Unemployment claims in the US skyrocket to 6.6 million. Last week, the number of Americans applying for unemployment benefits doubled the record high set a week earlier.
The rise of unemployment claims in the US hints a sign that layoffs have been multiplying as the country battles with the coronavirus pandemic.
Job cuts are rising against the backdrop of economies in the United States and abroad that have turned into a severe recession as businesses shut down worldwide, according to the report released by the Labor Department.
Jobless benefits claims mirror the amount of layoffs in general. Together with last week’s report that 3.3 million Americans filed for unemployment claims two weeks ago, the U.S. economy has already witnessed nearly 10 million layoffs in the past several weeks. This exceeds the amount for any corresponding period on record.
Moreover, some of the people who sought unemployment aid may have been delayed filings from the previous week, when state offices that process unemployment benefits were bombarded with a surge of online and telephone claims.
The rising layoffs became the basis of several economists to claim that there will be as many as 20 million lost jobs by the end of April. This figure would be more than double the 8.7 million jobs lost during the Great Recession.
Meanwhile, the unemployment rate could still rise as high as 15% this month, beyond the record of 10.8% set during a deep recession in 1982.
Companies are reducing their payrolls to remain afloat because their revenue already sank. These businesses are restaurants, gyms, hotels, movie theaters and other establishments that require face-to-face interaction. Auto sales already declined, and factories shut down.
Moreover, more than two-thirds of the U.S. population are observing under stay-at-home orders being implemented by most U.S. states. This also added to the pressure felt by businesses, most of which need to pay rent, loans and other bills.
The unemployment benefits system was expanded by the White House and the Congress last week. The $2.2 trillion economic rescue package had included $600 a week in jobless aid, aside from what beneficiaries get from their states. This will allow lower-income employees to handle their expenses and even heighten their purchasing power and support the economy.
The stimulus package makes many people qualified for unemployment assistance, including the self-employed, contractors, and so-called “gig economy” workers like Uber and Lyft drivers.
The legislation will also finance unemployment benefits for workers whose hours have been reduced.
Twenty six states already allow workers with reduced work hours to receive benefits. Several economists agree because it encourages employers to cut back on hours instead of let go their workers. Any program that supports companies in terms of keeping their workers can in turn help the economy recover faster when the virus outbreak fades.
Meanwhile, individuals who receive unemployment benefits are asked to actively look for new work and to record their searches. However, Congress has submitted other legislation that prods states to remove that requirement, since many businesses are closed, and most Americans have been told to stay mostly at home.