Coronavirus: Unemployment claims smash all records

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Coronavirus is having an impact on almost parts of the economy, and that too, at a level that hasn’t been seen before. We have already seen several growth indicators pointing to a bleak outlook. Now, the unemployment claims have shattered records as the coronavirus outbreak has shut down much of the country. On Thursday, Labor Department released latest figures showing unemployment claims surging to 3.28 million last week. This number is well above the claims registered during the peak of the Great Recession. Moreover, the experts say the worst is not over yet.

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Unemployment claims break all records

Coronavirus or COVID-19 has impacted all industries with energy, travel, transportation, hotel and restaurants being hit the hardest. As per the American Hotel and Lodging Association, the hotel industry alone has lost about a million jobs this month.

So far, the federal government’s data hasn’t included the information on job losses. However, the Labor Department’s weekly report on unemployment claims now confirms the massive expected rise in people seeking benefits due to the coronavirus outbreak.

As per the data from Labor Department, about 3.28 million Americans filed for the benefits during the week ending March 21. In comparison, the weekly average for the past six months has been 225,000.

Last Thursday, the data from the Labor Department revealed that the unemployment benefits claims increased by 70,000 in the second week of March to reach 281,000.

The latest unemployment claims number is almost five times the initial claims recorded during the peak of the Great Recession. For example, there were about 665,000 new claims in the week ending March 28, 2009. The previous high was 695,000 in the week ending Oct. 2, 1982. Labor Department records go back to 1967.

"If the number of new claims is as high as predicted and if it remains high in coming weeks, unemployment will skyrocket," a report from the Joint Economic Committee of Congress said.

Unemployment websites crashing

Over the last week, the states that have announced shutdowns include Washington, West Virginia, Delaware, Hawaii, Illinois, Indiana, New Mexico, New York, California, Connecticut, Massachusetts, Michigan, Louisiana, Oregon, Kentucky, and Wisconsin. This means non-essential workers are not working anymore, or almost one in three Americans are staying home while many others are out of work.

The rise in the level of unemployment claims could be gathered from the fact that many unemployment websites are crashing as they are unable to handle the volume of newly-jobless Americans applications, notes a report from Dailymail.

As businesses continue to shut across the U.S., people who have only recently lost their jobs are unable to register for the benefits as Labor Department websites aren’t functioning properly.

“In 5 days, the DUA received around twice as many new unemployment claims as were filed during the entire worst month of the Great Recession,” said a tweet from the state Executive Office of Labor and Workforce Development on Wednesday.

Some companies still hiring

At a time when unemployment claims are expected to reach record highs, there are many companies that have accelerated hiring. Amazon, for instance, recently announced 100,000 new jobs. The online retailer also said that it is giving an increase of $2-per-hour to the employees in the U.S.

A couple of days back, CVS also announced hiring 50,000 full-time, part-time and temporary employees. In a press release on March 23, CVS referred to the hiring as “the most ambitious hiring drive in the company’s history.”

Further, CVS also said that the employees who are needed at the CVS facilities to help patients and customers would get a bonus of between $150 to $500.

According to the data from JazzHR, the healthcare industry also continues to hire. As per the data, of the 5,500 firms they surveyed, 77% said they are hiring. However, the companies also said that they are witnessing a slowdown in the flow of candidates.

Domino’s pizza is also looking to hire about 500 new people, according to boston.com. The pizza chain will be hiring delivery drivers, managers, assistant managers, and customer service representatives.

“We want to make sure we’re not only providing food to people, but also delivering opportunity to those who are looking for work,” the press release for the company says.

Albertsons Companies is also hiring for 30,000 new jobs. The company has partnered with 17 other companies, including Hilton, Marriott International, and Regal Cinemas, to hire their associates during the crisis.

Coronavirus stimulus deal and unemployment claims

Lawmakers have also come out with a relief package for those who lost their jobs because of the coronavirus outbreak. Such people will get additional unemployment benefits from the federal government under the $2 trillion stimulus package.

As per the provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, workers will get $600 a week (for up to four months) in addition to anything they get under the state-level unemployment claim.

Additionally, the CARE act will take care of the first “waiting week” to ensure people have access to quick cash. “Waiting week” is the time  between when a person files for the jobless claim and when they start receiving unemployment benefits.

Moreover, workers in several states are eligible for 26 weeks of unemployment insurance. The insurance amount will vary from state to state, according to the Center on Budget and Policy Priorities. For instance, New York pays up to $504 a week for 26 weeks.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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