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WASHINGTON (AP) – Nearly 3.3 million Americans applied for unemployment benefits last week—nearly five times the previous record set in 1982—amid a widespread economic shutdown caused by the coronavirus.
The surge in weekly applications was a stunning reflection of the damage the viral outbreak is inflicting on the economy. Filings for unemployment aid generally reflect the pace of layoffs.
Layoffs are sure to accelerate as the U.S. economy sinks into a recession. Revenue has collapsed at restaurants, hotels, movie theaters, gyms and airlines. Auto sales are plummeting, and car makers have closed factories. Most such employers face loan payments and other fixed costs, so they are cutting jobs to save money.
As job losses mount, some economists say the nation’s unemployment rate could approach 13 percent by May. By comparison, the highest jobless rate during the Great Recession, which ended in 2009, was 10 percent.
“What seemed impossible just two weeks ago is now reality,” said Nancy Vanden Houten, an economist at Oxford Economics, a consulting firm. “The US economy will experience the largest economic contraction on record with the most severe surge in unemployment ever.”
The economic deterioration has been swift. As recently as February, the unemployment rate was at a 50-year low of 3.5 percent. And the economy was growing steadily. Yet by the April-June quarter of the year, some economists think the economy will shrink at its steepest annual pace ever—a contraction that could reach 30 percent.
In its report Thursday, the Labor Department said 3.283 million people applied for unemployment benefits last week, up from 282,000 during the previous week. Yet many people who have lost jobs in recent weeks have been unable to file for unemployment aid because state websites and phone systems have been overwhelmed by a crush of applicants and have frozen up.
The application logjam suggests that Thursday’s report actually understates the magnitude of job cuts last week. So does the fact that workers who are not on company payrolls—gig workers, free-lancers, the self-employed—are not currently eligible for unemployment benefits even though in many cases they are no longer able to earn money.
With layoffs surging, a significant expansion of unemployment benefits for the millions who will lose jobs as a result of the coronavirus outbreak was included in an economic relief bill nearing final approval in Congress. One provision in the bill would provide an extra $600 a week on top of the unemployment aid that states provide. Another would extend 13 additional weeks of benefits beyond the six months of jobless aid that most states offer.
The new legislation would also extend unemployment benefits, for the first time, to gig workers and others who are not on company payrolls.
Jessy Morancy of Hollywood, Florida, was laid off Friday from her job as a wheelchair attendant and customer service agent at Fort Lauderdale Airport. Ms. Morancy, 29, called the state unemployment office Monday to try to file for unemployment benefits but encountered just a recorded message telling her to call back later.
She was also concerned that even a full unemployment benefit of $275 a week would be less than half of what she earned at her job and insufficient to provide for her children, ages 10 and 7.
“I’m still in a state of shock,” Ms. Morancy said.