More than 6.6 million Americans applied for unemployment benefits last week — a record — as political and public health leaders put the economy in a deep freeze, keeping people at home and trying to slow the spread of the deadly coronavirus.
Job losses have skyrocketed as restaurants, hotels, gyms and travel have shut down across the nation, but layoffs are also rising in manufacturing, warehousing and transportation, underscoring how widespread the pain of the coronavirus recession is.
In March, more than 10 million Americans lost their jobs and applied for government aid, according to the latest Labor Department data, which includes claims filed through March 28. Many economists say the real number of people out of work is probably even higher, since a lot of newly unemployed Americans haven’t been able to fill out a claim yet.
The U.S. government has not released an official unemployment rate, but economists say it has probably jumped to 10 percent, a massive and sudden spike from February, when the nation’s unemployment rate was 3.5 percent.
The gravity of the job losses is staggering. During the Great Recession era, the U.S. unemployment rate only hit 10 percent for one month in October 2010.
“We’ve never seen anything like this,” said Aaron Sojourner, a labor economist at the University of Minnesota. “The scale of the job losses in the past two weeks is on par with what we saw in two years during the Great Recession.”
Economist Heidi Shierholz has spent her life studying the job market and said she was shaking when she saw the “terrifying” number of job losses in March. Shierholz is predicting 20 million Americans will be out of work by July — the worst unemployment situation since the Great Depression. That is her “best case” scenario if Congress does another big stimulus package to aid the economy.
Many newly unemployed have said they weren’t able to apply for unemployment benefits, because the phone lines were so swamped they could not get through.
Gig and self-employed workers like barbers and hairdressers were also not eligible to apply until the end of March, after Congress passed the $2.2 trillion relief bill to expand who qualifies for aid. These workers are only just beginning to fill out applications.
More Americans will probably lose their jobs in coming weeks as companies that have been trying to hold on to workers are forced to let them go or reduce their hours to almost nothing.
Major retail chains including Macy’s, Kohl’s and J.C. Penney announced this week they are furloughing hundreds of thousands of employees, meaning they keep their health insurance but they do not get any pay because their hours are reduced to zero. These workers are also eligible for unemployment aid, but many are only just realizing they can apply.
But the pain is spreading beyond shops and restaurants. Mercedes Addington lost her job on March 23 at a company that sells trucking parts and supplies in Kansas City, Kan. Even though the business was considered “essential” during the crisis and orders were still coming in, the company laid off most of its employees.
Addington was on the phone with a customer placing an order when she saw everyone around her packing up their things. She put the phone briefly on mute and asked what was going on and a colleague told her they had all been fired.
“I am very frustrated and scared. I have bills to pay soon and I was counting on this money to get by,” Addington said. “If I don’t risk it and go back to work somewhere, I’m not sure that I’ll still have a home to come back to.”
Addington, 21, lives in a modest apartment with her boyfriend. They pay $800 a month in rent. The landlord was willing to give them a break on April rent, but only if they could prove Addington had applied for unemployment aid from the state of Kansas.
She tried to apply right away for unemployment aid after getting laid off, but the system told her she could not complete the application until March 28. She did that and a screen popped up saying she was approved for about $300 a week in aid. But when she logged back in this week it suddenly said her benefits had been “temporarily suspended,” leaving her in limbo for rent and other bills.
Repeated calls to the Kansas unemployment office went unanswered. She is now unsure what to do.
“I have never applied for unemployment before and was very overwhelmed and confused,” she said.
Congress approved additional aid for the unemployed that is supposed to increase weekly checks by about $600 a week, a major boost in income for laid-off workers like Addington. But many states are struggling to implement the changes fast enough, and state unemployment offices do not have enough staff to handle this volume of claims and questions.
There’s growing concern that workers losing their jobs due to the coronavirus won’t be able to return to their same position even after the health crisis ends. The longer workers are away from a job, the more they lose that attachment to their old bosses and companies.
Nations like Denmark chose to pay all workers so they would keep their jobs, even if they are at home. But the United States has largely left it up to companies to decide what to do. Economists say it’s best if companies furlough workers like Macy’s did because at least they keep their benefits and some attachment to the company.
“Don’t lay off your workers, furlough them,” Shierholz said. “The worker will still get benefits. They don’t lose their job. And companies don’t lose their workers.”
There’s a growing consensus among economists that the economy is not going to bounce back easily from this recession given how deep and widespread it is becoming.
Eric Rosengren, head of the Boston Federal Reserve since 2007, is predicting a slower recovery, since it will take more time for people to feel comfortable to go out to baseball games and restaurants again.
“The public health aspects of this have not gone as well as they have in some other countries, so the infection rate and the mortality rate is likely to be relatively high in the United States. That also means the economic impact is likely to be more severe than in some other places,” Rosengren said.
He urged Congress to do additional stimulus to make coronavirus treatment free.
Andrew Van Dam and Alyssa Fowers contributed to this report.