The United States could lose 1 million jobs this month, warns economist and CNN commentator Kevin Hassett.
“You’re looking at one of the biggest negative job numbers we’ve ever seen,” said Hassett, who predicts a 5% economic shrinkage in the second quarter. “The odds of a global recession are close to 100% right now.”
Restaurant closures and other drastic measures taken to slow the spread of COVID-19 could cost millions of service industry workers and business owners their jobs (and their livelihoods).
Weekly applications for unemployment insurance jumped by 70,000 last week compared to the week before. In Pennsylvania, more than 100,000 individuals filed for unemployment benefits on March 16-17. There were just 14,000 claims during the first week of March.
Residents of Ohio filed 48,640 claims on March 16-17, more than twice the monthly average. In New Jersey, so many people filed for unemployment benefits that it crashed the website.
“While coronavirus layoffs began last week, the full weight of the impact – while swift – is still ramping up as businesses realize what they are up against,” writes EPI senior economist Heidi Shierholz. “That means that we should look at the numbers…as just the leading edge of the labor market impact of the coronavirus outbreak.”
The Trump Administration has proposed a hefty stimulus package to help Americans weather the storm, but without further action, unemployment could rise as high as 20%.
Officials say it could take months before the virus subsides to a level that is safe enough to allow Americans to return to normal life.
To date, the largest one-month job loss in US history was in September 1945 when 1.96 million jobs were lost as the nation adjusted to a post-war footing following the conclusion of WWII.
The biggest job loss in recent history was during the Great Recession (2007-2009), when employment plunged by 800,000 in March 2009. That drop followed losses of 743,000 in February and 784,000 in January.
Fortunately, the jobs market was strong heading into the COVID-19 outbreak and that strength could mitigate the coming damage.
“Companies will be cautious about cutting workers if they think this will be a short-term phenomenon,” says Russell Price, chief economist at Ameriprise. “They are going to try to hang onto workers for fear of not being able to get them on the other side.”
In the meantime, unemployed workers are flocking to gig jobs like Lyft, Instacart, and UberEats for income. These companies are seeing a spike in business as Americans attempt to avoid contact with each other.
UberEats is trying to keep restaurants afloat by waiving delivery fees and GrubHub, a similar service, is deferring the commissions it typically collects from restaurants. Amazon is hiring 100,000 employees to help meet the increasing demand for grocery delivery services.
“Progressives criticize this ‘on-demand’ work as somehow exploitative,” notes The Wall Street Journal. “But the coronavirus contagion is demonstrating that this free-market flexibility can be a labor lifesaver in a viral panic.”
Of course unemployment is going to skyrocket, but that is the price we are paying to save tens of thousands of lives. And while it is not like Trump to support measures harmful to the economy, he knows he can’t win the election if Democrats hang dead bodies around his neck.