There’s been a stampede from the sales floor to the unemployment line.
First-time claims for jobless benefits shot up 6.6 million for the week ended Saturday.
“This marks the highest level of seasonally adjusted initial claims” in the history of the U.S., the Labor Department said in releasing the numbers. The unprecedented surge follows a better than 3 million increase in claims the week before, which itself was an off-the-chart jump.
The weekly claims figures aren’t broken down by sector, but surely many retail workers are among those turning to the government as everything but essential businesses in many parts of the country were shut down last month and employees were sent home to slow the spread of the coronavirus.
The Labor Department said in its report on jobless claims, “Many states continued to cite the health care and social assistance, and manufacturing industries, while an increasing number of states identified the retail and wholesale trade and construction industries.”
And more retail workers will be seeking to fill a new hole in their household finances soon, as many of the big retailers that closed their stores, but kept paying associates started turning to furloughs this week. That technically keeps workers on the payrolls, but also allows them to apply for unemployment, which is generally available to people who want to and are ready to work, but have no income coming in.
Macy’s Inc. said it would furlough most of its 125,000 employees as it seeks to conserve cash, while getting what it can from online sales, to stay afloat. And the department store operator has plenty of company. Neiman Marcus Group, J.C. Penney Co. Inc., Gap Inc., Kohl’s Corp., Ascena, RTW Retailwinds, Urban Outfitters Inc., L Brands Inc. and Cato Corp. are among the other industry players furloughing workers.
Workers on unemployment receive a large portion of the money they made previously to hold them over or allow them time to find new work. In Europe, governments are taking a different approach, paying the salaries of workers if companies don’t resort to layoffs.
Both systems essentially shift responsibility for the paychecks of retail workers to the state amid the COVID-19 shutdown.
After approving a $2 trillion aid package to help prop up the economy, including loans for small businesses and expanded benefits for laid off workers, Senate Minority Leader Charles Schumer (D., N.Y.) described it as “unemployment compensation on steroids.”
“Every American worker who is laid off will have their salary remunerated by the federal government so they can pay their bills,” he said.
For fashion brands and retailers, the fallout will still be severe.
The National Retail Federation’s chief economist Jack Kleinhenz projected a “severe contraction,” but also offered some glimmer of hope and pointed to the “sound fundamentals” of the U.S. economy before the outbreak.
“We do not believe today’s situation presages a prolonged economic downturn,” Kleinhenz said. “Once the pandemic is over, we hope we will find that there is nothing structurally wrong with the economy and that any deficiencies were solved by monetary and fiscal policies….The big question is, ‘Can we get back to normal and how soon?’”
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