(UnitedVoice.com) – The coronavirus pandemic is creating chaos in the economy as it kills off small businesses and jobs faster than any other single event in American history. Payroll firm ADP and Moody’s Analytics reported on Wednesday that 27,000 jobs were cut through March 12. That’s just before state government-induced economic freezes took effect to control the spread of COVID-19.
Contrast that to February when 273,000 jobs were added and there were more jobs than people.
On March 26, the Labor Department reported that 3.28 million new unemployment claims were filed. That shattered the Great Recession peak of 665,000 in March 2009 and the previous all-time high of 695,000 in October 1982. The Federal Reserve Bank of St. Louis estimates that 47 million people could be laid off and the unemployment rate could go higher than 32%.
Small Businesses Hit Hard, But They Aren’t Alone
The ADP report reveals that small businesses were already being affected by the COVID-19 pandemic before state governments started imposing shutdowns of non-essential businesses. Small businesses accounted for all the payroll reductions in the ADP report. Service-related job losses totaled 18,000 while the construction sector lost 9,000.
Mid and large-size businesses have begun following the lead of small businesses by announcing layoffs and furloughs. Nearly 50% of US companies expect to furlough or lay off workers in the coming days. Many layoffs will occur in the retail industry which employs one out every four workers.
Last week, Designer Brands furloughed 80% of its workers. On Monday, GAP announced it was closing its doors on April 1 and will furlough 80,000 of its 129,000 employees. In addition, Macy’s said the majority of its 125,000 employees will be furloughed immediately and Kohl’s is furloughing 85,000 of its 120,000 employees this week.
There will certainly be more layoff and furlough announcements in the coming days and weeks. One prediction of the retail environment by Coresight Research suggests 15,000 stores will close this year. That’s nearly double of its initial predictions.
Help Is On the Way
Last week, President Trump signed into law a stimulus bill designed, in part, to help workers get through the crisis. Americans will get a direct payment of $1,200 if single or $2,400 if married (and an additional $500 per child). For those laid off or furloughed, they’ll also receive an extra $600 a week on top of normal state unemployment benefits.
Check out the IRS’s website for more details on what you can expect from the third stimulus bill.
Lawmakers have said over the last few days another stimulus could be in the works to help Americans affected by the COVID-19 outbreak. For now, it’s unknown how long state governments will need to continue enacting stay-at-home or shelter-in-place orders to curb the spread of the virus. Let’s hope this pandemic gets behind us sooner than later so that Americans can get back to work and start rebuilding the economy.
By Don Purdum, Freelance Contributor
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