At the end of March, more than 6.6 million Americans applied for unemployment benefits, doubling the record level set just a week earlier, a sign that layoffs accelerated in the midst of a pandemic of mers. This writes France24.
The report of the U.S. Department of labor showed that job cuts is growing on the background of economic recession in the United States and abroad.
The figure for last week is much higher than the previous record of 3.3 million, which was reported earlier. The unemployment rate may rise to 15% in April, surpassing the previous record of 10.8 percent set during the deep recession in 1982.
Many employers are reducing their payroll, trying to stay afloat, because their incomes fell, particularly in restaurants, hotels, sports halls, cinemas and other places that depend on personal visit. Auto sales declined and factories closed.
Orders to “stay home”, introduced in most US States, have increased pressure on enterprises, most of which have to pay the rent, loans and other accounts.
Congress greatly expanded the system of unemployment benefits as part of a package of measures to save the economy cost $2.2 trillion. It added $600 per week as unemployment benefits, besides the fact that recipients already have. This will allow many workers with low incomes to manage their spending and even increase their purchasing power and support the economy.
It also provides an opportunity for more people to be eligible for unemployment benefits, including self-employed, contractors and employees of the so-called “giants” such as Uber and Lyft drivers.
Katherine Lickteig, cook in Kansas city, signed up for unemployment benefits last week after the city shut down the restaurants. She hoped that extra $600 will help her to withstand the crisis rather than to look for temporary work.
The law will also help to Fund unemployment benefits for workers whose hours have been reduced. This would allow these people to replace part of your lost income with unemployment benefits, even if they retain their job.
Reduce the hours compared to layoffs
Approximately 26 States allow workers with reduced hours to claim the payment of benefits. Most economists support it because it encourages firms to reduce hours, and not to dismiss workers. Any program that encourages companies to liaise with their employees may help the economy to recover faster after the outbreak of the virus.
As a rule, people who receive unemployment assistance are obliged to actively look for new work and document your search. But Congress passed another law, encouraging States to waive this requirement, given that many businesses are closed, and most Americans were ordered to stay at home.
Mark Zandi, chief economist at Moody’s Analytics, said that only 6% of companies surveyed by Moody’s, say that they hire employees, compared with 40% in the weeks leading to the outbreak of coronavirus.
On March 3, the government will release the March employment report, which economists expect will show a loss of 145,000 jobs. This report is based on data collected mainly before the surge of layoffs began in mid-March. Although this loss is relatively small, it still put an end to a record 113-month streak of employment growth.
Numerous agencies on unemployment are struggling to keep up with the flood of applications for unemployment benefits. The labor Department of new York asks people to apply to different days depending on their last names. For example, Monday is reserved for those names that start with A to F.
Americans are losing income
About half (53%) of all working Americans claim that the coronavirus had a negative impact on their income or the income of family members. In this case people with a low income job loss threatens most. This is indicated by a new poll by the Associated Press-NORC Center for Public Affairs Research. Loss of income includes the reduction of wages, loss of paid vacation and actually lose their jobs, writes “Voice of America”.
23% of adults who had jobs before the start of the surge of the disease, now they say that they or a member of their family lost a job. A third of families earning less than $50,000 a year say they or a member of their family lost a job.
60% of Americans say that the economy is in bad shape. For comparison, in January the economy was described as “good” 67% of Americans. A surge of pessimism was the result of the collapse in the stock market and closing business across the country. Normal economic activities were suspended to limit the number of deaths from COVID-19.
The survey also indicates that 43% of Americans positively assess the work of Donald trump as President of the United States. 56% assessed it negatively.
The economy has plunged into recession
The American economy was overtaken by the recession. How long it will last will depend on the development of the situation with the pandemic, which could claim hundreds of thousands of lives, and which compelled most countries to impose strict restrictive measures to curb the spread of infection. This writes the “Voice of America”.
But the speed of recovery will depend on how much assistance would support the government and how effectively you will use this assistance to save jobs, said April 2 at the Federal reserve.
“What do we know on the example of 2008 when millions and millions of Americans lost jobs, the labor market recovery took more than a decade, says the head of the Federal reserve Bank of Minneapolis Neil Kashkari. – I am very pleased that many of the actions of the Federal government and state governments are intended to help people keep jobs.”
We are talking about starting April 3, a new program of lending to small businesses totaling $350 billion, which aims to help companies to pay wages to employees.
This program is part of a package of anti-crisis measures in the amount of $2.2 trillion, which passed the Congress.
Over the last two weeks for unemployment benefits appealed the 10 million Americans that Kashkari called the “shocking and disturbing” rate. The ranks of the unemployed and joined his wife, who worked in the Agency corporate travel.
According to Kashkari, if jobs remain reserved for employees, recovery can go faster because companies will be easier to start again.
If the company will not be able to re-open and keep their employees, thousands of businesses will go bankrupt, which will lead to a much longer recovery.
The head of the Federal reserve Bank of Dallas Robert Kaplan also noted that the economy is in the stage “a sharp reduction” and the unemployment rate could reach 10-15%.
At 15% without a job are 24 million Americans. In February, the unemployment rate was 3.5%, and the peak figure of 10% was achieved during the great recession.
“We know that in connection with the restrictive measures and the services sector, and the consumer will be more difficult,” said Kaplan, referring to published in most States, the Executive orders requiring people to stay indoors and to close all institutions of non-Essentials.
Although Kaplan believes that by the end of the year unemployment will fall to about 8%, he warns: “to achieve this we will need a lot of work.”
A key role is played by the anti-crisis measures, including those adopted last week a package of assistance, however, will require more measures of a fiscal nature, he said.
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