More than 6.65 million people filed for unemployment benefits in the US last week, the latest official figures to highlight the devastating economic impact of the Covid-19 pandemic on the American economy.
As reports emerged of long lines at unemployment offices, jammed phone lines and broken websites across the US, the federal labor department said Thursday that a new record number of people sought benefits after losing their jobs in the week ending 27 March.
Some 3.3 million had filed for unemployment the previous week, bringing total claims to 9.95 million for the two weeks. More people have filed for unemployment in the last two weeks than filed in the last six months.
The US now faces the sharpest rise in unemployment in its history, a surge that is already highlighting income inequality across the nation and comes as the global economy goes into a nosedive that is likely to exacerbate the situation in the months ahead.
“We are at the mercy of the virus,” said William Rodgers, former chief economist at the US Department of Labor. Rodgers calculates US unemployment, just 3.5% in February, has already reached 17% in just two weeks and that rates for African Americans have soared to 19% from 5.8%.
With large parts of the US now on lockdown, millions working in retail, restaurants, travel, hotels and leisure industries have lost their jobs and the losses are spreading. Oil and gas companies are laying off workers as oil prices collapse and engineering firms including General Electric are cutting staff as the airline industry grinds to a halt.
All 50 states reported a rise in unemployment claims with the largest rises in Pennsylvania (up 362,012), Ohio (up 189,263) and Massachusetts (up 141,003). The layoffs were widespread with losses reported in almost all sectors of the economy from leisure and retail to construction and manufacturing.
The scale and speed of the layoffs is without precedent. Before last week the sharpest rise in unemployment claims was in 1982 when filings rose by 695,000.
It has been over two weeks since Brandy Banaay was let go from her housekeeping job at the Doubletree Hotel Alana in Waikiki, Hawaii, yet the single mother of three has yet to successfully file for unemployment insurance. Whenever she tries to file on Hawaii’s website, it crashes.
“Every time, it would just kick me out, kick me out. It’s very frustrating. You have to have patience because there’s a lot of unemployment,” Banaay said.
The crisis has effectively shut down Hawaii’s $17bn tourism industry, leaving thousands of workers like Banaay unemployed. Over 82,000 workers in a state of 1.5 million people filed for unemployment in March.
“It’s just so stressful, the fact that I have to provide for my kids. I have to make sure I can still pay my bills and my loans. It’s a lot,” Banaay said. “It’s a struggle right now.”
Modeling predicts regional and racial disparities
On Friday, the Bureau of Labor Statistics will release its first monthly jobs report since the Covid crisis hit the US. It is expected to show the first rise in unemployment in more than nine years. The figures were collected in the middle of last month, before General Electric, Macy’s, Marriott and others laid off workers.
Economists are forecasting a rise to 4% unemployment, up from a 50-year low of 3.5% in February and ending a record 113 months of growth in the jobs market. The figure will probably be revised sharply upwards next month when more data is available.
Using a model based on unemployment insurance claims, Rodgers, professor of public policy at the Bloustein School for Planning and Public Policy at Rutgers University, expects to see sharp regional and racial differences in unemployment emerge.
Alongside a 19% unemployment rate for African Americans, he calculates the unemployment rate for Latinx workers has risen to 17% from 4.4% and teen unemployment has hit 25%, just weeks into the US crisis.
Rodgers also expects a widening gap in unemployment rates across the country. In Louisiana, he predicts unemployment could rise to 44.9% (from 5.3%) as oil and gas production are hit by falling oil prices and tourism to New Orleans, currently in the midst of one of the country’s worst coronavirus outbreaks, dries up. At the end of March, New Orleans had reported 1,834 total cases of Covid-19 infection and 101 deaths.
It is too early to say how long this will go, said Rodgers. “We really are in uncharted waters,” he said.