A Torrent of Job Losses Threatens to Overwhelm the U.S. Economy

New filings for unemployment benefits rose 30 percent last week amid cutbacks and shutdowns over the coronavirus crisis.

In an early sign of the coronavirus pandemic’s devastating impact on American workers, the Labor Department on Thursday reported a 30 percent increase in unemployment claims last week, one of the largest spikes on record.

The surge — 281,000 new claims — reflects a crushing new reality: Any hopes that businesses could keep their staffs largely intact have quickly evaporated.

“I started laying people off this Monday, not knowing how bad it was,” said Barry Rosenberg, founder of Vending One, a Los Angeles company that stocks and maintains vending machines and self-serve kiosks in malls, office complexes, jails, schools and casinos. “On Tuesday, we started restricting hours. By next Monday, I don’t know that there’ll be any work.”

Jon Blomer, who services accounts and refills those machines, was one of the first to lose his job. “There’s not enough hours to go around, and everyone’s been there longer,” said Mr. Blomer, 33, who has worked at Vending One for a year. “I understand.”

Job losses have become so sensitive that the Trump administration is asking state labor officials to delay releasing the precise number of unemployment claims.

In an email sent Wednesday and shared with The New York Times, the Labor Department instructed state officials to do nothing more than “provide information using generalities to describe claims levels (very high, large increase)” until the department releases the total number of national claims next Thursday.

The message noted that the data was “monitored closely by policymakers and financial markets to determine appropriate actions in light of fast-changing economic conditions” and should be closely held until the Labor Department’s report.

To stanch the torrent of job losses, officials in Washington are racing to design a trillion-dollar stimulus. Senate Republicans put forward a blueprint on Thursday that includes loans to big corporations and small businesses, large corporate tax cuts, and checks as large as $1,200 per adult to individuals earning less than $99,000 a year.

President Trump said he would be open to having the government take equity stakes in companies that require federal help. But Democrats are pushing to direct more assistance to workers and families rather than to corporations.

In the meantime, as employers at global conglomerates and kitchen-table offices anxiously grapple with the economy’s partial shutdown, tens of thousands of laid-off workers like Mr. Blomer are jamming government websites and phone lines to apply for unemployment insurance.

In some states, overwhelmed systems collapsed under the weight.

“It was so frustrating,” said Tim Tilley, who was laid off from his kitchen job at an Olive Garden in Ohio on Tuesday. For four hours that day and eight hours on Wednesday, he tried to file a claim. The website crashed repeatedly — after three attempts, he was locked out. He called dozens of times but was bumped from prompt to prompt, only to end up at the original automated message.

Rules for unemployment benefits vary across the country. States follow federal guidelines but administer their own programs. Each state uses its own formula to decide what percentage of weekly wages will be covered (50 percent, for example) and for how long (generally 26 weeks).

Emergency legislation that Mr. Trump signed into law on Wednesday would increase funding for states with surges in claims and pare back eligibility restrictions like waiting times and job search requirements. Although the rules are shifting, policy experts said, workers who have been quarantined or furloughed without pay should qualify.

Still, many workers could be left out entirely. Some states do not cover part-time workers, and many others have made it difficult for temporary workers to qualify. Gig workers are also often ineligible because they are typically considered self- employed.

In Maryland, for example, many applicants are confused about whether they would qualify for benefits if they became sick from the coronavirus and had to take time off or quit. The answer: No. Self-quarantines don’t qualify, either. But if a business had to shut down or lay workers off because of the virus, they could qualify.

Nicholas Javier, a restaurant server at the Westin St. Francis Hotel in San Francisco, is hoping he will. On Monday, he received a text indicating that he should not show up the next day. The hotel restaurant where he worked was being shut down, and he and his fellow servers were no longer needed. Nearly all of the hotel’s roughly 140 housekeepers were sent home as well, said Mr. Javier, a union shop steward.

Mr. Javier had worked at the hotel about six years and earned $600 to $700 a week during the winter, typically a slow season. He said he and his co-workers got word of deep cuts two weeks ago, after which his hours were scaled back.

“My anxiety level is through the roof,” he said.

For businesses, the economic effects can ripple out in helter-skelter fashion.

For the City Center Investment Corporation, a real estate development company revitalizing downtown Allentown, Pa., the property management and construction arms are all operating but the restaurants and hotels in its portfolio are dark, said J.B. Reilly, the president.

“Most business owners are right now trying to make decisions to allow them to operate in the long run and make smart decisions for themselves, their businesses and their employees,” he said.

The Renaissance Allentown Hotel, one of City Center’s properties and part of the Marriott chain, is laying off virtually all of its more than 100 workers at 5 p.m. on Friday. Charles Reece, the general manager, is one of a handful of employees who will stay on for a couple of weeks to wrap up.

“I suppose I will be applying for unemployment benefits,” Mr. Reece said. “I haven’t even thought about myself, because there is so much to do in closing.”

Planning ahead is nearly impossible, employers and workers say, without knowing how long the crisis will last or how much government assistance might be available.

Many owners are facing the choices that Robert Burns confronted when he thought about what the pandemic meant for the future of his company — and its 200 workers.

“At first, we were trying to figure out a plan where nobody’s income would be affected,” said Mr. Burns, one of the founders and the president of Night Shift Brewing, a family-owned brewery and taproom in Everett, Mass. “As things quickly deteriorated, we realized that wasn’t feasible.”

He furloughed 170 of his employees, saying he would maintain their health benefits while they collect unemployment benefits. The founders eliminated their own salaries to finance the plan. He hopes to bring all the workers back soon.

“It’s still a really tough call — they definitely won’t be making the same money they were last week,” he said, “but it’s the

best we can do.”

For Nick Crews, chief executive of Crews Hospitality, which operates airport concessions around the country, the numbers were stark: 34 outlets at four airports with roughly 1,000 employees and sales that are down about 70 percent from last year.

He started this week with a few dozen layoffs and furloughs and reduced hours at the gift shops, restaurants and newsstands, and he expects several dozen more by Monday. He also sent requests to the airports and transportation authorities for a rent reprieve and permission to delay some required refurbishments.

Every morning, he holds a crisis management meeting at 6:30 from his home office.

To Mr. Crews, hanging on to three-quarters of his staff would be an optimistic outcome. He fears that without some kind of government intervention, he would have to scale back by half, and that half the employers in his industry could fail.

“As a leader, I’m trying to be positive,” he said. “I trust we can get out of this. But it is an emotional roller coaster.”

In Los Angeles, Mr. Rosenberg of Vending One watched on a monitor as sales parachuted toward zero. On Thursday morning, he got a phone call telling him that Las Vegas casinos were closing for 30 days and that he essentially had 24 hours to retrieve the money from his machines before the doors were locked.

His warehouse is full of precut packaged sandwiches and candy bars, but he has nowhere to put them.

“I can’t sleep, I can’t eat, I’m walking in circles in the middle of the night,” he said. “It’s like being in a car accident in slow motion.”

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