U.S. unemployed claims hit 3.3 million, quadrupling the previous record

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U.S. unemployed claims hit 3.3 million, quadrupling the previous record

Unusually light traffic travels through the intersection of Wyoming Blvd and Second Street in eastern Casper on Monday, March 16 (Dan Cepeda, Oil City)

March 26, 2020

By CHRISTOPHER RUGABER AP Economics Writer

WASHINGTON (AP) – Nearly 3.3 million Americans applied for unemployment benefits last week – more than quadrupled the previous record set in 1982 – amid widespread economic shutdowns caused by coronavirus.

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The increase in weekly applications was a fantastic reflection of the damage the viral outbreak is doing to the economy. Unemployment benefit registrations generally reflect the pace of layoffs.

The pace of layoffs is sure to accelerate as the US economy slows down in a recession. Revenue has collapsed at restaurants, hotels, cinemas, gyms and airlines. Car sales are declining, and car manufacturers have close factories. Most of such employers face loan payments and other fixed costs, so they cut jobs to save money.

As job losses increase, some economists say the country’s unemployment rate could reach 13% in May. By comparison, the highest unemployment rate during the Great Recession that ended in 2009 was 10%.

The economic deterioration is rapid. As of February, unemployment was at a 50-year low of 3.5%. And the economy grew steadily if modestly. However, in the April-June quarter, some economists believe the economy will fall at its steepest annual pace ever – a contraction that can reach 30%.

Many people who have lost jobs in recent days have been unable to apply for unemployment benefits because government websites and telephone systems have been overwhelmed by a large number of applicants and have frozen. This logjam suggests that Thursday’s report on filing unemployment benefits actually understands the extent of job cuts last week.

With layoffs rising, a significant expansion of unemployment benefits for the millions who lose jobs as a result of the coronavirus outbreak was included in a financial bill nearing final approval in Congress. A provision of the bill would provide an additional $ 600 a week on top of the unemployment benefit provided by states. Another would extend another 13 weeks of benefits beyond the six months of unemployment assistance offered by most states.

Separate legislation passed last week provides up to $ 1 billion to states to improve their ability to process claims. But this money will take time to be paid.

Jessy Morancy of Hollywood, Florida, was fired Friday from her job as a wheelchair employee and customer service agent at Fort Lauderdale Airport. Morancy, age 29, called the state unemployment office Monday to try to file unemployment benefit applications, but came across just one recorded message that she would 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 support her children aged 10 and 7.

“I’m still in a state of shock,” Morancy said.

She said she has heard that airline employees can continue to receive salaries if Congress provides financial assistance to the airlines. Still, it’s not clear that employees like her who work for contractors – Eulen America, in her case – would be eligible.

“If these companies get a rescue, why not include us?” Morancy said.

Even for those who are able to file a claim, the benefits will take time to kick in. Typically, it takes two to three weeks for applicants to receive money. State agencies must first contact their former employers to verify their employment and earnings history. Only then can the employee’s weekly unemployment benefit be calculated.

Exacerbating the problem, most state agencies that handle unemployment claims operate at historically low funding levels and staffing intended to handle a trick of claims. Only a few weeks ago, the labor market was in the strongest shape it had been for decades.

Kim Boldrini-Sen, 41, has also struggled to even file her claim. She has tried in two states: in Connecticut, where she works as an acupuncturist in a private practice, and in New York, where she lives and has her own acupuncture business.

In Connecticut, she believed her application had been submitted. But when she returned last week to recover, which applicants must do every week, she found that there was no record of her original filing. After taking an hour to file again, she received a pop-up notification that she was not eligible to do so online.

In New York, the state website repeatedly crashed when she was halfway filling her request. When she finally managed to tap submit, she received a pop-up saying she had to file over the phone. It has not worked well either.

“I’ve called all the times of the day,” she said. “It’s been my life for a week and I still can’t get through to anyone.”

On Monday, the New York State Department of Labor tweeted, “If you haven’t been able to get through our phone and / or online system this week, keep trying.”

“We work as hard as we can to ensure that all benefits are paid out and appreciate your patience,” the agency said on Twitter.

Ellen Zentner, an economist at Morgan Stanley, said in a note to clients that 17 million jobs could be lost through May – twice the entire 8.7 million jobs lost in the Great Recession. She expects unemployment to average 12.8% in the April-June quarter, which would be the highest level since the 1930s.

Still, Zentner also expects the economy to recover in the second half. It will take time before things return to something that is close to the normal she projects: Unemployment may still be 5% by the end of next year.