The coronavirus outbreak is taking a deep toll on the U.S. economy, prompting hundreds of layoffs over the past week alone and halting a historic 11-year bull market in stocks.
The Dow Jones industrial average lost 1,465 points, or 5.9 percent, Wednesday with every sector slumping after the World Health Organization designated the coronavirus a pandemic. The Dow closed in bear market territory, meaning it had shed more than 20 percent from its high less than a month ago.
Airlines, hotels, travel agencies and event companies have all been suffering, but interviews with more than two dozen firms and workers reveal that the pain is now translating into layoffs in a wider circle of industries, including a bakery and a chain restaurant.
At the Port of Los Angeles, 145 drivers have been laid off and others have been sent home without pay as massive ships from China stopped arriving and work dried up. At travel agencies in Atlanta and Los Angeles, several workers lost their jobs as bookings evaporated. Christie Lites, a stage-lighting company in Orlando, laid off more than 100 of its 500 workers nationwide this past week and likely will lay off 150 more, according to chief executive Huntly Christie. Meanwhile a hotel in Seattle is closing an entire department, a former employee said, and as many as 50 people lost their jobs after the South by Southwest festival in Austin got canceled.
Economists fear more layoffs in the coming weeks as supply chains come to a halt and people stay home and spend less.
“We will definitely see an effect on jobs from the coronavirus, and it could be pretty large in leisure and hospitality,” said Julia Pollak, labor economist at ZipRecruiter. “The first thing we’ll see is a reduction in hours. We hear many reports of employers canceling staff everywhere except in health care.”
Monday in Los Angeles, Sam Creighton and about 20 colleagues were fired from the China Visa Service Center. Creighton helped Americans get travel documents to China, but business plummeted as groups and individuals canceled trips to Asia out of virus fear. The company processed around 400 visas a month; in February, that number fell to 22. The visa center did not return a request for comment.
“This job was my paycheck,” said Creighton, 27, who worked at the company for about three years. “I really don’t know what to do next."
Baiden King lost her job at Carson’s Cookie Fix bakery in Omaha on Tuesday because online sales and customer traffic dried up dramatically — especially after the state’s first case of covid-19 was reported nearby. The company didn’t return a request for comment. King said her manager told her when she showed up for her shift that morning she had no choice. King made $11 an hour.
“If my job’s laying off people, I can only imagine other employers are as well,” said King, who is preparing to move back in with her parents. “I’m not sure anyone will be hiring.”
These early coronavirus-related jobs cuts appear to have mostly affected younger, entry-level employees and gig workers. Workers receiving pink slips said they have no idea whether these layoffs will be permanent and that it is nearly impossible to look for another job right now, with many companies instituting hiring freezes. Uncertainty is high, and as people lose jobs — or fear losing jobs — they typically scale back spending even more, which has a ripple effect on local economies.
For example, the Port of Los Angeles, the busiest port in the United States, has become a “ghost town,” four workers said. They said the port has never been this quiet, not even during the Great Recession.
The ongoing lack of cargo prompted Shippers Transport Express to send layoff notices at the end of February to 145 drivers who transport containers from the port to corporate warehouse hubs. The company told workers there is a “near shutdown” of its operations at the port “for the foreseeable future.” Many factories closed in China, stunting shipments to the United States.
“I’ve been working the ports for 13 years, and I’ve never seen anything like this,” said Randy L. Williams, a trucker for Shippers Transport Express. “I’m glad I didn’t buy a house yet.”
He said the port typically handles over 1,000 containers a night at his part of the operation, including some Walmart products, but is down to 200. He didn’t work at all last week and it’s been spotty this week.
Williams has dipped into his savings, and money is tight with a son in college. But he has union benefits and is applying for unemployment insurance. He also saved from years of $29-an-hour pay. Not everyone at the port has that situation.
Josue Alvarez drives for another company operating at the port, XPO Logistics, but is classified as an independent contractor, meaning he gets no vacation, sick days or health insurance. He pays for his truck and all related expenses. He typically makes $2,000 a week, but since mid-February has made $300 a week, an income he cannot survive on for long.
