The coming unemployment crisis from the ‘coronavirus recession’ (revised and updated)

What do you see wrong in the photo above? A large group of people congregating less than six feet apart — in disregard of CDC social distancing guidelines — at a One-Stop Career Center for unemployment insurance benefits after having been laid off from their service sector employment in Las Vegas.

A massive number of people are now or about to be filing for unemployment insurance claims as the government orders businesses to shut down and workers to stay at home in a “lockdown” to try to slow the spread of the coronavirus pandemic.

State unemployment offices need to make application for unemployment benefits online or by telephone tree voice application. In Arizona, “DES does not have Unemployment Insurance offices. You must apply online. If you don’t have a computer, you may visit a One-Stop Center or DES Employment Service office resource center (access to computers is available free of charge).” Sorry, but the telephone tree voice application alternative needs to implemented and made available now. We can’t have people standing in line for unemployment insurance benefits at employment offices, as in the photo above.

UPDATE: People who can’t fill out the form online may call 602-542-5954 from 8 a.m. to 5 p.m.

The federal and state government must also waive the requirement that someone receiving unemployment benefits must submit a weekly “job search” report to continue receiving benefits. With a government “lockdown” of economic activity, it is nonsensical and counter to CDC guidelines to force people to go out and look for work during a pandemic when businesses have been ordered shut down and workers ordered to stay home. This is something the Arizona legislature must address before adjourning sine die. (See below). The legislature must also add additional funding to the reserve for unemployment insurance benefits.

Politico reports, Coronavirus layoffs surge across America, overwhelming unemployment offices:

Employers are slashing jobs at a furious pace across the nation due to mass shutdowns over the coronavirus, slamming state unemployment offices with a crush of filers facing sudden crises.

Long before official government data is expected to reveal the depths of the economic shock inflicted by the coronavirus, reports from state officials and businesses around the country indicate the gathering of a massive wave of unemployment on a scale unseen since the Great Recession.

In New Jersey, 15,000 people applied for unemployment benefits on Monday, a twelvefold increase over normal levels. In Connecticut, nearly 8,000 applications arrived over the weekend, an eightfold increase over the norm. Rhode Island officials reported Tuesday a five-day rise in claims due to the coronavirus from 10 on March 11 to 6,282 on March 16.

More than 45,000 Ohio workers have applied for unemployment over the past week, the Ohio Department of Job and Family Services told Sen. Rob Portman, a nearly sevenfold increase over the previous week.

UPDATE: U.S. jobless claims rose to 281,000 last week, Labor Department says.

The dramatic rise in claims could spur further action by Congress beyond the legislation now under discussion. “This demonstrates the urgency for Congress to act, and act quickly,” Portman said Tuesday in a written statement.

According to an NPR/Marist poll conducted Thursday and Friday, 18 percent of households already reported someone being laid off or having hours reduced because of the coronavirus outbreak, with women hit harder (21 percent) than men (16 percent), and people who earn less than $50,000 hit harder (25 percent) than those earning $50,000 or more (14 percent).

“A coronavirus recession is inevitable,” said Josh Bivens, director of research at the left-leaning Economic Policy Institute, in a blog post. He estimated that at least 3 million jobs will be lost by summer. Meanwhile, the U.S. Travel Association was projecting 4.6 million jobs lost this year in the travel industry alone, pushing the unemployment rate up to 6.3 percent.

The layoffs swept businesses large and small. On Tuesday Marriott said it expects to lay off tens of thousands of workers worldwide. MGM Resorts International on Monday closed 150 restaurants and bars, with more closings to come; Caesars Entertainment Corp. said it also has begun layoffs. In D.C., Compass Coffee, a local Starbucks competitor, laid off most of its 189 employees, and the Dubliner, a popular Irish bar on Capitol Hill, laid off all of them, leaving the place empty on St. Patrick’s Day.

During the past 48 hours, unemployment insurance offices around the country were flooded with phone calls, and state unemployment websites crashed in Kentucky, Oregon, and New York.

Lawmakers on Capitol Hill late Tuesday were racing toward a deal with the White House on an economic stimulus package to aid industries disrupted by the pandemic, and ironing out the details on a separate coronavirus aid package.

But many state unemployment insurance programs are ill-prepared for the downturn. Twenty-two states and jurisdictions, including California, New York, Illinois and Texas, have dangerously low reserves, and 10 have reduced the number of weeks they offer benefits since the 2007-09 Great Recession. The duration of eligibility for unemployment insurance in any given state won’t be affected by the legislation moving through Congress.

