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Pandemic has claimed 1.5 million Pennsylvania jobs, but a forecaster sees a temporary summer ‘pop’ in rehiring

Experts warn that the economy will remain in quicksand until a coronavirus vaccine is developed, and consumer confidence is restored.

Chairs are stacked up in the Naf Naf Grill in Philadelphia’s Wynnefield Heights section due to the city’s ban on dining in in restaurants.
Chairs are stacked up in the Naf Naf Grill in Philadelphia’s Wynnefield Heights section due to the city’s ban on dining in in restaurants.Read moreTIM TAI / Staff Photographer

About 4.4 million Americans filed new unemployment applications last week, federal figures showed Thursday, as the historic economic crash caused by COVID-19 reached new depths. The pandemic response has now claimed 26.5 million jobs nationwide in five weeks.

More than 198,000 Pennsylvanians filed a claim in the week ending April 18 after losing their jobs or getting hours reduced, bringing the state’s total in five weeks to nearly 1.5 million, or 23% of the workforce.

In New Jersey, the five-week total has climbed to 817,000, or 18% of the labor force. More than 139,000 New Jersey workers filed new claims for assistance last week, according to data released Thursday by the U.S. Department of Labor.

The job losses since mid-March have effectively erased a decade of employment gains. Though the number of new claims in the states and nationwide declined this week from previous weeks, joblessness now runs so deep and wide that that economists say it will take years to recover.

“The apex of the hit to the economy is now, in April,” said Mark Zandi, chief economist of Moody’s Analytics in West Chester. He expects the jobless rate will spike to between 15% and 20%, and then will subside to around 8% to 9% by year’s end as some economic sectors begin to reopen.

“This is the worst of the hit right here, and then I would expect some business re-openings starting in May, accelerating in June going into July, and we get a pop to growth, a temporary pop to growth,” he said.

The coronavirus has killed more than 44,000 Americans, including at least 1,622 in Pennsylvania as of Thursday.

» READ MORE: Couldn’t get Pa. unemployment benefits? You might be eligible for this new coronavirus program.

Pennsylvanians last week filed about half the number of applications they submitted during the last week of March, when the state’s weekly unemployment filings peaked with more than 400,000 claims. The Pennsylvania Department of Labor ascribed the latest reduction to “fewer layoffs in the arts, entertainment, and recreation, other services, and agriculture, forestry, fishing, and hunting industries.”

The reduction of workload might provide some relief to state labor officials, who have been undermanned and overwhelmed by a record number of applications. More than 80 unemployed workers co-signed a letter this week, organized by the Philadelphia Unemployment Project, to urge Gov. Tom Wolf to redeploy a thousand laid-off state workers to the Department of Labor to handle telephone calls from frustrated applicants.

“We know the state has been overwhelmed with new claims and new guidelines from the recent federal stimulus bill, but people need to know if they can expect help or not," said Ted Kelly, an organizer with the project. “Providing no information is creating great stress for laid-off workers.”

Small businesses in the region are about to get a second chance at emergency financial relief to keep their companies afloat, as the House gave final passage Thursday to a measure that would provide more than $300 billion in new funding for the Paycheck Protection Program, a Small Business Administration initiative that was meant to help firms keep employees on payroll during the pandemic. Banks quickly burned through the first round of funds, lending all $349 billion available in a matter of days.

Zandi said the economy will remain in quicksand until a coronavirus vaccine is developed and consumer confidence is restored. Travel and tourism, performing arts, movie theaters, restaurants, and big retailers will be slow to reopen or attract large crowds.

And many businesses will remain cautious, declining to hire or expand aggressively.Business are also are going to remain on high alert because they don’t know how this all is going to play out,” Zandi said. “They don’t know whether there’s going to be a second wave and they have to shut down again.”

» READ MORE: How a 3rd-generation Philly-area business is surviving the coronavirus pandemic: ‘Whatever it takes’

Nationwide, the cumulative 26.5 million unemployment claims — 16% of the U.S. workforce — represents a job loss unprecedented in quickness and rivaling only the Great Depression in depth, though that epic downturn endured for a decade.

The government’s official unemployment rate will be announced in May and lags real-time data, but two economists who are conducting surveys of jobless Americans with the aim of producing a more timely metric for policy makers say the U.S. jobless rate is already over 20%.

“We find an unemployment rate of 20.2% during the first week of April, compared with 4.5% in the second week of March,” the economists, Alexander Bick of Arizona State University and Adam Blandin of Virginia Commonwealth University, said in their report. More than half of the unemployed workers in their survey reported being temporarily laid off, suggesting that many could return to work quickly if conditions improve.

“I didn’t expect the number to be so stark, but it’s pretty much in line with the unemployment claims data, which we get every week,” Bick, a labor economist, said. Their survey of 1,118 respondents was conducted April 8 and 9, and a second survey is underway.

Hours worked per working-age adult declined 25% from the second week of March, and half of the decline was due to reduced hours rather than job loss, according to the survey. More than 60% of work was conducted at home, compared with about 10% before the pandemic.

The job loss was most pronounced for workers who were female, older, and less educated, who tend to dominate the types of service-sector jobs that were most affected by lockdown orders.

» READ MORE: Why does Pennsylvania have so many more unemployment claims than even larger states?

Wolf on Wednesday announced a tiered, color-coded system for relaxing restrictions on businesses and residents now under a lockdown aimed at slowing the spread of the coronavirus. The sectors that Zandi identified as most likely to resume operations initially — construction, manufacturing, mining, agriculture and financial services — tend to be dominated by male employees.

Zandi said some small stores might also reopen “because they can control the number of people in their stores.”

» READ MORE: Philly businesses shuttered by coronavirus say they can’t reopen until you feel safe leaving your house

State data on the impact on specific economic sectors is limited, but Zandi said that proprietary survey results he has reviewed indicate the job losses are broad-based.

“It’s not just small companies that are getting creamed and are at high risk because they don’t have any financial cushion,” he said. “But big companies are laying off en masse now too. So it’s companies of all sizes."