Originally posted on Wall Street Journal: https://www.wsj.com/articles/u-s-surge-in-unemployment-claims-expected-to-continue-11586424605
By Sarah Chaney and David Harrison
Nearly 17 million Americans have filed new claims for benefits since mid-March as the coronavirus spread.
The number of Americans seeking unemployment benefits continued to surge at unprecedented levels, bringing the total number of applications to nearly 17 million since the coronavirus pandemic shut down swaths of the U.S. economy.
The Labor Department reported on Thursday that another 6.6 million people submitted new applications for unemployment insurance in the week ended April 4. That is on top of a revised 6.9 million in the prior week, a record, and 3.3 million the week before.
States overwhelmed by the volume are still processing backlogs, suggesting the number of initial claims for benefits could keep getting bigger.
“You should still expect to see staggeringly large numbers of individuals file for first-time claims,” Joseph Brusuelas, chief economist for RSM US LLP, said.
The U.S. continued to reel from the highest infection totals in the world, with containment measures continuing to disrupt business and daily routines.
Those measures, which include stay-at-home orders across the country and limits on what businesses can operate, have thrown millions of people out of work. “People have been asked to put their lives and livelihoods on hold, at significant economic and personal cost. We are moving with alarming speed from 50-year lows in unemployment to what will likely be very high, although temporary, levels,” Federal Reserve Chairman Jerome Powell said in an online discussion with the Brookings Institution.
The economic disruption is fueling debate within the Trump administration and across the country over when to ease restrictions. Treasury Secretary Steven Mnuchin said on CNBC Thursday that he thought the U.S. economy could be ready to reopen by the end of May, adding it will be “as soon as the president feels comfortable with the medical issues.”
Meanwhile, lawmakers in Congress argued over the next package of economic relief, with Senate Republicans and Democrats rejecting each other’s plans to provide additional help for small businesses, hospitals and others. The Fed separately continued expanding its rescue efforts with new programs to provide $2.3 trillion in loans aimed at helping states, cities and midsize businesses.
The labor market and economy has continued to decline as the crisis continues. Another key measurement of joblessness showed a record 7.5 million Americans were already receiving unemployment benefits at the end of March. Such so-called continuing claims—as opposed to new claims—grew by 4.4 million in the week ended March 28, eclipsing the prior record of 6.6 million set in 2009 at the end of the financial crisis. The number of continuing claims lags behind the initial-claims data and is expected to continue to grow.
Jobless claims are applications by laid-off workers for unemployment insurance payments.
The federal rescue package signed into law in March increases the pool of workers who can tap benefits by making independent contractors and self-employed individuals eligible, at least in some cases.
Subrina Norton, 50 years old, is one American receiving jobless benefits. She applied for unemployment insurance immediately after getting laid off from her Oklahoma City waitressing job in March. Her online application kept getting rejected, prompting her to try calling.
She was able to access her unemployment benefits after she contacted the office of one of her U.S. senators, Republican James Inhofe. The senator’s office put her in touch with a state official who was able to help her fill out the application forms.
“It was just a blessing because I was really getting stressed out,” Ms. Norton said.
Her checks, for $150, started arriving less than two weeks after she was laid off from her $7.25 an hour job. She is still waiting for the additional $600 payments that were included as part of the federal rescue package.
Many laid-off Americans have been unsuccessful in applying for unemployment insurance as state labor department websites and phone lines are inundated with inquiries.
“We clearly are still processing individuals who are having a hard time getting claims through at the state level in addition to the large numbers of layoffs that corporate America is now doing,” Mr. Brusuelas, the economist, said.
Meanwhile, auto makers and major retail chains such as Macy’s Inc. have announced furloughs of tens of thousands of workers, further swelling the ranks of the unemployed.
Mr. Brusuelas said that will likely push the unemployment rate up to around 20% this year, a figure reminiscent of the Great Depression.
Last week, jobless claims in California, Georgia and Michigan were the highest in the nation.
States are adapting to address an unprecedented rise in applications for unemployment benefits. Many have reallocated or added staff to handle calls and review claims. Despite these changes, some Americans are still struggling to file applications.
Corinne Chin, a 23-year-old resident of Brooklyn, N.Y., hasn’t been able to file for unemployment benefits since she was furloughed from her creative-marketing agency in mid-March because of the coronavirus.
She said she sometimes calls New York’s labor department hundreds of times a day.
“I’m stuck right now, and I haven’t been able to get through to any representatives,” she said.
Ms. Chin has savings but is worried about her financial situation in a couple of months if she still doesn’t have any income. Most of the companies in her industry have implemented hiring freezes. She said she is hesitant to seek a job where work is available, such as at a grocery store, because of the possibility she could be exposed to the coronavirus.
Layoffs are hitting a widening array of industries, state-level data suggest.
In Oregon, slightly more than 30% of the state’s jobless claims in the week ended March 21 were from laid-off workers in the restaurant industry. In the week after, the share of claims from restaurant employees remained roughly the same, but the portion of claims coming from health-care and retail workers rose.
“There’s still a lot of these sectors for this virus to go through,” said Jacob Robbins, assistant professor of economics at the University of Illinois in Chicago. “This is what’s really concerning me right now.”
The steep rise in joblessness is keeping job-training centers like Goodwill in Fort Worth, Texas, busy.
“People are calling in, and they’re like, ‘I need a job. I need it right now. I’ve got to feed my kids,’” said Romney Guy, vice president of workforce development at Goodwill in Fort Worth.
The Goodwill location is now offering virtual job training to help people develop resumes, as well as interviewing and computer skills. Ms. Guy said the job-training center is seeing an increase in upper-middle-income individuals seeking assistance.