16.2 Million Americans Won’t Have a Job When the Economy Restarts

Posted in: HeadlinesOpinion
April 10, 2020 2:17 PM UTC

The sky-high unemployment figures due to coronavirus aren't temporary as more than 16 million jobs are likely to be permanently erased.

  • While the shocking unemployment figures have been seen as temporary, projections show many of these job losses will persist.
  • Several industries will continue to suffer at least until a coronavirus vaccine becomes available.
  • More than 16 million Americans may not have a job to return to once lockdown measures lift.

At the end of March Treasury Secretary Steve Mnuchin said the unprecedented spike in unemployment claims across America “isn’t relevant.”

But with jobless claims rocketing toward 17 million in just three weeks, many are wondering how many of those people are going to have a job at the end of the coronavirus crisis. It’s likely that most of them will remain out of a job for the long term.

The record-high jobless claims that have been coming in the past few weeks may not be temporary. In fact, they’re probably not temporary even in the best case scenario.

That’s because even the rosiest of projections don’t see a coronavirus vaccine becoming available for at least a year. That’s going to demolish some industries and leave millions of Americans without a job for the foreseeable future.

20% of Airline Workers Could File for Unemployment Indefinitely

The airline industry is facing its worst threat since 9/11 and will likely respond by laying off at least a quarter of its staff. | Tom Pennington/Getty Images/AFP

In the aftermath of 9/11, U.S. airlines cut a fifth of their workforce due to waning demand and the financial cost of grounding their fleets. Today, most airlines have been out of operation for weeks. Their planes will probably remain on the ground for a few more weeks.

Roger Dow, CEO of the U.S. Travel Association, believes coronavirus will be far more detrimental to the travel industry than 9/11 was.

The impact on travel is six or seven times greater than the 9/11 attacks

Airlines support roughly 10 million U.S. jobs. Using airlines’ behavior following 9/11 as a guide, you’re looking at 2-3 million people out of work.

Hotels to Contribute to Nearly 4 Million Unemployment Claims

As hotels sit empty amid lockdown measures, the likelihood their occupancy rates will return to normal in the aftermath is slim. | Source: Instagram

Hotels face a sharp drop in occupancy despite easing lockdown measures as consumers are likely to remain cautious about spending. Large gatherings like conferences and events won’t be happening as the world tries to avoid a second wave of coronavirus. Hotels, along with airlines, will shoulder the brunt of this new behavior.

In mid-March, Mr. Dow estimated that between 10% and 15% of American hotels will go out of business without a financial lifeline from the government. The government did toss a life-ring to hotels in the CARES Act, but to take advantage of it hotels have to re-hire their employees by the end of June.

That’s a pipe-dream according to American Hotel & Lodging Association (AHLA) CEO Chip Rogers, who says the industry won’t be back on its feet for some time:

We don’t expect the industry to be back by June 30

Even if hotels remain in business, a drop in occupancy rates means they won’t be able to afford to keep their entire staff. According to data from the AHLA, if normal hotel occupancy rates drop by 30%, 3.9 million jobs could be lost.

Restaurants Will Shutter

The coronavirus pandemic has also hit the service industry, particularly restaurants, hard. Many believe that a huge percentage of the unemployment figures we’re seeing right now are restaurant staff. That may be true, but their job status doesn’t appear to be temporary.

According to the National Restaurant Association (NRA), roughly 110,000 restaurants are expected to go out of business over the next month.

Temporary restaurant closures may turn into permanent ones over the next few weeks. | Source: Instagram

NRA data showed that 3% of the industry had already closed down permanently and a further 11% is planning to do so by the end of April.

Considering the U.S. restaurant industry employs roughly 13.5 million people, a 14% reduction in the workforce would translate to 1.9 million permanently lost jobs—and that’s just in April. As restaurant industry analyst and adviser Roger Lipton put it—we’re on the verge of a “restaurant apocalypse.”

Retailers Can’t Weather this Storm

Restaurants aren’t the only industry facing an apocalypse. Retailers are also expected to be hit hard by coronavirus as the sector was already struggling against a shift toward e-commerce.

Manny Chirico, CEO of PVH Corp, says many retailers simply don’t have the financial fortitude to withstand the sudden drop-off in traffic. He believes somewhere between 20% and 25% of U.S. retailers will go out of business over the next two years.

Department stores and other retailers didn’t have much momentum going into this crisis, so they may not make it out. | Source: Instagram

Considering the retail industry is responsible for 42 million U.S. jobs, that’s a whopping 8.4 million positions that could evaporate from the labor market.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.

This article was edited by Sam Bourgi.

Laura Hoy @Laura_h_says

Laura has been working as financial journalist covering US markets for more than a decade. Her work can be found in a wide variety of publications including Yahoo Finance, InvestorPlace, Nasdaq and Benzinga. She can be reached at LMarieHoy @ gmail.com

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