The second jobs apocalypse
This week, United Airlines warned 36,000 U.S. employees their jobs were at risk, Walgreens cut more than 4,000 jobs, it was reported Wells Fargo is preparing thousands of terminations this year, and Levi's axed 700 jobs due to falling sales.
Why it matters: We have entered round two of the jobs apocalypse. Those announcements followed similar ones from the Hilton, Hyatt, Marriott and Choice hotels, which all have announced thousands of job cuts, and the bankruptcies of more major U.S. companies like 24 Hour Fitness, Brooks Brothers and Chuck E. Cheese in recent days.
- While round one was a swift reckoning that left 20.5 million Americans without a job after one month, part two will be a slow burn that sees millions more jobs lost as some businesses reduce headcounts and others shut down for good.
- In the first half of 2020, more than 3,600 companies filed for bankruptcy, according to legal services provider Epiq. Just over 600 filed in June, up 43% from June 2019.
How it works: The initial jobs apocalypse was due to the mandated and temporary closures of businesses across the country in an attempt to contain the coronavirus pandemic.
- Part two is the fallout from the decline in consumption that resulted and will likely include the wreckage from wide-ranging business closures and a reckoning for white collar jobs, experts say.
The intrigue: "What we’re seeing in the numbers so far is more an outcome of the cumulative negative effect of March, April and May than anything worsening with the pandemic in the last few weeks," Wendy Edelberg, director of the Hamilton Project and a senior fellow at the Brookings Institution, tells Axios.
- "The numbers are probably going to get worse."
What's next: "The pickup in COVID is going to increase uncertainty and make people cut back on spending, but ... even without that pickup in the pandemic, the economic weakness will lead to layoffs and failures from businesses that are only being indirectly hurt" by the pandemic, says Edelberg, who was previously chief economist at the Congressional Budget Office.
More than 1 million Americans filed for traditional unemployment benefits last week for the 16th week in a row, the Department of Labor reported Thursday. But perhaps more distressing has been the increase in claims filed for the Pandemic Unemployment Assistance program.
By the numbers: First-time PUA claims rose above 1 million for the first time since the week of May 23 last week, while the number of people approved for and receiving PUA benefits increased to 14.4 million, as of June 20, the last week for which data are available.
The big picture: The small decline in the number of Americans applying for and receiving traditional unemployment benefits is being more than offset by the increase in PUA beneficiaries, resulting in more people on unemployment.
Editor’s note: This piece was updated to clarify Wells Fargo job cuts were not announced by the company, but reported by Bloomberg.