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Crisis begins to hit professional and public-sector jobs once considered safe
As the novel coronavirus pandemic brought business to a halt, the pain rippled outward, blowing up sector after sector. According to a detailed analysis of unemployment claims, no industry was left untouched.
After that first chaotic week of lockdowns mid-March, as officials scrambled to slow the spread of the deadliest pandemic in more than a century, restaurants and theaters saw job losses slow while losses in other sectors, such as construction and supply-chain work, accelerated. Now, it appears the economic upheaval is hitting professional and public-sector jobs that some once regarded as safe.
The Labor Department doesn’t release jobless claims by industry. So, building on the work of economist Ben Zipperer and his colleagues at the Economic Policy Institute, we analyzed industry-specific new unemployment-benefit claims from 14 states that publish them. (For a full list, see the charts below.)
For that, we need to focus in on the weekly changes in jobless claims to distinguish between industries where claims are falling and those where claims are steady or increasing. The data can also help us estimate how the labor market will change in coming months.
Week 1, March 15 to 21: Full-contact industries
(Highest week-to-week change included: accommodation and food services; arts entertainment and recreation; hairdressers, auto mechanics and laundry workers)
The first week of closures slammed headfirst into industries that require the most face-to-face customer contact — America’s hospitality sector. More than 7 percent of all restaurant, hotel and bar workers filed for unemployment in this first week alone.
For public officials looking to enforce social distancing, bars, hotels and movie theaters were obvious targets: They’re discretionary spending and require significant human interaction. Another category, which the government calls “other services” but is primarily made up of hairdressers, auto mechanics and laundry workers, also suffered swift and significant losses.
The number of newly unemployed filers in all these high-contact industries fell off in subsequent weeks, but they remain the biggest casualties of the crisis. And unemployment claims probably understate the pain of lower-earning Americans. Low-wage workers often don’t qualify for benefits because they haven’t spent enough time on the job, or aren’t being paid enough, Zipperer said.
A survey released Tuesday by Zipperer and his colleague Elise Gould implies unemployment numbers may be significantly worse than government statistics show. For every 10 people who successfully applied for unemployment benefits during the crisis, they show, another three or four couldn’t get through the overloaded system, and two more didn’t even apply because the system is too difficult.
Week 2, March 22 to 28: The producers
(Highest week-to-week change included: manufacturing; construction; retail)
By the second week, the shutdown moved from businesses where the primary danger is interacting with customers to those, like construction and manufacturing, that require in-person interaction with large crews of colleagues.
On March 26, for example, Spokane, Wash.-area custom-cabinet maker Huntwood Industries, laid off around 500 employees, according to Thomas Clouse of the Spokesman-Review. As a manufacturer whose sales depend on the construction industry, it was hit doubly hard by the shutdowns.
“It is a scary time,” Amy Ohms, 37, told Clouse. “It’s kind of unfair. I think construction is essential. There is a lot of uncertainty.”
Manufacturers were among the first publicly traded companies to note travel and supply-chain risks related to the coronavirus outbreak in China in financial filings, according to a separate analysis by Oxford researchers Fabian Stephany and Fabian Braesemann and collaborators in Berlin. By March, manufacturers were noting domestic production issues.
Their analysis also shows that, in the middle of March, concern about the coronavirus and its disease, covid-19, from retail corporations eclipsed that of manufacturers. Indeed, retail struggled mightily in the second week of the crisis. More workers were told to stay home, and folks realized foot traffic was often incompatible with social distancing.
The retail sector wasn’t hit as quickly or as forcefully as food services or entertainment, presumably because the sector includes grocery stores and others who employ workers who were deemed essential.
Week 3, March 29 to April 4: The supply chain
(Highest week-to-week change included: wholesale trade; retail trade; administrative and waste management)
In the third week, the pain worked its way up the supply chain, as wholesale trade — a sector that includes some sales representatives, truck drivers and freight laborers — got slammed.
In theory, the lockdowns created near-perfect trucking conditions: traffic vanished, diesel keeps getting cheaper and the roads are safer than they have been in decades. Only one problem: There’s not much to haul right now.
Don Hayden, president of Louisville trucking firm M&M Cartage, feared he would have to lay off about 70 percent of his 400 employees — drivers, mechanics and office staff — in early April. Orders from his customers in heavy manufacturing evaporated.
But, just in time, he got a Payroll Protection Program loan through his local bank. He was shocked at how rapidly his loan was approved and the money arrived, and he said the Treasury Department had done an outstanding job.
“We’re good through May and into June,” he said. “We have a good workforce. We’re proud of them. We sure would like to retain them.”
