Weak demand is forcing U.S. employers to lay off workers, keeping new applications for unemployment benefits extraordinarily high, even as businesses have reopened, buttressing views the labor market could take years to recover from the COVID-19 pandemic.
FILE PHOTO: People line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort, Kentucky, U.S. June 18, 2020. REUTERS/Bryan Woolston
“There were some businesses that tried to maintain their workforce, waiting to see what would happen as businesses reopened,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “Even as the economy is picking up they are not seeing a lot of demand and are deciding that they don’t need that many workers.”
Rising coronavirus infections in many parts of the country, including California, Texas and Florida, are likely to hurt employment as some people stay away from restaurants and other consumer-facing establishments, even if businesses are not shut down again. These so-called continued claims are reported with a one-week lag. Continuing claims have dropped from a record 24.912 million in early May, with economists crediting the government’s Paycheck Protection Program, part of a historic fiscal package worth nearly $3 trillion, giving businesses loans that can be partially forgiven if used for wages.
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