US employment claims hit record 6.6 million as coronavirus devastates economy

Stay-at-home orders lead to massive surge in nationwide layoffs, with economists fearing the worst is yet to come

US unemployment figures have once again shattered records, with 6.6 million Americans filing for benefits as the coronavirus pandemic brought society to a grinding halt in most states across the country and threatened economic collapse.

The number of people in the US filing for unemployment in a single week doubled the previous record of 3.3 million, which came just a week earlier.

"We've never seen anything like this," Aaron Sojourner, labour economist at the University of Minnesota, told the Washington Post. "The scale of the job losses in the past two weeks is on par with what we saw in two years during the Great Recession."

The surging layoffs have led many economists to envision as many as 20 million lost jobs by the end of April. The unemployment rate could spike to as high as 15 per cent this month, above the previous record of 10.8 per cent set during a deep recession in 1982.

Many employers are slashing their payrolls to try to stay afloat because their revenue has collapsed, especially at restaurants, hotels, gyms, movie theatres and other venues that depend on face-to-face interaction. Auto sales have sunk, and factories have closed.

Stay-at-home orders, imposed by most US states, have meanwhile intensified pressure on businesses, most of which face rent, loans and other bills that must be paid.

Congress significantly expanded the unemployment benefits system in last week's $2.2 trillion economic rescue package. That legislation added $600 a week in jobless aid, on top of what recipients receive from their states. This will enable many lower-income workers to manage their expenses and even increase their purchasing power and support the economy.

It also makes many more people eligible for jobless aid, including the self-employed, contractors, and so-called "gig economy" workers such as Uber and Lyft drivers.

The legislation will also help fund unemployment benefits for workers whose hours have been cut. That would enable these people to replace some of their lost income with unemployment aid even as they keep their jobs.

About 26 states allow workers with reduced hours to claim benefits. Most economists support doing so because it encourages companies to cut back on hours rather than lay off workers. Any program that encourages companies to maintain connections with their workers can help the economy rebound faster after the virus outbreak is contained.

Typically, people who receive jobless aid are required to actively look for a new job and to document their searches. But Congress has passed other legislation that encourages states to drop that requirement, given that so many businesses are closed, and most Americans have been ordered to stay mostly at home.

Additional reporting by Associated Press