At this point in the crisis, the focus shifted from huge, industry-eviscerating swings in jobless numbers to gradual weekly trends that help us guess where the jobless claims will settle in the weeks and months to come.
As industries fall like dominoes, policymakers need to realize the damage isn’t contained to a few specific sectors, said University of Tennessee economist Marianne Wanamaker, a former member of Trump’s Council of Economic Advisers.
She said there may be a temptation to extend benefits for difficult-to-reopen industries such as food service and hospitality, but “it doesn’t comport with the data because the damage is so widespread. It’s not fair to say, ‘Hotel and restaurant workers, you get these really generous packages and everybody else has to go back to work.’ ”
Week 4, April 5 to 11: White-collar workers
(Highest week-to-week change included: management; finance and insurance; public administration)
White-collar industries have been shedding jobs since mid-March, albeit at a much lower rate than lower-income sectors. But as losses in low-income sectors subsided, white-collar jobless claims stayed flat or even intensified. By week four, categories that contain managers, bookkeepers, insurance agents and bank tellers saw some of the worst weekly trends of any sector.
On April 9, the online review site Yelp laid off 1,000 workers and furloughed 1,100 more (about a third of its workforce) as traffic on the site plunged while businesses were locked down.
“The physical distancing measures and shelter-in-place orders, while critical to flatten the curve, have dealt a devastating blow to the local businesses that are core to our mission,” CEO Jeremy Stoppelman wrote at the time.
Jane Oates, president of the employment-focused nonprofit organization WorkingNation, used to oversee the Labor Department wing that coordinates unemployment claims and training. “The big difference between coronavirus and the Great Recession is that this has completely stopped the economy across so many sectors,” she said.
During the Great Recession, she and her team had the luxury of flooding support into areas that were being hit hardest in a particular week or month. They went from state to state and industry to industry, putting out fires as they arose.
The Labor Department can’t address individual problems like that during the coronavirus recession, she said, because everybody’s getting shellacked simultaneously.
Week 5, April 12 to 18: The public sector
(Highest week-to-week change included: oil, gas and mining; utilities; public administration)
In the week ending April 18, the most recent for which we have data, we can no longer avoid one of the most ominous trends in the entire analysis: a rise in public-sector layoffs. Utilities, public administration and education services — all of which have close implicit or explicit ties to state and local government, were among the worst-faring sectors on a weekly basis.
To stem the tide of what could be millions of job losses and furloughs, the National League of Cities is pushing for a $250 billion bailout of cities throughout the country, colleague Tony Romm reports.
In Broomfield, Colo., a Denver-area suburb of about 70,000 residents, 235 city and county employees were furloughed on April 22, according to Jennifer Rios in the Broomfield Enterprise.
“The impact of the COVID-19 coronavirus is more significant than any of us could have ever expected for our well-being, as well as our municipal financial stability,” Rios reports that officials wrote in a letter to furloughed employees.“
State and local governments are typically required to balance their budgets. Now that they’re staring down the barrel of a huge tax-revenue shortfall, “these revenue losses are going to cause government budgets to fall and they’re going to lay people off,” Zipperer said.
“You’re seeing the beginnings of a big contraction in the public sector,” he said. “That’s going to be the next huge thing.”
The public sector used to be the bulwark that kept the economy going while the private sector pulled back during a recession, Zipperer said. “Over the last couple of recessions, the public sector hasn’t played that traditional role,” Zipperer said. “As a result, we’ve seen steeper recessions and slower recoveries.”
Jobless Numbers Are ‘Eye-Watering’ but Understate the Crisis
With 4.4 million added last week, the five-week total passed 26 million. The struggle by states to field claims has hampered economic recovery.
Nearly a month after Washington rushed through an emergency package to aid jobless Americans, millions of laid-off workers have still not been able to apply for those benefits — let alone receive them — because of overwhelmed state unemployment systems.
Across the country, states have frantically scrambled to handle a flood of applications and apply a new set of federal rules even as more and more people line up for help. On Thursday, the Labor Department reported that another 4.4 million people filed initial unemployment claims last week, bringing the five-week total to more than 26 million.
“At all levels, it’s eye-watering numbers,” Torsten Slok, chief international economist at Deutsche Bank Securities, said. Nearly one in six American workers has lost a job in recent weeks.
Delays in delivering benefits, though, are as troubling as the sheer magnitude of the figures, he said. Such problems not only create immediate hardships, but also affect the shape of the recovery when the pandemic eases.
Laid-off workers need money quickly so that they can continue to pay rent and credit card bills and buy groceries. If they can’t, Mr. Slok said, the hole that the larger economy has fallen into “gets deeper and deeper, and more difficult to crawl out of.”