“There’s a lot of uncertainty right now. My dispatchers say it will get worse before it gets better,” said Alvarez, who is 26 and lives with his parents. His father is also a trucker at the port. They show up early every day hoping for work but in the past two weeks almost always get sent home with no pay.
“The disruption to trade will be felt well beyond the dock workers,” said Stephen Levy, senior economist at the Center for Continuing Study of the California Economy. “Half of China’s goods come to the Port of Los Angeles. That will be felt by warehouse workers, truckers and people in the wholesale trade.”
The slowdown of goods moving across the country is hitting United Parcel Services hard, as drivers in Los Angeles have had their hours and pay scaled back. Ron Herrera, director of the Teamsters Port Division, the union representing UPS drivers, cited a decline in shipments because of coronavirus. A UPS spokesman said it was a “routine” staffing adjustment and that those drivers “are allowed to work at either a full- or a part-time” UPS facility.
Major airlines, weathering a massive decline in travelers, have not started layoffs, but nearly all have canceled routes and many have put on a hiring freeze, said Sara Nelson, international president of the Association of Flight Attendants-CWA, AFL-CIO, which represents about 50,000 flight attendants at 20 airlines.
“It’s just like a factory,” Nelson said. “When it slows down, and they cut all of the overtime hours, that is a massive pay cut for people right off the top.”
As consumers and businesses begin to pull back on spending, gig workers and independent contractors are having a particularly tough time. They are caught in limbo: Work is drying up, meaning they are effectively laid off, but they do not get to collect unemployment insurance. A payroll tax cut President Trump has proposed would not help them.
“It’s kind of like I’m laid off but I’m not,” said Chad Denick, 35, who was told Monday he no longer needed to report to his job as a catering contractor for a tech company because employees would be working from home for the rest of the month. “But this is what I know: I don’t have a job at least until April.”
Denick stopped going out to restaurants and scaled back on purchases, like the $20 phone-charging mat he picked up a few days ago.
Spending behavior changes like that are one of the reasons, restaurant chains are starting to feel the crunch. Buca di Beppo, the Italian restaurant chain owned by Planet Hollywood, has begun laying off sales managers around the country, according to a former employee. Neither Buca di Beppo nor Planet Hollywood responded to a request for comment.
The cancellation of major conferences, including South by Southwest, Austin’s annual tech, music and film festival, also has created ripple effects of lost gigs. For Elle Mahoney, a freelance stage manager and producer, the South by Southwest cancellation knocked out 10 percent of her income. She just got engaged but is not planning or picking a wedding date.
“Everything is just on hold,” said Mahoney, 35, who is reaching out to people she used to nanny for to help make up lost pay. “It’s just really hard for us to depend on money from gig to gig.”
The economic strain is also starting to slow down and even freeze hiring that was in the works. In Kansas City, Mo., Sherry Caserta owns Travel Employment Agency, and she’s fielding a flood of phone calls, telling potential applicants their chances of landing a new job “are limited right now” as job postings are evaporating.
“The layoffs are already happening,” she said. “Most of these are last-hired, first-fired situations, but I’m really seeing it pick up this week in big cities: Atlanta, New York, Chicago.”
The travel industry layoffs reached Alex Brown, who was shocked at how quickly it all happened. Brown made $12 an hour overseeing marketing for a boutique travel agency in Atlanta. She learned on Monday she was being laid off because of nosediving sales and a falling stock market. Her boss told her he would get in touch “when this all blows over.”
“Even with that, I really wasn’t expecting to get laid off so soon,” she said.
Brown, 22, is not sure where to find new work. She emailed her former manager at an upscale restaurant and plans to talk to her boss at a gelato shop, where she works one shift a week, to see whether she can get more hours. She is afraid those places will be struggling soon, too.
“I don’t even know where I should be looking,” Brown said. “Which businesses are actually going to be hiring long-term for this strange year ahead of us? Everyone is cutting back.”