US Unemployment Hits 18M, Highest Mark to Date

Colorado is allowing more businesses like hair salons and tattoo parlors to open up again, while others like this music store on Colfax Avenue in Aurora face uncertain futures. (Courthouse News photo/Amanda Pampuro)

(CN) — Doling out benefits to some 18 million Americans, the Department of Labor announced Thursday that 12.4% of the U.S. were collecting insured unemployment as of last week.

“The Covid-19 virus continues to impact the number of initial claims and insured unemployment,” the report confirms. “This marks the highest level of seasonally adjusted insured unemployment in the history of the seasonally adjusted series.” 

Last week 3.8 million Americans filed initial claims for unemployment insurance benefits, the sixth week in a row where the rate exceeded 3 million claims. Week to week, this adds up to 30 million claims filed.

With 21.8% of workers out of a job, Michigan has the highest rate of insured unemployment in the country, followed by Connecticut and Pennsylvania. 

Florida saw the largest increase in initial claims last week, followed by Connecticut and West Virginia. New York, New Mexico and South Dakota were among states that reported a decrease in layoffs.

Investment firm Goldman Sachs projects unemployment will reach 15% by the end of the third quarter with few opportunities for re-employment. Other economists are predicting unemployment will peak at 20%. 

The Department of Labor used covered employment of 145,671,710 in its calculation, defining that term as Americans who are “unemployed through no fault of their own,” while also meeting certain work and wage requirements.

Since unemployment first started to spike at the end of March, only 60% of those who filed claims are currently receiving benefits, according to reports of continued claims.

For every 10 people who received unemployment insurance benefits, an Economic Policy Institute poll counted 6.4 people who could not get through, were rejected, or didn’t apply because the process seemed too difficult. Based on its survey of 25,000 Americans, the D.C. thinktank estimates that the process shut out 7.8 million to 12.2 million people who would otherwise qualify. 

The policy group also pointed to the U.S. unemployment insurance system as a place where improvements would prepare the country for future hardship. “Over time and with much investment, lots of this work could be done near-exclusively through an unemployment insurance system that is permanently enhanced and kicks on automatically at scale when a large crisis hits,” its researchers wrote Monday.

Other economists counter that if the economic impacts of Covid-19 are ephemeral, then the short-term solutions provided in the CARES Act, short for Coronavirus Aid Relief and Economic Security, are appropriate. 

“Unemployment insurance is an effective income support tool when hard times are transitory, as we believe and hope would be the case for Covid-19,” said Domenico Ferraro, an assistant professor of economics at Arizona State University’s W.P. Carey School of Business.

Colorado is allowing more businesses like hair salons and tattoo parlors to open up again, while other like the fast food restaurant El Bombon never closed. (Courthouse News photo/Amanda Pampuro)

The challenge now is in finding the right balance between the risks of workers getting sick and losing income.

“A plan for gradually reopening needs to be designed,” Ferraro said. “In my view, this plan would need to open first states in which contagion has been more limited.”

If outbreaks in the disease continue to spike, however, “we need to learn how to live with it,” Ferraro added.

Public health officials reiterate the importance of managing the spread of the virus and scaling up testing. 

“When we really have sufficiently widespread testing and we actually bring that testing to a random sample of the population, then we can know how many cases we actually have,” said Dr. Jon Samet,  a pulmonary physician and epidemiologist who is dean of the Colorado School of Public Health at the University of Colorado Anschutz Medical Campus.

The university’s model projects physical-distancing needs in relation to Colorado’s hospital capacity. An April 20 report projects the state will hit peak infection of 19,800 cases in October if residents can limit social interactions by 65%. With social interactions only limited by 35%, coronavirus cases in Colorado could hit 151,000 by July.

“I’m hopeful that the measure the governor has taken, sending some people back to work with great care will not increase social interactions,” Samet said. “When we get out of our houses and get back out of the world, the virus will be waiting. I think what that means is that every place is going to need strategic measures that continue to provide protection.”