Hours after the Labor Department report, the House passed a $484 billion coronavirus relief package to replenish a depleted small-business loan program and fund hospitals and testing. The Senate approved the bill earlier this week.
Even as Congress continues to provide aid, distribution has remained challenging. According to the Labor Department, only 10 states have started making payments under the federal Pandemic Unemployment Assistance program, which extends coverage to freelancers, self-employed workers and part-timers. Most states have not even completed the system needed to start the process.
Ohio, for example, will not start processing claims 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.
Pennsylvania opened its website for residents to file for the federal program a few days ago, but some applicants were mistakenly told that they were ineligible after filling out the forms. The state has given no timetable for when benefits might be paid.
Reports of delays, interruptions and glitches continue to come in from workers who have been unable to get into the system, from others who filed for regular state benefits but have yet to receive them, and from applicants who say they have been unfairly turned down and unable to appeal.
Florida has paid just 17 percent of the claims filed since March 15, according to the state’s Department of Economic Opportunity.
“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.”
Using data reported by the Labor Department for March 14 to April 11, the Economic Policy Institute, a liberal research group, estimated that seven in 10 applicants were receiving benefits. That left seven million other jobless workers who had filed claims but were still waiting for relief.
States manage their own unemployment insurance programs and set the level of benefits and eligibility rules. Now they are responsible for administering federal emergency benefits that provide payments for an additional 13 weeks, cover previously ineligible workers and add $600 to the regular weekly check.
So far, 44 states have begun to send the $600 supplement to jobless workers who qualified under state rules, the Labor Department said. Only two — Kentucky and Minnesota — have extended federal benefits to workers who have used up their state allotment.
With government phones and websites clogged and drop-in centers closed, legal aid lawyers around the country 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 would not have been able to make his mortgage payment.
Last week’s tally of new claims was lower than each of the previous three weeks. But millions of additional claims are still expected to stream in from around the country over the next month, while hiring remains piddling.
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.
Florida had the largest increase in initial claims last week, although the state figures, unlike the national total, are not seasonally adjusted. That increase could be a sign that jobless workers finally got access to the system after delays, but it is impossible to assess how many potential applicants have still failed to get in.
The 10 states that have started making Pandemic Unemployment Assistance payments to workers who would not normally qualify under state guidelines are Alabama, Colorado, Iowa, Kentucky, Louisiana, Massachusetts, Rhode Island, Tennessee, Texas and Utah.
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.
An outsize share of jobless claims have also been filed by women, according to an analysis from the Fuller Project, a nonprofit journalism organization that focuses on women.
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, Tex. 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.
New layoffs are expected to ease over the next couple of months, but 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, Mr. Rieder said, is “going to go through another period of evolution.”
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The Presidential Campaign, Policy Issues and the Public
The U.S. presidential campaign is ultimately a connection between candidates and the people of the country, but the development of the candidates’ policies and positions is largely asymmetric. Candidates develop and announce “plans” and policy positions that reflect their (the candidates’) philosophical underpinnings and (presumably) deep thinking. The people then get to react and make their views known through polling and, ultimately, through voting.
Candidates by definition assume they have unique wisdom and are unusually qualified to determine what the government should do if they are elected (otherwise, they wouldn’t be running). That may be so, but the people of the country also have collective wisdom and on-the-ground qualifications to figure out what government should be doing. That makes it useful to focus on what the people are telling us, rather than focusing exclusively on the candidates’ pronouncements. I’m biased, because I spend most of my time studying the public’s opinions rather than what the candidates are saying. But hopefully most of us would agree that it is worthwhile to get the public’s views of what they want from their government squarely into the mix of our election-year discourse.
So here are four areas where my review of public opinion indicates the American public has clear direction for its elected officials.
1. Fixing Government Itself.
I’ve written about this more than any other topic this year. The data are clear that the American people are in general disgusted (even more than usual) with the way their government is working and perceive that government and elected leaders constitute the most important problem facing the nation today.
The people themselves may be faulted here because they are the ones who give cable news channels high ratings for hyperpartisan programming, keep ideological radio talk shows alive, click on emotionally charged partisan blogs, and vote in primaries for hyperpartisan candidates. But regardless of the people’s own complicity in the problem, there isn’t much doubt that the government’s legitimacy in the eyes of the people is now at a critically negative stage.
“Fixing government” is a big, complex proposition, of course, but we do have some direction from the people. While Americans may agree that debate and differences are part of our political system, there has historically been widespread agreement on the need for elected representatives to do more compromising. Additionally, Americans favor term limits, restricting the amount of money candidates can spend in campaigns and shifting to a 100% federally funded campaign system. (Pew Research polling shows that most Americans say big donors have inordinate influence based on their contributions, and a January Gallup poll found that only 20% of Americans were satisfied with the nation’s campaign finance laws.) Americans say a third major party is needed to help remedy the inadequate job that the two major parties are doing of representing the people of the country. Available polling shows that Americans favor the Supreme Court’s putting limits on partisan gerrymandering.
