One-tenth of U.S. labor force now unemployed since coronavirus slammed economy, as 6.6 million more file for jobless aid

WASHINGTON (AP) — With a startling 6.6 million people seeking unemployment benefits last week, the United States has reached a grim landmark: More than one in 10 workers have lost their jobs in just the past three weeks to the coronavirus outbreak.

The figures collectively constitute the largest and fastest string of job losses in records dating to 1948. By contrast, during the Great Recession it took 44 weeks — roughly 10 months — for unemployment claims to go as high as they now have in less than a month.

The damage to job markets is extending across the world. The equivalent of 195 million full-time jobs could be lost in the second quarter to business shutdowns caused by the viral outbreak, according to the United Nations’ labor organization. It estimates that global unemployment will rise by 25 million this year. And that doesn't even count workers on reduced hours and pay. Lockdown measures are affecting nearly 2.7 billion workers — about 81 percent of the global workforce — the agency said.

Around half a billion people could sink into poverty as a result of the economic fallout from the coronavirus unless richer countries act to help developing nations, Oxfam, a leading aid organization, warned Thursday.

In the United States, the job market is quickly unraveling as businesses have shut down across the country. All told, in the past three weeks, 16.8 million Americans have filed for unemployment aid. The surge of jobless claims has overwhelmed state unemployment offices around the country. And still more job cuts are expected.

More than 20 million people may lose jobs this month. The unemployment rate could hit 15% when the April employment report is released in early May.

“The carnage in the American labor market continued unabated,” said Joseph Brusuelas, chief economist for RSM, a tax advisory firm.

The viral outbreak is believed to have erased nearly one-third of the U.S. economy’s output in the current quarter. Forty-eight states have closed non-essential businesses.

A nation of normally free-spending shoppers and travelers is mainly hunkered down at home, bringing entire gears of the economy to a near-halt. Non-grocery retail business plunged 97% in the last week of March compared with a year earlier, according to Morgan Stanley. The number of airline passengers screened by the Transportation Security Administration has plunged 95% from a year ago. U.S. hotel revenue has tumbled 80%.

Applications for unemployment benefits are a rough proxy for layoffs because only people who have lost a job through no fault of their own are eligible.

The wave of layoffs may be cresting in some states even while still surging in others. Last week, applications for jobless aid declined in 19 states. In California, they dropped nearly 13% to 925,000 — still a shockingly high figure. In Pennsylvania, they dropped by nearly one-third to 284,000. That's still more than the entire nation experienced just four weeks ago.

» FAQ: Your coronavirus questions, answered.

By contrast, in Georgia, which issued shutdown orders later than most other states, filings for unemployment claims nearly tripled last week to 388,000. In Arkansas, they more than doubled. In Arizona, they jumped by nearly 50%.

On Thursday, the Federal Reserve intensified its efforts to bolster the economy with a series of lending programs that could inject up to $2.3 trillion into the economy. Chairman Jerome Powell said that the economy's strength before the viral outbreak means it could rebound quickly in the second half of the year.

“There is every reason to believe that the economic rebound, when it comes, will be robust," Powell said.

In many European countries, government programs are keeping people on payrolls, though typically with fewer hours and lower pay. In France, 5.8 million people — about a quarter of the private sector workforce — are now on a “partial unemployment” plan: With government help, they receive part of their wages while temporarily laid off or while working shorter hours.

A similar system is in place in Germany, where the federal labor agency says 650,000 companies have registered to put people in the short-time work program and so still on payrolls. That’s up from 470,000 about 10 days earlier.

In both countries, such workers aren't counted in unemployment figures but will likely still suffer a drop in income.

Because the U.S. government-mandated business shutdowns that are meant to defeat the virus have never brought the American economy to such a sudden and violent standstill, economists are struggling to assess the duration and severity of the damage.

“We’re just throwing out our textbooks,” said Beth Ann Bovino, chief U.S. economist at S&P Global Ratings.

The Penn Wharton Budget Model, created at the University of Pennsylvania’s business school, projects that the U.S. economy will shrink at an astonishing 30% annual rate in the April-June quarter — even including the government’s new $2.2 trillion relief measure, the largest federal aid package in history by far. An economic contraction of that scale would be the largest quarterly plunge since World War II.

A key aspect of the rescue package is a $350 billion small business loan program that is intended to forestall layoffs. Small companies can borrow enough to cover payroll and other costs for eight weeks. And the loans will be forgiven if small businesses keep or rehire their staffs. The Treasury Department has begun to roll out the loans to mixed results. Many small businesses have had trouble accessing loan applications, and many economists say the $350 billion is insufficient. Treasury Secretary Steven Mnuchin has said he will seek an additional $250 billion for the program from Congress.

The rescue package also added $600 a week in unemployment benefits, on top of what recipients receive from their states. This will enable many lower-income workers to manage their expenses and even increase their purchasing power and support the economy. It also makes many more people eligible for jobless aid, including the self-employed, contractors, and so-called “gig economy” workers such as Uber and Lyft drivers.

But many of these people have been expressing frustration and bewilderment about the process for seeking benefits as a flood of applications has overwhelmed many state offices. Margaret Heath Carignan said she called the unemployment office in Maine, where she lives, 291 times on the day that people with the last names A through H were eligible to call.

She never connected to anyone.

Carignan, 57, was laid off — temporarily, she hopes — from her position as a certified medical assistant at an orthopedic practice in Portland, Maine, a job she had held for 20 years. The office furloughed her and others because they’re unable to see many patients. She hopes to return once the coronavirus is contained.

___

AP writers Travis Loller in Nashville, Lindsay Whitehurst in Salt Lake City and Patrick Whittle in Portland, Maine, contributed to this report.