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Layoffs reach staggering levels for Mass. hotel, restaurant, and construction workers

State jobless claims mount as more than 6.6 million nationally filed for unemployment pay last week.

Drivers lined up Wednesday to receive applications for unemployment benefits from city employees in Hialeah, Fla.
Drivers lined up Wednesday to receive applications for unemployment benefits from city employees in Hialeah, Fla.Joe Raedle/Getty

Massachusetts suffered its third straight week of crushing layoffs caused by the coronavirus crisis, with cumulative job losses topping 25 percent for lodging, food, and construction workers.

Nearly 139,600 first-time jobless claims were filed in Massachusetts in the week ended April 4, the Baker administration said Thursday. More people have filed jobless claims in the past three weeks than in the prior 78 weeks combined, and workers everywhere know they are vulnerable.

“I was not surprised because I had been talking to friends and it seemed like it was pretty inevitable," said Samuel Kasten, who lost his sales job Tuesday at Toast, a Boston restaurant software startup that laid off or furloughed 1,000 workers. “I was prepared.”

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Nationally, more than 6.6 million Americans submitted initial jobless claims last week, a dip of 4 percent from the prior week’s historic high, according to seasonally adjusted data released Thursday by the Labor Department.

Massachusetts filings, which are not adjusted, were down 23 percent, but that was still the third-worst week ever. Some 250,000 people are now receiving payments from the state.

“I don’t think we can take solace in the decline in filings," said Michael Goodman, an economist and executive director of the Public Policy Center at the University of Massachusetts Dartmouth.

The jobless claims report, until recently a minor event on the government statistics calendar, has become a widely watched tally of the economic carnage inflicted by the pandemic. Over the past three weeks — as businesses were ordered closed and stay-at-home restrictions were expanded to cover more than 95 percent of the US population — nearly 17 million people have sought benefits, or about one in 10 workers.

Minutes after the Labor Department release, the Federal Reserve provided details on its latest effort to calm markets and ease the flow of credit to businesses and individuals. The central bank said it has the firepower to inject $2.3 trillion into the economy through new and expanded programs, including those for state and local governments and for businesses with up to 10,000 workers or revenue of less than $2.5 billion.

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The Fed’s announcement sparked a rally on Wall Street, where the S&P 500 rose 1.4 percent The index gained 12.1 percent for the week, its biggest jump since late 1974. Markets will be closed for Good Friday.

Even with the Fed’s unprecedented lending, and trillions in rescue spending by the federal government, economists surveyed by The Wall Street Journal forecast a painful recession: On average they expect a 25 percent contraction in the April-June quarter, following a drop of more than 3 percent in the quarter that just ended. Respondents estimated growth of 6 percent a quarter in the second half of 2020.

The outlook is a stunning reversal from just weeks ago. The US jobless rate sat at 3.5 percent in February, the lowest in five decades. The economy was in a record-long expansion, and US stocks were near their peaks.

Now, unemployment is expected to approach 13 percent by June, according to the Journal survey, though some economists predicted levels of 20 percent or more. The post-World War II record for the jobless rate was 10.8 percent at the end of 1982, during a painful recession. More than 20 percent of the workforce was out of a job from 1932 to 1935, according to estimates made by the government years after the Depression.

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For some of the state’s industries, jobless claims are at staggering levels. In the lodging and food sector, for example, 87,500 people have filed for benefits in the past three weeks, or 27 percent out of a workforce of 320,000. Some 41,200 construction industry workers have submitted claims, or 25 percent of the labor pool. In retail, 16 percent of workers have filed claims, while in health care it is 8.5 percent.

Bill Rodgers, a Rutgers University economist and a former chief economist for the Labor Department, recently calculated the “true” March unemployment rate in Massachusetts to be 27 percent, up from 2.8 percent in February. His estimate includes laid-off workers who could not file claims for technical reasons, as well as independent contractors and people running their own businesses.

Congress has responded to the jobs crisis by beefing up unemployment benefits and establishing a $350 billion loan program for small businesses to cover payroll costs for about two months, with the debt forgiven in amounts based on how many workers are retained or rehired.

Implementation of the government’s rescue packages has been shambolic. Many states have yet to accept claims from workers previously ineligible to collect benefits or pay out the extra $600 a week authorized by Congress.

The Massachusetts Department of Unemployment Assistance said Thursday that the extra $600 will begin showing up in checks this week, retroactive to March 29., But the system to handle claims from newly eligible recipients, including gig workers and the self-employed, won’t be up and running until the end of the month. There may be an uptick in claims once those workers can file.

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Meanwhile, demand for loans under the federal Payroll Protection Program has overwhelmed many lenders.

Steve Bergeron, owner of AMP Fitness in Boston, was forced to lay off his four employees, including his wife, after the state ordered gyms to close in mid-March. He has been waiting since Friday for his bank, Citizens Bank, to take his loan application. On its website, the Providence-based bank cautions customers that “due to the high demand, we are currently accepting reservations for applications.”

Bergeron also applied for a $5,000 grant from the city of Boston’s Small Business Relief Fund, and was told it would take up to 10 business days to get a check if he is approved.

“Like restaurants, we don’t have a huge war chest” to survive on until the fitness studio reopens, Bergeron said in an interview earlier this week. “We’ve got a little bit in our personal savings, but the goal is not to deplete that.”

In Washington, the Fed moved on several fronts to facilitate lending to hard hit sectors. Under its new Main Street Lending Program, a facility set up by the central bank will purchase as much as $600 billion in new or increased four-year loans made by banks to eligible borrowers. Principal and interest payments will be deferred for one year. Banks will retain 5 percent of the loans.

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The Fed said that companies seeking Main Street loans must “commit to make reasonable efforts to maintain payroll and retain workers” and adhere to rules barring stock repurchases, dividend payments, and raises for certain employees laid out by Congress in the recently passed CARES Act. Businesses that borrowed money under the separate Payroll Protection Program may also take out Main Street loans, the Fed said.

In another step, the central bank added commercial mortgages and other securities to the list of assets that can be used as collateral in a previously announced $100 billion program to ensure that capital is available for student loans, auto loans, and credit card loans. The Fed also said it would back the purchase of up to $500 billion in short-term debt issued by US states and US counties with a population of at least 2 million people as municipalities are squeezed by pandemic-related spending increases.

“When the spread of the virus is under control, businesses will reopen, and people will come back to work,” Fed chairman Jerome Powell said in remarks Thursday at the Brookings Institution in Washington, D.C. “There is every reason to believe that the economic rebound, when it comes, can be robust.”

Correction: Due to a reporter’s error, a previous version of this story gave the wrong percentages for layoffs in the hospitality and food sector, as well as for health care and retail workers.

Globe correspondent Anissa Gardizy contributed to this report.


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