Mural on a Colfax Avenue pawn shop in Aurora, Colorado, embodies the national mood during the coronavirus pandemic. (Courthouse News photo/Amanda Pampuro)

In his book “Economics in the Age of Covid-19,” Joshua Gans outlines two methods for reopening the economy: One begins with jobs sectors lowest at risk of spreading the disease, the other with the least vulnerable populations. 

This week several states allowed stay-at-home order to lapse — bars in Georgia, movie theaters in Texas, and hair salons in Colorado got the all-clear to reopen.

“The problem is the hair salons,” said Gans, chief economist of the University of Toronto’s Creative Destruction Lab. “People sitting around in close proximity sounds like a recipe for disaster.”

“For whatever reason, people are very invested in the economic value of being able to get their hair cut,” Gans explained. “That is a really hard problem to deal with: People not having their hair done do not feel normal.”

Thanks to videoconferencing platforms like Zoom, many Americans are still seeing their colleagues every day while working from home. Jennie Wolff, chief marketing officer of the beauty chain Sola Salon Studios, is herself hoping to keep a June appointment.

“For people who are used to coloring their hair maybe every three to four weeks, it’s a self-esteem issue,” Wolff said. “People really do want to look and feel their best even during a time like this.”

Lonnie Sullivan covers his face with a mask while getting a haircut last Friday after The Barber Shop in Broken Arrow, Okla., was allowed to reopen. (Matt Barnard/Tulsa World via AP)

Sola locations in Georgia reopened this week, and, south of Denver, a Sola salon in Highlands Ranch is preparing to reopen Friday. Hair stylists who work at Sola are each independent business owners renting space from the corporation.

“As soon as we are allowed to open our buildings to our individual stylists and beauty professionals, then they have the opportunity to open their own business on their side,” Wolff said.

Amid the closures, Wolff noted that Sola stopped charging rent, hosted webinars on sanitation and sourced personal protective equipment for beauty workers. Wolff said the company’s buildings are already partitioned off into small studios, making them ideal for socially distanced care. 

“For hair stylists and salon owners, it’s their only source of income. Thinking about them as small business owners, how we support our small business owners through this is also really important,” Wolff said. “I think the demand is there from their customers.”

For employees in these nonessential sectors, though, many worry whether it is really safe to return to work. 

Colorado is allowing some businesses like hair salons and tattoo parlors to open up again, but House of Beauty in Aurora, Colorado, will remain closed through at least May 8 per an order from the county health department. (Courthouse News photo/Amanda Pampuro)

Erin McCaffrey, a stylist at Coco Marie Salon in Westminster, north of Denver, said she worries about getting catching Covid-19 because her elderly parents often watch her young child. Once McCaffrey’s job calls her back on May 8, the state unemployment benefits she is receiving will disappear.

But customers can help, as can business owners. 

“Sometimes customers want to get their hair done so bad they’ll do whatever to get it done. They’ve come in before saying, ‘Sorry, I have strep throat,’ or ‘I have pink eye, but I really wanted my roots done,’” McCaffrey said. “I just want them to be conscious of themselves. If they’re not feeling well, then don’t come in. If they have a temperature, don’t come in.” 

When Coco Marie reopens, both stylists and customers will be required to wear masks. The salon is also staggering out appointments and limiting the number of people in the building at one time.

Not all businesses are gearing up to reopen at the first green light. 

“There’s no rush to get back into the studios especially now that we have figured out a way to use these other tools to have rehearsals and have classes,” said Malik Robinson, executive director of Cleo Parker Robinson Dance in Denver. With tour dates and competitions canceled, the organization quickly shifted focus to run online classes. 

The organization received a loan from the Paycheck Protection Program to keep 23 staff on payroll, but still had to cut contracts with others who teach classes and run theater tech.  

“The emphasis for us will still be on this virtual experience. I think there’s going to be a need for it, even beyond social-distancing guidelines,” Robinson said. “There are students in other states who have connected with the company, and this gives them an opportunity to work with us.”

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