When coronavirus cases surfaced across the country in the fall of this year, economists warned: Without government help, layoffs would certainly follow.
Now these terrible predictions are coming true.
More than 947,000 workers filed new applications for state unemployment benefits last week, the labor ministry said on Thursday. That was a significant increase from the previous week, more than the reverse of a week-long slump that many economists ascribed to Thanksgiving. Applications have risen three times in the past four weeks and have risen by nearly a quarter of a million since the first week of November.
Nearly 428,000 applied for Pandemic Unemployment Assistance, a federal program that covers freelancers, self-employed, and others who are not eligible for regular government benefits. This number was also a sharp increase compared to the previous week.
The unemployment records filed during the pandemic were well above the levels recorded in previous recessions. But for most of the fall they had been falling week after week, raising hope that companies could avoid further downsizing. That hope is fading.
“It is very clear that the third wave of the pandemic is causing companies to lay off people and consumers to cut spending,” said Daniel Zhao, senior economist on Glassdoor. “It looks like we’re going through a rough winter economically.”
Colleen Levy was laid off at a catering company in Ann Arbor, Michigan, in March as the pandemic resulted in mass cancellations and postponement of events in the area. But it was hired again in a couple of weeks when the company started offering meals for home delivery.
The company scraped business together over the summer through a combination of online ordering and events, many of them outdoors. A federal loan through the Paycheck Protection Program helped.
But business slowed that fall when the Michigan weather turned cold and coronavirus cases began to rise there. When the state government imposed new restrictions on gatherings last month, Ms. Levy and her colleagues knew the business had to close.
“We pretty much all knew this was the end for us,” she said. She had already packed her things when her boss spread the news.
Ms. Levy, 25, lives with an ex-boyfriend who signs a lease for her. And unlike many others in her industry, she has been busy for most of the pandemic, despite having reduced hours and without the tips she could normally count on to supplement her wages. But she is not sure when she will find steady work again.
“It’s like, ‘Hey, your industry is dead and you won’t qualify for other jobs for the next year,” she said. “There’ll be parties again at some point, but I don’t know how long it’ll be’ sometime ‘. “
Unlike last spring, when tens of millions of people lost their jobs in just a few weeks, the number of layoffs has gradually increased recently. Virtually no one predicts a repeat of March and April when up to six million people apply for unemployment benefits a week.
“This is all a slow disaster, unlike the spring that happened so quickly,” said Ian Shepherdson, Pantheon Economics chief economist.
But it’s still a disaster, he said. If governments direct restaurants and retailers to close or reduce capacity, and if consumers withdraw from their travel, shopping and other activities that put them at risk, it will lead to layoffs and business failures that will affect the economy. A growing number of forecasters are warning that the economy could contract early next year.
The monthly job report released last Friday showed that hiring slowed sharply in early November and that some of the sectors hardest hit by the pandemic, such as restaurants and retailers, cut jobs for the first time since spring. More recent data from private sources suggests that the slowdown has continued or deepened since the November survey was conducted.
“The pace of recovery is slowing every month,” said AnnElizabeth Konkel, an economist on the job site. Well, she said, the question is, “Are we actually going to see it slide backwards?”
Updated
Apr. 10, 2020, 4:00 p.m. ET
Many economists say the recovery will slow further if the government stops helping households and businesses. After months of stagnation in Washington, the prospects for a new round of federal aid have grown in recent days. Both parties’ congressional leaders have signaled their openness to compromise, and the White House on Tuesday proposed its own $ 916 billion spending plan. However, major divisions persist on key issues.
The stakes for the unemployed are particularly high, depending on federal programs that expanded and expanded unemployment benefits during the pandemic. These programs expire later this month, potentially leaving millions of families with no income, while epidemiologists warn that these could be some of the worst months of the pandemic.
It is not exactly clear how many people can lose accomplishments. The Labor Department’s report on Thursday showed that more than 13 million people participated in the two programs. However, a recent report from the Government Accountability Office found that the Pandemic Unemployment Support Program was plagued by fraud and overcount, which made some of the data unreliable.
However, after each bookkeeping, millions can lose their income when the programs end. Many have drawn on savings, left them with little financial cushion, and put them at risk of eviction or foreclosure.
“You will be forced to make a lot of bad financial decisions very quickly to put food on the table,” said Andrew Stettner, senior fellow at the Century Foundation, a progressive group. “It can be something that cannot be recovered from or that takes years to recover.”
Stephanie Freed, an electrician and lighting designer based in New York City, was hosting a gala at the American Museum of Natural History last spring when the event was postponed for a month. That was pushed back to July, then to autumn. Now the event has been postponed indefinitely – and Ms. Freed has not worked since March. Her state unemployment benefit expired weeks ago and she was dependent on the federal pandemic being extended.
Ms. Freed, 32, lives in her parents’ basement in Virginia and rents her New York apartment. Many other unemployed are not so lucky, she said – but many are still trying to help each other.
“Mutual help between the unemployed can only go so far,” she said. “People donate $ 5 to each other’s GoFundMes in an eternal circle just to survive.”
Earlier this year, Ms. Freed and a friend launched an online campaign to organize the unemployed and urge Congress to extend the pandemic programs and revive the $ 600-a-week extra benefits that expired over the summer. The group met with senators and flooded the convention bureau with phone calls. But Ms. Freed said she was frustrated with the slow progress and worried about what would happen if the benefits came to an end.
“We already have monumental lines for food, we already have people being kicked out of their homes,” she said. “I don’t know how we’re going to recover from this.”