which at least will be retroactive.
Meanwhile, he’s subsisting on savings, paying some bills every other month, calling creditors for deferrals.
“I had hoped to get back to work by this point, but pastry kitchens aren’t fully operating at this point, so I can’t find a solid job that pays the same as my last employer,” he said.
Villavelazquez at least was fortunate enough to have a cushion to fall back on. However, a huge number of unemployed people lack any resources. Some 40% of Americans said they could not cover an unexpected $400 expense from savings, a 2019 Federal Reserve study found.
The vast numbers of laidoff workers at hotels, restaurants, airlines, stores, salons and other hardhit service sectors are already on the lower end of the economic scale.
That points to another looming crisis: a potential plunge in unemployment benefits. Washington had allocated an extra $600 a week in emergency pandemic support, but that ends this month and Congress is stalled about what to do next. California’s unemployment benefits top out at $450 a week without that extra money.“The unemployed tend to be lower income, living hand to mouth, so they are basically spending all that money” on living expenses, Bloom said. “If we don’t continue that, they will suddenly drop off an economic cliff.”