Jobless claims in the Richmond region soared more than 2,480% last week compared with the previous week as restaurants, hotels and other businesses temporarily closed to slow the spread of coronavirus.
Virginia’s week-over-week claims for jobless benefits increased 16 times more for the period ending March 21 compared with the previous week, the Virginia Employment Commission said Thursday.
Nearly 3.3 million Americans applied for unemployment benefits last week — almost five times the previous record set in 1982 — amid a widespread economic shutdown.
The state said it received 46,277 jobless claims last week, up by 43,571 claims from the previous week’s level of 2,706, marking a historically large weekly increase, the commission said.
In the Richmond region — Richmond and the counties of Henrico, Chesterfield and Hanover — jobless claims rose to 7,589, up from the 294 claims in the previous week.
The city of Richmond had the third largest increase among the state’s localities, with 2,958 new claims last week. Fairfax County had the state’s biggest increase with 4,200 new claims. Virginia Beach, with 3,222 new claims, had the second biggest increase.
Most of the initial claims in Virginia came from laid-off restaurant and hotel workers, the employment commission said.
Hundreds of the state’s restaurants temporarily closed last week and more did so this week as Gov. Ralph Northam said that restaurants, while considered essential, can stay open only for carry-out and delivery.
The decreased travel due to the coronavirus also has caused some hotels to close or to curtail operations, laying off or furloughing workers.
In the Richmond area, for instance, the Quirk Hotel and the Commonwealth Park Suites Hotel temporarily closed late last week.
The surge in U.S. weekly applications was a stunning reflection of the damage the viral outbreak is inflicting on the economy. Filings for unemployment aid generally reflect the pace of layoffs.
Layoffs are sure to accelerate as the U.S. economy sinks into a recession. Revenue has collapsed at restaurants, hotels, movie theaters, gyms and airlines. Auto sales are plummeting, and car makers have closed factories. Most such employers face loan payments and other fixed costs, so they’re cutting jobs to save money.
As job losses mount, some economists say the nation’s unemployment rate could approach 13% by May. By comparison, the highest jobless rate during the Great Recession, which ended in 2009, was 10%.
“What seemed impossible just two weeks ago is now reality,” said Nancy Vanden Houten, an economist at Oxford Economics, a consulting firm. “The U.S. economy will experience the largest economic contraction on record with the most severe surge in unemployment ever.”
The economic deterioration has been swift. As recently as February, the unemployment rate was at a 50-year low of 3.5%. And the economy was growing steadily if modestly.
Yet by the April-June quarter of the year, some economists think the economy will shrink at its steepest annual pace ever — a contraction that could reach 30%.
In its report Thursday, the Labor Department said 3.283 million people applied for unemployment benefits last week, up from 282,000 during the previous week.
Many people who have lost jobs in recent weeks, though, have been unable to file for unemployment aid because state websites and phone systems have been overwhelmed by a crush of applicants and have frozen up.
That logjam suggests that Thursday’s report actually understates the magnitude of job cuts last week. So does the fact that workers who are not on company payrolls — gig workers, free-lancers, the self-employed — aren’t currently eligible for unemployment benefits even though in many cases they’re no longer able to earn money.