Additionally, a majority of Americans favor abolishing the Electoral College by amending the Constitution to dictate that the candidate who gets the most popular votes be declared the winner of the presidential election (even though Americans who identify as Republicans have become less interested in this proposition in recent years because the Republican candidate has lost the popular vote but has won in the Electoral College in two of the past five elections).
2. Fix the Backbone of the Nation by Initiating a Massive Government Infrastructure Program.
I have written about this at some length. The public wants its government to initiate massive programs to fix the nation’s infrastructure. Leaders of both parties agree, but nothing gets done. The failure of the Congress and the president to agree on infrastructure legislation is a major indictment of the efficacy of our current system of representative government.
3. Pass More Legislation Relating Directly to Jobs.
Jobs are the key to economic wellbeing for most pre-retirement-age Americans. Unemployment is now at or near record lows, to be sure, but there are changes afoot. Most Americans say artificial intelligence will eliminate more jobs than it creates. The sustainability of jobs with reasonably high pay in an era when unionized jobs are declining and contract “gig” jobs are increasing is problematic. Our Gallup data over the years show clear majority approval for a number of ideas focused on jobs: providing tax incentives for companies to teach workers to acquire new skills; initiating new federal programs to increase U.S. manufacturing jobs; creating new tax incentives for small businesses and entrepreneurs who start new businesses; providing $5.5 billion in federal monies for job training programs that would create 1 million jobs for disadvantaged young Americans; and providing tax credits and incentives for companies that hire the long-term unemployed.
My read of the data is that the public generally will support almost any government effort to increase the availability of high-paying, permanent jobs.
4. Pass Legislation Dealing With All Aspects of Immigration.
Americans rate immigration as one of the top problems facing the nation today. The majority of Americans favor their elected representatives taking action that deals with all aspects of the situation — the regulation of who gets to come into the country in the first place and the issue of dealing with individuals who are already in the country illegally. As I summarized in a review of the data earlier this year: “Americans overwhelmingly favor protecting the border, although with skepticism about the need for new border walls. Americans also overwhelmingly favor approaches for allowing undocumented immigrants already living in the U.S. to stay here.”
Recent surveys by Pew Research also reinforce the view that Americans have multiple goals for their elected representatives when it comes to immigration: border security, dealing with immigrants already in the country, and taking in refugees affected by war and violence.
More Direction From the People
What else do the people want their elected representatives to do? The answer can be extremely involved (and complex), but there are several additional areas I can highlight where the data show clear majority support for government policy actions.
- Significant majorities of Americans want stricter gun control laws and, for some proposals such as universal background checks, support reaches the 90% level.
- Americans want government to support the development of alternative sources of energy with a dramatic decrease in use of traditional fossil fuels. Americans want government to maintain and enhance pollution and emission standards.
- Americans strongly favor protecting the environment even at the risk of curbing economic growth.
- Americans favor legalizing the recreational use of marijuana.
- A significant majority of Americans favor keeping abortion legal under at least some circumstances and do not want Roe v. Wade to be overturned.
- A majority of Americans favor higher taxes on the rich and on corporations.
- Americans put high priority on the president and Congress dealing with basic ongoing functions such as combating terrorism and maintaining Social Security and Medicare.
- Americans want the government to keep products safe and prevent discrimination.
Americans See Healthcare and Education as Important but Don’t Have a Clear Mandate
There are two areas of life to which the public attaches high importance, but about which there is no clear agreement on what the government should be doing. One is healthcare, an issue that consistently appears near the top of the list of most important problems facing the nation, and obviously an issue of great concern to presidential candidates. But, as I recently summarized, “Healthcare is clearly a complex and often mysterious part of most Americans’ lives, and public opinion on the issue reflects this underlying messiness and complexity. Americans have mixed views about almost all aspects of the healthcare system and clearly have not yet come to a firm collective judgment on suggested reforms.”
Education is another high priority for Americans, but one where the federal government’s role in the eyes of the public isn’t totally clear. Both the American people and school superintendents agree on the critical importance of teachers, so I presume the public would welcome efforts by the federal government to make the teaching profession more attractive and more rewarding. Americans also most likely recognize that education is a key to the future of the job market in a time of growing transition from manual labor to knowledge work. But the failure of the federal government’s massive effort to get involved in education with the No Child Left Behind legislation underscores the complexities of exactly what the federal government should or should not be doing in education, historically a locally controlled part of our American society.
HENRY KOTULA 