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Jobless claims in Mass. top 893,000, or 24% of the labor force, amid coronavirus crisis

Nationally, more than one in six workers have sought unemployment pay

A booklet for coping with unemployment rests next to a application deposit box at a state WIN job center in Canton, Miss.
A booklet for coping with unemployment rests next to a application deposit box at a state WIN job center in Canton, Miss.Rogelio V. Solis/Associated Press

Nearly one in four Massachusetts workers have lost their jobs during the coronavirus shutdown, a harrowing gutting of the workforce in a state where just two months ago employers were having a hard time filling open positions.

In the weeks since COVID-19 restrictions closed stores, restaurants, and thousands of other business, the state has fielded more than 893,600 claims for unemployment pay, or 24 percent of the labor force before the pandemic, the Baker administration said Thursday. The jobless ranks were swelled by gig workers, freelancers, and others who were newly eligible for benefits.

“Bad as these are, these numbers are likely to increase in Massachusetts as layoffs start to hit the education and government sectors in the months ahead,” said Thomas Kochan, a professor at the MIT Sloan School of Management.

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Nationally, more than one in six workers have been laid off, the US Labor Department said. Its weekly report didn’t include the expanded categories of workers, indicating that the US figures will grow as they are added to the unemployment rolls.

Moreover, jobless filings don’t capture everyone who has lost a paycheck, and economists said the state’s unemployment rate — which sat at a near record low of 2.8 percent in February — is likely closer 27 percent, a level not seen since the 1930s.

The speed and intensity of the job losses spurred the federal government to take unprecedented steps to help workers and businesses hang on, and to stabilize financial markets. Congress and the Federal Reserve have authorized a combined $6.4 trillion in spending, lending, and other financial support.

The emergency action, along with early moves to reopen the economy, has helped the stock market recover some of the steep losses it suffered from mid-February to mid-March. The Standard & Poor’s 500 index is down 13 percent since its Feb. 19 record high, after falling as much as 34 percent. The benchmark slipped 0.9 percent Thursday to close at 2,912.

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While investors have grown more optimistic, few economists see a quick rebound. The economy is expected to tank in the second quarter, and the Conference Board forecasts a contraction of 3.6 percent to 6.6 percent for the year under its most rosy scenarios.

More than 242,000 people filed for unemployment pay in Massachusetts in the week ending April 25, according to the Executive Office of Labor and Workforce Development.

The state received 70,550 standard claims, the fourth straight weekly decline. There were 171,600 claims by people who became eligible for jobless pay under the $2.2 trillion rescue package, known as the CARES Act, that was approved by Congress in late March. It was the first week that the state processed these filings.

Nationally, 3.8 million workers applied for unemployment benefits last week, bringing the six-week total to 30.3 million, the Labor Department said Thursday.

The federal data don’t include claims from recipients who became eligible under the CARES Act, everyone from Uber drivers and Instacart delivery workers to independent contractors and self-employed business owners. Labor Department officials didn’t return phone calls and e-mails seeking comment on why these claims were excluded from its report.

About one-third of states revamped their computer systems and were able to process claims from gig workers last week, though all of them are now paying the extra $600 a week in benefits included in the CARES Act.

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The jobless claims report is just the latest from the government to detail the unprecedented economic damage caused by the coronavirus.

Consumer spending, which powers about two-thirds of the economy, slid 7.5 percent in March, the largest decline in records going back to 1959, the Commerce Department said Thursday. On Wednesday, the government said the economy contracted at an annual rate of 4.8 percent in the first quarter, the steepest decline since the final three months of 2008 and evidence the country is in a recession.

But there is a glimmer of good news: Companies in sectors where Massachusetts is strong continue to recruit employees, according to Jim McCoy, chief revenue officer of Scout Exchange, an online recruitment marketplace in Boston. They include health care and life sciences, e-commerce and logistics, and consultants who can help companies set up their employees to work from home.

Economists said there are several reasons why they expect a continued rise in unemployment, even as some states begin easing their lockdowns.

“The official claims don’t capture everyone who has been laid off,” said Andrew Stettner, a senior fellow at the Century Foundation, who studies unemployment issues.

Filings will climb as more states began to process applications from previously ineligible workers, he said, and from people who weren’t aware that they are entitled to unemployment pay or who gave up because of technical glitches.

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A survey by the Economic Policy Institute found that out of every 10 people who successfully filed for unemployment benefits during the previous four weeks, as many as six others couldn’t complete the process or didn’t try.

Though swamped, the Massachusetts Department of Unemployment Assistance has done better than many states in handling the flood of claims. It has expanded its staff to 1,200 from 50, and says it is now making more than 25,000 contacts per day with claimants.

The state has paid out $2.3 billion in claims since mid-March, and on Thursday asked the Labor Department for $1.2 billion by June to help cover additional benefits. Massachusetts entered February with $1.7 billion in its unemployment trust fund, one of the most underfunded in the country,

Economists see a second wave of layoffs in education and government, sectors that weren’t hit as hard early in the meltdown as restaurants, hotels, construction, and retail. Many colleges aren’t sure if they’ll be able to reopen their campuses in the fall, while budgets for state and local governments are being squeezed by declining sales tax and other revenue.

“Public sector employers are going to have to make some very difficult choices in coming weeks.” said Michael Goodman, an economist and professor of public policy at the University of Massachusetts Dartmouth. “Left unchecked, shrinking state and local revenues will require smaller public payrolls.”

Sean P. Murphy of the Globe staff contributed to this report. Material from the Associated Press also was used.

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