The grim economic toll from the coronavirus pandemic jumped on Thursday when the government reported another 4.4 million people filed new unemployment claims last week, bringing the five-week total to more than 26 million.
The relentless increase in the jobless ranks has intensified the debate over when to lift restrictions that have helped halt the virus’s rapid spread but placed the economy in a stranglehold.
“At all levels, it’s eye-watering numbers,” said Torsten Slok, chief international economist at Deutsche Bank Securities. As large as the latest figures from the Labor Department are, they still don’t capture the full extent of the layoffs because of continuing lags in processing claims.
State agencies have scrambled to handle the overwhelming flood of filings as well as a set of federal eligibility rules instituted to deal with the crisis. Those problems will affect the shape of the recovery when the pandemic eases, Mr. Slok said.
Laid-off workers need money quickly so that they can continue to pay rent, and credit card bills and for groceries. If they can’t, he said, the hole that the larger economy has fallen into “gets deeper and deeper, and more difficult to crawl out of.”
Reports of delays, interruptions and glitches continue to come in from workers who have been unable to get into the system, from early filers who complain they have yet to receive any money and from applicants who say they have been unfairly turned down and unable to appeal.
“Speed matters” when it comes to government assistance, said Carl Tannenbaum, chief economist at Northern Trust. Speed can mean the difference between a company’s survival and its failure, or between making a home mortgage payment and facing foreclosure.
There is “a race between policy and a pandemic,” Mr. Tannenbaum said, and in many places, it is clear that the response has been “very uneven.”
States manage their own unemployment insurance programs and set the level of benefits and eligibility rules. Now they are responsible for administering new federal emergency relief benefits that provide payments for an additional 13 weeks, cover previously ineligible workers like part-timers and freelancers, and add $600 to the regular weekly check.
Florida has one of the worst records for benefit payments in the country, paying less than 16 percent of the claims filed since March 15, according to the state’s Department of Economic Opportunity.
Pennsylvania opened its website for residents to file for the federal Pandemic Unemployment Assistance program a few days ago, but has given no timetable for when benefits might be paid.
And Ohio, struggling to meet the demand, won’t start processing claims covered under the expanded federal eligibility criteria until May 15. Recipients whose state benefits ran out, but who can apply for extended federal benefits, will not begin to have their claims processed until May 1.
With government phones and websites clogged and drop-in centers closed, legal aid lawyers are fielding complaints from people who say they don’t know where else to turn.
“Our office has received thousands of calls,” said John Tirpak, a lawyer with the Unemployment Law Project, a nonprofit group in Washington.
People with disabilities and nonnative English speakers have had particular problems, he said.
Even those able to file initially say they have had trouble getting back into the system as required weekly to recertify their claims.
Colin Harris of Marysville, Wash., got a letter on March 31 from the state’s unemployment insurance office saying he was eligible for benefits after being laid off as a quality inspector at Safran Cabin, an aerospace company. He submitted claims two weeks in a row and heard nothing. When he submitted his next claim, he was told that he had been disqualified. He has tried calling more than 200 times since then, with no luck.
“And that’s still where I am right now,” he said, “unable to talk to somebody to find out what the issue is.” If he had not received a $1,200 stimulus check from the federal government, he said, he wouldn’t have been able to make his mortgage payment.
Millions of additional claims are expected to stream in over the coming weeks, with only piddling hiring to offset the losses.
States are frantically trying to catch up. California, which has processed 2.7 million claims over the last four weeks, opened a second call center on Monday. New York, which has deployed 3,100 people to answer the telephone, said this week that it had reduced the backlog that accumulated by April 8 to 4,305 from 275,000.
Pain is everywhere, but it is most widespread among the most vulnerable.
In a survey that the Pew Research Center released on Tuesday, 52 percent of low-income households — below $37,500 a year for a family of three — said someone in the household had lost a job because of the coronavirus, compared with 32 percent of upper-income ones (with earnings over $112,600). Forty-two percent of families in the middle have been affected as well.
Those without a college education have taken a disproportionate hit, as have Hispanics and African-Americans, the survey found.
Josalyn Taylor, 31, learned that she was out of a job on March 16. “I clocked in at 3 o’clock, and by 3:30 my boss called me and told me we were going to shut down for three weeks,” said Ms. Taylor, an assistant manager at Cicis Pizza in Galveston, Texas. The restaurant has yet to reopen.
Two days later, she applied for unemployment insurance, but she kept receiving a message that a claim was already active for her Social Security number and that she could not file. She has tried to clear up the matter hundreds of times — online, by phone and through the Texas Workforce Commission’s site on Facebook — with no luck.
“I used my stimulus check to pay my light bill, and I’m using that to keep groceries and stuff in the house,” said Ms. Taylor, who is five months pregnant. “But other than that, I don’t have any other income, and I’m almost out of money.”
The first wave of layoffs most heavily whacked the restaurant, travel, personal care, retail and manufacturing industries, but the damage has spread to a much broader range of sectors.
At the online job site Indeed, for example, postings for software development jobs are down nearly 30 percent from last year, while listings for finance and banking openings are down more than 40 percent.
While new layoffs are expected to ease over the next couple of months, the damage to the economy is likely to last much longer. In a matter of weeks, the shutdown has more than erased 10 years of net job gains — more than 19 million jobs.
Health and education are going to revive relatively quickly, said Rick Rieder, chief investment officer for global fixed income at BlackRock, but leisure and hospitality are going to take a lot longer.
“A lot of the people who have been furloughed won’t come back,” he said. “Companies will either close or decide not to take back those workers.”
Over the past decade, the employment landscape has shifted substantially as new types of jobs have appeared and old categories have disappeared. The U.S. economy is now “going to go through another period of evolution,” Mr. Rieder said.