Thursday’s report brought the eight-week total of coronavirus-induced layoffs to 36.5 million.
Workers filed nearly 3 million new unemployment claims last week, the Labor Department reported Thursday, signaling that a wave of coronavirus-induced layoffs is continuing as the country struggles to reopen for business.
The latest number, which covers the week ending May 9, pushed the two-month tally of unemployment claims to 36.5 million, reflecting a jobless rate that the Bureau of Labor Statistics acknowledged last week is the worst since the Great Depression of the 1930s.
The figure is “another sickening punch to the gut,” Mark Hamrick, senior economic analyst for Bankrate, said in a statement. “And, we need to be braced for more incoming body blows with respect to economic data,” he said.
As high as the official unemployment rate is — BLS said it reached 14.7 percent in April — that likely understates the damage, because large numbers of people misclassified themselves as employed but absent from work, artificially suppressing the jobless rate by about five percentage points.
Unemployment claims by week
“We’re going to see high levels of unemployment for a long time, meaning nine to 18 months,” predicted Tom Gimbel, founder & CEO of LaSalle Network, a national staffing and recruiting firm. “The whole labor model is going to change.”
As most states begin allowing non-essential businesses to reopen their doors, Gimbel said he expects many companies to favor temporary over permanent hiring.
“We’ll see an increase in temporary staffing, because companies are going to be concerned about a resurgence,” Gimbel said. “People don’t want to commit to full-time staff.”
Workers who are called back face a choice between potentially risking their health or losing unemployment benefits. On Monday, DOL “strongly encouraged” state unemployment agencies to find out from employers whether benefit recipients refuse to return to work, as federal guidelines dictate that those workers will no longer be eligible.
The data released by DOL Thursday also indicated that self-employed workers who were made eligible for jobless benefits under a new temporary program, Pandemic Unemployment Assistance, have finally begun to tap into the relief.
In the week ending April 25, 3.4 million Americans were receiving benefits from the program, up from fewer than 1 million the week prior.
In Washington, lawmakers have been unable to agree on next steps to address the economic pain caused by the virus.
House Speaker Nancy Pelosi has scheduled a vote Friday on a new $3 trillion relief package that would include an extension through January of the $600 sweetener to weekly unemployment checks, which is set to expire at the end of July, and another round of direct payments. President Donald Trump and Senate Republicans oppose the plan, and say they prefer to assess the effects of the $2 trillion CARES Act.
But Federal Reserve Chair Jerome Powell said Wednesday that further congressional stimulus would be worth the price.
“The record shows that deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy,” Powell said at a virtual event hosted by the Peterson Institute for International Economics. “Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”
The Fed chief said the central bank will release a survey on Thursday showing that nearly 40 percent of people in households making less than $40,000 a year had lost a job in March.
Over the short term, financial losses are already devastating. About half of Americans say they’ve lost income and savings due to the effects of the coronavirus, a National Bureau of Economic Research survey found. On average, those Americans said they’ve lost $5,293 in income and $33,482 in wealth.
This blog originally appeared at Politico on May 14, 2020. Reprinted with permission.
About the Author: Rebecca Rainey is an employment and immigration reporter with POLITICO Pro and the author of the Morning Shift newsletter. Prior to joining POLITICO in August 2018, Rainey covered the Occupational Safety and Health administration and regulatory reform on Capitol Hill. Her work has been published by The Washington Post and the Associated Press, among other outlets.
