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‘It’s a Wreck’: 3.3 Million File Unemployment Claims as Economy Comes Apart

More than three million people filed for unemployment benefits last week, sending a collective shudder throughout the economy that is unlike anything Americans have experienced.

The alarming numbers, in a report released by the Labor Department on Thursday, provide some of the first hard data on the economic toll of the coronavirus pandemic, which has shut down whole swaths of American life faster than government statistics can keep track.

Just three weeks ago, barely 200,000 people applied for jobless benefits, a historically low number. In the half-century that the government has tracked applications, the worst week ever, with 695,000 so-called initial claims, had been in 1982.

Thursday’s figure of nearly 3.3 million set a grim record. “A large part of the economy just collapsed,” said Ben Herzon, executive director of IHS Markit, a business data and analytics firm.

The numbers provided only the first hint of the economic cataclysm in progress. Even comparatively optimistic forecasters expect millions more lost jobs, and with them foreclosures, evictions and bankruptcies. Thousands of businesses have closed in response to the pandemic, and many will never reopen. Some economists say the decline in gross domestic product this year could rival the worst years of the Great Depression.

And there was fresh evidence on Thursday of the relentless course of the virus itself. Cases in the United States now exceed 80,000, the most of any nation, even China and Italy, according to a New York Times database, and more than 1,000 deaths across the country have been linked to the virus.

At least 160 million people nationwide have been ordered to stay home. Many hospitals are overwhelmed, while essential protective gear is in short supply. “We are the new global epicenter of the disease,” said Dr. Sara Keller, an infectious-disease specialist at Johns Hopkins Medicine. “Now all we can do is to slow the transmission as much as possible.”

The situation in the New Orleans area is particularly acute, with the city reporting more than 800 cases, a higher total than most states.

In New York, the state hardest hit, Gov. Andrew M. Cuomo reported a 40 percent increase in hospitalized patients in one day, to well over 5,000. The surge dashed hopes that had been raised a day before, when Mr. Cuomo said the state’s social-distancing measures seemed to be slowing the growth in hospitalizations.

President Trump said the federal government planned to designate areas as being at high, medium or low risk for spreading the virus to guide local decisions on imposing or relaxing restrictions on movement and commerce.

The terrifying speed of the U.S. economic collapse from the pandemic has spurred lawmakers to action. Late Wednesday night, senators agreed on a $2 trillion aid package that would provide cash payments to nearly all Americans and would expand the unemployment system, among other changes. Final congressional approval is expected on Friday.

The legislative action has helped buoy financial markets. A three-day rally has lifted stocks in the S&P 500 index more than 17 percent, including a rise of 6.2 percent on Thursday, though prices remain far lower than they were a month ago.

As staggering as the figures are for jobless claims, they almost certainly understate the problem. Some part-time and low-wage workers don’t qualify for unemployment benefits. Nor do gig workers, independent contractors and the self-employed, although the emergency aid package passed by the Senate would broaden eligibility to include many of them. Others who do qualify may not know it. And the sudden rush of layoffs led to jammed phone lines and overwhelmed computer servers at unemployment offices across the country, leaving many people unable to file claims.

The evening that Elise Quivey, 25, heard she was being furloughed from her job in Chicago as a web designer for a cruise ship company, she immediately clicked on the state’s unemployment benefits website. The pages wouldn’t load. The next morning, as she tried to fill out the online form, error messages kept flashing.

Days of calling have resulted in nagging busy signals. She is hoping that her claim made it through, and that she will receive aid within a few weeks, but she is not optimistic.

“There’s so many things up in the air right now, and it’s so stressful,” she said. “It’s a wreck.”

Despite the glitches, Thursday’s figures suggest the scale of the problem. In a single week, the pandemic wiped out a year and a half of job gains. The past two weeks’ claims alone would be enough to push the unemployment rate up to 5.7 percent from 3.5 percent in February — a half-century low that now seems like ancient history.

The worst could be yet to come. Mr. Herzon of IHS Markit said he expected a similarly large number next Thursday, when the Labor Department releases its report on new claims filed this week.

Some forecasters think the unemployment rate could hit 10 percent this summer, which would equal the highest level from the last recession more than a decade ago. Back then, it took nearly two years for the jobless rate to reach that height.