With the Trump administration and other nations considering travel restrictions, and more Americans pulling back on nonessential trips, the travel and hospitality industries have been among the first to see job cuts.

“We are adjusting global operations accordingly,” a Marriott spokesperson said in an emailed statement, “which has meant either reduction in hours or a temporary leave for many of our associates at our properties.” The spokesperson said that employees “will keep their health benefits during this difficult period and continue to be eligible for company- paid free short-term disability that provides income protection should they get sick.”

Several airlines have cut back service, and Delta recently announced a hiring freeze in the wake of the outbreak.

Service sector and travel sector jobs are just the beginning. As more drastic “lockdown” measures need to be taken to slow the spread of the coronavirus, more businesses will be ordered to shut down by the government.

UPDATE: A half-measure from the Arizona legislature was moving through the legislature on Thursday. Arizona legislators move to change jobless-benefit eligibility during outbreak:

State lawmakers were moving late Thursday to provide additional flexibility to the Department of Economic Security to decide who can collect payments even if they do not meet what has, until now, been the definition of “unemployed.”

One issue is that Arizona law says an individual has to be available to work for any willing employer. A change signed in 2018 by Gov. Doug Ducey says people who don’t take pretty much any job after being out of work for at least four weeks automatically lose their unemployment benefits.

The problem with that in the face of COVID-19, according to the Labor Department, is that it does not account for what happens when an employer temporarily shuts down due to the virus, with the expectation the worker will return when business resumes.

In its advisory, the Labor Department says states are free to conclude that someone who had been working for that firm can collect benefits as long as he or she is available to retake the original job.

More complicated is the requirement to actually seek work, particularly if the job still exists and the company remains open but the employee is quarantined.

In that case, the Labor Department says states can decide that a person meets the work-search requirement by remaining “able and available for that job” and that the person will “take reasonable steps to preserve their ability to come back to that job.”

Senate Bill 1694 (passed Thursday) and its companion, House Bill 2911, give DES the authority to adopt similar rules.

There also is permission for DES to waive an existing one-week “waiting period,” a situation where someone has to be out of work — and with no income — for a full week before getting benefits.

The legislation has a sweetener of sorts for the business community: It spells out that any additional costs of providing benefits because of the virus outbreak will not be passed on to employers in the form of higher premiums.

What is not being changed is that $240 a week maximum, something fully within the state’s purview.

Arizona law limits unemployment benefits to $240 a week, no matter how much the person had been earning before. Only Mississippi has a lower cap at $235 a week.

Dave Wells, research director of the Grand Canyon Institute, said that figure has not been changed since 2004. He said a more reasonable cap would be $490 a week, a figure he said is “about average” for the country and in line with states like Texas and Utah.

UPDATE 3/20/20: Gov. Ducey extends jobless benefits for Arizonans out of work due to coronavirus:

Gov. Doug Ducey on Friday issued an executive order intended to ensure people out of work because of the coronavirus pandemic can get benefits, which max out at $240 a week in Arizona.

His order waives the one-week waiting period after an employee loses a job before they can apply for unemployment benefits.

It also waives the requirement that recipients search for work to get their payments.

And it ensures eligibility for people working at companies that have closed or reduced hours because of the outbreak; workers who have to quarantine because of COVID-19; and workers who have to care for sick family members with the virus.

The order also waives any increase in employer payments to the unemployment insurance fund for businesses whose employees receive benefits under the new provision.

Benefits are not retroactive, so people should apply as soon as possible after their last day of work.

UPDATE: Ben White reports at Politico, How ugly could it get? Trump faces echoes of 1929 in coronavirus crisis:

The early signals from the coronavirus crisis point to a scale of damage unseen in the modern U.S. economy: the potential for millions of jobs lost in a single month, a historic and sudden plunge in economic activity across the nation and a pace of sharp market swings not seen since the Great Depression.

The rest of his report is just as bleak.

UPDATE 3/20/20: Axios reports The coronavirus jobs apocalypse is here:

Goldman Sachs predicts that more than 2 million Americans will file for unemployment claims by next week, pointing to “an unprecedented surge in layoffs this week.”

If Goldman’s economic forecasters are right, the number of Americans filing initial claims for unemployment benefits next week will more than triple the all-time high of 695,000 set in October 1982, and nearly four times the number seen at the peak of the Great Recession.

The numbers are expected to be so bad the Trump administration has asked states to hold off on releasing them before Thursday, according to a Wall Street Journal report, citing an email from a U.S. Labor Department official.