- The economic fallout from the coronavirus pandemic has begun to wipe out millions of jobs in the US, not just in hospitality and travel but also in spaces including sports and entertainment as well as manufacturing.
- The Bureau of Labour Statistics reported on May 8 that 20.5 million US nonfarm payroll jobs were lost in April.
- Nearly 3.17 million Americans filed for unemployment benefits during the week ending May 2. The weekly increase in new workers applying for benefits has slowed since an unprecedented 6.64 million in the week ending in March 28.
- Several industries are pleading with the federal government for a bailout.
- Visit Business Insider’s homepage for more stories.
A recession from the novel coronavirus outbreak is a near certainty, economists say. And the fallout has already begun to wipe out a substantial number of American jobs.
According to the latest employment report from the US Bureau of Labour Statistics, the US lost 20.5 million jobs in April, a historical record and vastly larger than the loss of 870,000 nonfarm payroll jobs in March.
The number of Americans newly filing for unemployment benefits has declined in recent weeks. Nearly 3.2 million Americans filed unemployment claims in the week ending May 2, according to Thursday morning’s release of figures from the US Department of Labour. That is about the same as the number of Americans who filed for unemployment claims in the week ending March 21, the week before a record number of 6.6 million Americans.
“There is a real danger that the economic crisis that comes out of this health crisis is worse than what we experienced in 2008,” Jason Furman, formerly a top economist for the Obama administration, recently told Business Insider.
The unprecedented shutdown has closed bars, restaurants, and salons across the nation in an attempt to prevent the virus from spreading. It’s unleashing a tidal wave of layoffs across sectors that power the American economy.
Many major companies, once titans of industry, are now in dire financial straits and laying off workers. And more are pleading for a bailout from the federal government.
The airlines are set to receive a $US50 billion bailout from the Trump administration as part of a colossal $US2 trillion federal rescue package that President Trump signed into law at the end of March. It also includes around $US504 billions in loans for large corporations as well as $US377 billions in loans and grants for small businesses.
Here’s a look at the record-breaking unemployment figures and what industries are likely to get hit the hardest.
Jobless claims have declined in recent weeks since more than 6.64 million Americans filed for unemployment benefits during the week ending March 28.
As job losses continue in the US, many Americans are seeking to claim unemployment benefits.
The latest jobless claims from the Labour Department report that 3.17 million Americans filed for unemployment benefits in the week ending May 2, down from 3.85 million Americans in the week ending in April 25.
During the early response to the coronavirus outbreak, the United States saw an unprecedented number of Americans filing for unemployment benefits. More than 6.64 million filed for unemployment benefits in the week ending March 28, surpassing the previous week’s record of 3.3 million Americans. This is when businesses started to temporarily close their doors and states started to enforce stay-at-home orders.
The coronavirus emergency aid bill has expanded unemployment eligibility in a bid to address those gaps.
Initial figures from states across the nation had suggested we would see a skyrocketing number of Americans filing for unemployment – putting state safety nets under significant strain.
Nevada, Hawaii, and Montana are three states forecasted to lose the most jobs as a share of their labour force, according to an analysis from the Economic Policy Institute.
The US saw a drastic decline in jobs in April, a record 20.5 million.
The latest BLS figures show that a startling 20.5 million Americans lost their job in April.
Experts recently shared their reactions to the record figure with Business Insider.
“There’s no part of the economy that is really escaping unscathed right now,” Martha Gimbel, an economist at Schmidt Futures, told Business Insider’s Carmen Reinicke.
Between mid-February and mid-March, 870,000 Americans lost their jobs as businesses shuttered, more shutdowns were enforced, and a large number of unemployment claims were filed, ending a 113-month streak of job gains.
The jobs lost are across industries, from healthcare to retail. The April report noted the leisure and hospitality industry had the most job losses.
Retail lost 2.1 million jobs in April, the majority of which is from clothes and accessories businesses. Because of a decline in consumer demand and other effects from the response of the coronavirus, some retailers have filed for bankruptcy, such as J. Crew. Business Insider’s Madeline Stone reported that experts believe more retailers will follow in filing for bankruptcy.
The unemployment rate skyrocketed to 14.7% in April from 4.4% in March.
As a result of the striking number of job losses in April, the unemployment rate climbed from March’s rate of 4.4% to 14.7% in April – a 10.3 percentage point increase. The BLS employment report noted this is the largest monthly rate change since reporting unemployment figures began in 1948. Only three months ago the unemployment rate was 3.5%.
The unemployment rate doesn’t capture the whole picture, because workers who are employed but absent from work aren’t included in the figure.
The unemployment rate also slightly varies by race, ethnicity, and gender. For instance, the unemployment rate was 16.7% for Black Americans and 18.9% for Hispanic Americans in April.
The Federal Reserve Bank of St. Louis forecasts that the unemployment rate could reach an astonishing 32.1% in the second quarter of the year.
The Congressional Budget Office, a nonpartisan government agency, recently projected that the effects of the coronavirus could last well into 2021. Unemployment could be as high as 9% around then, challenging President Donald Trump’s optimistic assessment of a quick economic rebound once the pandemic subsides.
Major US airlines are being ravaged by the virus’ economic fallout, and they’re likely to receive emergency federal funding.
The coronavirus pandemic compelled the mass cancellation of travel plans from consumers and businesses alike, severely damaging the airline industry. Countries have also sealed off their borders to thwart the spread of the virus.
Delta Air Lines, for example, moved to drastically cut costs by parking half its fleet and sending 10,000 employees home without paid leave. United Airlines said it could take similar steps and lay off more than half of its workers in the coming months.
The four major US airlines – American, Delta, United, and Southwest – were seeking a $US50 billion bailout from the Trump administration, which supports the idea.