“What is really hard to fathom is just how fast these numbers are going to escalate,” said Carl Tannenbaum, chief economist at Northern Trust.

Still, while there is little doubt that the numbers will get worse in the short term, some economists remain optimistic that the pain will be relatively short-lived. The congressional relief package is intended to, in effect, press “pause” on the economy, allowing idled workers and shuttered businesses to keep paying their bills so that they can spring back quickly once the health crisis eases. If it works, the recovery could be relatively swift; if it doesn’t, the cascade of layoffs and business failures could stretch on far longer.

Quintina Moore-Caraway, a ramp agent at George Bush Intercontinental Airport in Houston, New York City News was at work on March 13 when her supervisor called her over. She was being furloughed, without pay, at the end of her shift.

Ms. Moore-Caraway, 46, was barely getting by on the $10 an hour she earned at the airport. She has no savings, and no idea how she will pay her $688 rent bill on April 1. She hasn’t been in the job long enough to qualify for unemployment, and the few places still hiring during the pandemic aren’t near bus routes.



“Through all the hurricanes, floods, I’ve never seen anything like this,” she said. “On the movies I have, not in real life.”

Low-wage workers — many of them black, like Ms. Moore-Caraway, or Hispanic — have been hit especially hard by the sudden economic reversal. Many work in the industries most affected by the outbreak, such as restaurants and travel, and few can work from home. They are also less likely to have sick leave or other paid time off, and they have less money saved to help overcome a missed paycheck.

Black and Hispanic workers “always bear the brunt” of economic slowdowns, said Alix Gould-Werth, a researcher at the Washington Center for Equitable Growth, a left-leaning think tank. “Now they’re bearing the brunt of these twin crises, the health crisis and the economic crisis.”

Some help may be on the way for workers like Ms. Moore-Caraway. Under the congressional aid package, most families would receive $1,200 per adult and $500 per child in direct payments. The bill would also increase unemployment benefits by $600 a week and extend how long laid-off workers could receive benefits. And it would waive some requirements for receiving jobless benefits, like the requirement that recipients look for work.

It would not, however, expand the food-assistance program formerly known as food stamps.

An earlier relief bill, passed by Congress last week, provided $1 billion to help state unemployment systems that are breaking under the stress of record call volumes. Departments across the country reported huge spikes in call volumes and online applications.

The surge in applications was a particular challenge because departments were staffed — and funded — for a labor market that had until recently been setting records for its strength.

Colorado’s Department of Labor and Employment had 70 people working on unemployment claims before the coronavirus outbreak. It added 90 people to help respond to calls and process claims on Monday, pulling them off other jobs in the department. Roughly 80 percent of workers are at home, while the rest are in a call center in downtown Denver that during the last recession had hundreds of workers dealing with claims.

“Where we maybe had eight months to prepare heading into the recession, we had five days to respond to coronavirus,” said Cher Haavind, the department’s deputy executive director.

On Monday, nearly 100,000 call attempts were made by 10 a.m., when the call center normally receives 6,000 calls in an entire week. The department put in place a new process under which those filing claims submit their forms at specified times based on their last names. Even so, Ms. Haavind said, the crush of applications has strained not just the department’s systems but also its employees.

“They are talking to stressed-out people, and they are also stressed out,” she said.

For laid-off workers, the anxiety is racking.

Mere weeks ago, Bill Copperfield had steady work installing drywall in commercial buildings in Hawaii. Press Release Distribution News Then he caught a cold and, in the suddenly cautious world of coronavirus, was told not to come to work, meaning he wasn’t paid. By the time he was healthy again, the job had shut down and the state government was telling nonessential workers to stay home. He has tried repeatedly to file an unemployment claim, but hasn’t managed to get through.

“So right now I am three weeks without income and I’ve got my rent coming up, I’ve got food I’ve got to buy,” Mr. Copperfield said. “Definitely I won’t be paying bills this month.”

Mr. Copperfield, 45, has been laid off in the past, including during the 2008-9 housing crisis, in which he ended up losing his home to foreclosure. But even then, he said, he was able to go out and find work as a handyman or even sell fish he caught.

“At least then I could go out and hustle work, even if it wasn’t in my field,” he said. “Nobody can work right now, we’re on like lockdown. And even if I could find side work, I’d be putting my family at risk.”

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