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6.65 million file jobless claims as job market collapses under weight of coronavirus pandemic

Americans by the millions are seeking unemployment pay as the economy grinds to a halt — this week’s surge in the number of claims is double last week’s record amount. In Massachusetts, filings rose 22 percent to 181,032 on an unadjusted basis.

General Electric's aviation division in Lynn is one company that has laid off workers due to the coronavirus.
General Electric's aviation division in Lynn is one company that has laid off workers due to the coronavirus.JOSEPH PREZIOSO/AFP via Getty Images

The coronavirus crisis took a fearsome toll on the once-vigorous US job market for the second straight week, as an expanding list of states imposed stay-at-home restrictions and ordered nonessential businesses to close.

A record 6.65 million Americans filed first-time unemployment claims in the week ended March 28, double the number from the previous week, according to seasonally adjusted data released Thursday by the Labor Department.

In Massachusetts, new claims rose by 22 percent to 181,032 on an unadjusted basis, from an upwardly revised 148,452 claims in the prior week.

The spike in people thrown out of work, with its chilling echoes of the Great Depression, comes as pandemic shutdowns bring the economy to a grinding halt. Americans are fearful about their livelihoods at the very moment the country braces for a surge in COVID-19 cases that the White House estimates could result in 100,000 to 240,000 deaths.

Nearly 10 million Americans have sought unemployment pay over the past two weeks, or more than 6 percent of the total workforce. In Massachusetts, more than 329,500 people have filed claims, or just under 9 percent of the workforce.

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“The increases are sobering and staggering, but the worst is yet to come,” said Thomas Kochan, a professor at the MIT Sloan School of Management.

The claims total was bigger than many analysts had expected, but the reaction in financial markets was muted. The Standard & Poor’s 500 index rose 2.3 percent on a day when investors were more focused on the prospect of a deal between Russia and Saudi Arabia to limit oil production after a glut of supply had sent prices tumbling in recent days. That sent shares of energy companies higher.

The United States entered March with an envious unemployment rate of 3.5 percent, a level not seen since 1969. Payrolls had grown for 113 straight months, to more than 151 million, and the biggest worry of most employers was finding enough qualified workers.

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Now, layoffs are mounting with shocking speed. Pandemic containment measures cover 294 million people in at least 37 states, 74 counties, 14 cities, the District of Columbia, and Puerto Rico, according to an April 1 tally by The New York Times.

Job losses came early in the travel, food, and hotel industries and have spread throughout the economy.

In Massachusetts, unemployment claims in the past two weeks among food and accommodations workers equaled 22 percent of the sector’s total jobs, state figures released Thursday show. The numbers in other fields: construction (19 percent), retail (10 percent), health and social assistance (6 percent), and manufacturing (5.5 percent).

Based on the state’s claims data and other factors, the jobless rate in Massachusetts is probably about 11 to 11.5 percent, said Alan Clayton-Matthews, an economics professor at Northeastern University. It was 2.8 percent in February.

Handling the surge in jobless claims has become a major challenge for the Massachusetts Department of Unemployment Assistance, which has increased its call center staff tenfold to 500 and is endeavoring to respond to the thousands of calls from applicants who have encountered problems trying to file online.

Claims totals may understate how many people have been laid off because they don’t include those who are ineligible for unemployment based on the specifics of their case, said Clayton-Matthews said.

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The ranks of the unemployed are expected to mount as the initial round of business shutdowns affect related companies and because the federal government will, for the first time, allow self-employed and gig workers to receive benefits in a non-disaster-relief situation.

Once those new eligibility rules are put into place, “the total numbers will be even more mind boggling,” Arindrajit Dube, an economics professor at the University of Massachusetts Amherst, said on Twitter.

The Labor Department will release its March jobs report Friday. But since the data is based on employer and household surveys taken earlier in the month, the numbers will not reflect the full scope of recent layoffs.

Many forecasters see a US unemployment rate of at least 10 percent by the end of June. Beyond that, predictions vary widely because so much depends on assumptions made about the length and severity of the pandemic.

Goldman Sachs economists see the jobless rate climbing to 15 percent by midyear. James Bullard, president of the Federal Reserve Bank of St. Louis, has one of the most pessimistic forecasts: He told Bloomberg that the jobless rate may hit 30 percent in the second quarter.

Nearly one in four US residents say they already have lost a job or income due to the crisis, according to the latest Health Tracking Poll from the Kaiser Family Foundation.

Congress last week passed a $2 trillion rescue package that includes a boost to unemployment benefits and financial aid to businesses aimed at protecting jobs. The bill will give laid-off employees — including newly eligible gig workers and independent contractors — $600 a week on top of their state benefits for four months. It would also extend benefits for 13 weeks beyond state limits.

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Meanwhile, the Fed has moved even more aggressively than during the 2007-2009 recession to ease the flow of credit and stabilize stressed financial markets.

“It almost feels like a turning point for gig workers,” said Scott Alderman, 59, of Shrewsbury, who drives for Uber and Lyft as his main source of income. “It’s a real positive thing.”

Alderman stopped driving March 14 on the advice of his doctor, who was concerned about an underlying medical condition. Alderman said he often took people to and from Logan Airport, and he grew increasingly worried about his exposure to the virus from international travelers.

He applied for unemployment benefits Saturday and is waiting for approval. However, the state Department of Unemployment Assistance has since told nontraditional workers to hold off applying until it receives federal guidance on how to handle such claims.

There will be a wide variation in jobless rates among the states, with those dependent on tourism seeing the largest immediate declines in employment, according to Karl Kuykendall, a regional economist at IHS Markit. Nevada and Florida could see employment fall 9.8 percent and 7.9 percent, respectively, by the end of this year, he said.

The industry accounts for 10 percent of the workforce in Massachusetts, putting it in the bottom third among states, according to the US Bureau of Labor Statistics. Nevada is No. 1 at 25 percent.

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Before it imploded, the nation’s job boom had brought many lower-income, minority, and underskilled workers into the workforce. They are among the most vulnerable now, according to Eric Rosengren, president of the Federal Reserve Bank of Boston.

The economic pain of layoffs will hurt hourly workers disproportionately, given their jobs are typically in hard-hit industries, and the pandemic will widen income inequality and health outcomes, he said in an interview Wednesday.

“Many of the problems we already had will clearly be exacerbated by this pandemic,” he said.

Shirley Leung and Sean P. Murphy of the Globe staff contributed to this report.


Larry Edelman can be reached at larry.edelman@globe.com. Follow him on Twitter @GlobeNewsEd.