The bailout is part of a $US2 trillion stimulus bill, the largest federal rescue package in US history. Around $US8 billion of it would be directed to aid cargo carriers.
But airlines have come under fire for using their profits from hiked passenger fees and cheap fuel during the long bull market to buy back stock instead of, say, improving labour conditions or creating a financial cushion for just this kind of crisis.
Boeing is another major aerospace firm seeking help, in the form of a bailout worth billions. Trump has expressed interest in extending emergency federal aid, saying, “we have to absolutely help Boeing.”
Airlines employ around 750,000 people in the US, according to the Financial Times.
Hotels across the country are laying off workers or cutting their hours.
Like the airlines, hotels have also been ravaged by massive numbers of Americans cancelling their travel plans in the fallout from the coronavirus.
The hospitality industry, which includes hotels and restaurants among other businesses, experienced the largest number of jobs lost in April. Based on BLS figures, the leisure and hospitality sector lost nearly half its jobs, or 7.7 million.
Marriott International recently told workers that it was furloughing tens of thousands of them as it closes properties around the world, The Wall Street Journal reported.
The American Hotel and Lodging Association, a trade group, said that in March nearly 4 million jobs could be wiped out, or almost half of all jobs in the hotel sector.
Travel spending in the US is forecasted to plunge 31% this year – that would be six times worse than in the aftermath of 9/11 – according to a report from the US Travel Association.
Those figures are raising alarm among hotel executives, who met with President Trump last week to request a $US150 billion bailout. They said the coronavirus’ impact on their business has been bigger than “September 11th and the Great Recession of 2008 combined,” according to the head of the AHLA.
Trump’s hotels also took a financial hit, and at least 200 workers were laid off.
The travel industry has also experienced the largest single-month decline in internship openings, according to Glassdoor.
Many major sport and entertainment cancellations are affecting the job safety of event workers.
As people are being advised to stay away from large crowds to stop the spread of the coronavirus, sports and entertainment events have been cancelled or postponed en masse. Notable events like March Madness and the South by Southwest festival have been cancelled.
As games are cancelled or postponed, sports-betting companies are cutting costs to keep their companies from going under.
Many employers in entertainment have started laying off workers. According to a list compiled by Forbes, Circuit of the Americas and Cirque du Soleil are among the entertainment companies laying off workers. Cirque du Soleil has reportedly laid off 4,679 employees, or 95% of its workforce.
Sports and other event cancellations also impact the job safety of thousands of vendors and event staff members, according to Politico.
Goldman Sachs predicts it will take years for the cruise line industry to bounce back from cancellations and a decline in travel demand.
The cruise line industry is also taking a big hit from the coronavirus outbreak after the US State Department advised people not to travel by cruise ship, especially older people and people at risk of catching the virus.
Of the 3,711 passengers on the Diamond Princess cruise ship, 705 were infected with the coronavirus. Some other cruise ships have been unable to dock at ports even if they had no suspected cases onboard.
Carnival, Royal Caribbean, and Norwegian Cruise Line have, as a precautionary measure, banned people from boarding who have been to mainland China, Hong Kong, or Macau. A few major cruise lines were on a 30-day shutdown as of March 13.
Some cruise lines cut salary pay and laid off workers as ways to handle losing profits, the decrease in travel demand, and cruise line shutdowns.
Research analysts and economists interviewed by Forbes said they believed that cruise lines will have a hard time making a case of why they deserve a federal bailout compared to other industries that need it.
Goldman Sachs predicted that a cruise line recovery will take years, citing previous dips, such as the Great Recession.
Millions of restaurant workers are predicted to lose their jobs over the next few months.
Restaurants have been especially feeling the effects of stay-at-home orders since March when most places had to temporarily close and some switching to take-out food only.
The sector saw major job losses in April of 5.5 million, according to the latest figures from BLS.
As a result of the coronavirus, 5 million to 7 million restaurant workers are estimated to lose their jobs and the industry as a whole will lose $US225 billion between March and June, according to projections from The National Restaurant Association.
In New York City, which CNBC has reported to have more than 27,000 eating and drink establishments with 300,000 employees, restaurants and bars are closed to stop the spread and are only allowed to provide takeout and delivery service.
Some states are starting to ease restrictions in areas like beaches and retail, and a few states are allowing bars and restaurants to reopen as long as they follow social distancing guidelines. This includes restaurants and bars in Montana, Texas, and Alabama.
New York City restaurateur Danny Meyer laid off 2,000 employees, or 80% of his workforce, on March 18 and is donating his salary to a fund for the employees at his company Union Square Hospitality Group, according to CNBC. The company operates 18 restaurants in the city.
Although a lot of restaurants and eateries are having to think about laying off workers, some major pizza chains, such as Domino’s, were looking to hire more than 50,000 new employees during the coronavirus in March. Some GoFundMe pages have also been set up to help workers during layoffs.
Manufacturing in the US is now in a state of contraction.
The manufacturing industry has been hit especially hard recently.
According to the latest BLS figures, there were 1.3 million jobs lost in April in the manufacturing sector.
April also saw a loss off 88,300 truck drivers, wiping out job gains in the sector, as reported by Business Insider’s Rachel Premack. One reason for the steep job losses in trucking is the decline in consumer demand leading to a reduction in need for trucks that would transport goods.
The Wall Street Journal reported that indexes tracking manufacturing activity in the US recorded a steep drop in March, compared to February.
US manufacturing is now in a state of contraction instead of expansion, the product of falling business activity across the economy.
A recent survey from the National Association of Manufacturers found 80% of firms expected they would take a financial hit from efforts to curtail the spread of the virus.
More factories are beginning to stagger shifts in their workplaces in a bid to maintain current production levels, the Journal reported.