The dismal unemployment data out this week doesn't paint a full picture of the state of the labor market as more layoffs are announced.
The impact of coronavirus is becoming painfully evident as unemployment numbers continue to rise at a sickening pace. One by one the dominoes are starting to fall as U.S. employers are forced into mass layoffs and furloughs to cope with the sudden halt in demand.
Thursday’s jobless report showed that 6.6 million people filed for unemployment benefits bringing the total over the past two weeks to roughly 10 million.
The Labor Department’s Friday report painted an equally grim picture with the unemployment rate rising nearly one percentage point to 4.4% as nonfarm payroll employment fell by 701,000.
That’s not the worst of it, though. Friday’s jobs report doesn’t include many of the filings from the past two weeks and will likely show more pain in April.
The past two weeks’ jobless reports weren’t unexpected, which could explain why the stock market didn’t buckle under the weight of the staggering figures. But it’s only a matter of time before reality sets in and investors start to price in the dire conditions coronavirus has created for the U.S. economy.
How much higher can jobless rates climb? It’s anyone’s guess but layoffs announced in recent days suggest several millions more will be forced to collect unemployment in the month ahead.
Disney (NYSE:DIS) announced this week that it would furlough its park employees as it struggles to cope with the closure of its worldwide theme parks. Disney’s theme parks account for nearly 40% of the firm’s overall revenue, so the lost ticket sales will be crippling to its business.
According to a statement from the company, the furlough is a short-term measure but it seems unlikely they’ll bring staff back to work anytime soon.
With coronavirus still rapidly spreading, Disney’s resorts will remain shuttered for at least the next few weeks. Even after the pandemic has started to subside, large gatherings will likely be prohibited for months to come in order to prevent a second wave.
Disney didn’t provide an exact number of staff whose wages are being put on pause, but it could impact up to 177,000 park employees.
Boeing (NYSE:BA) is another big name whose employees will be hitting the unemployment line in the weeks to come. The firm employs roughly 160,000 people, almost half of whom are in Seattle. On Thursday, Boeing announced it was offering voluntary layoffs.
The struggling aerospace firm hasn’t been able to come out from under its 737 MAX issues, which halted production of the aircraft back in January. With the airline industry expected to be one of the hardest hit amid the coronavirus fallout, Boeing is in desperate need of cash.
The voluntary layoffs are only a first step according to Boeing execs, who say they expect involuntary layoffs to follow.
Following the September 11th attacks, Boeing shed 30,000 employees. By all accounts, the coronavirus pandemic is expected to have an even larger impact on aviation. That will put the 90,000 Boeing employees working within its commercial aerospace arm at risk.
Marriott (NASDAQ:MAR), the largest hotel company in the world, is also letting some of its 130,000 U.S. workers go as the chain braces against the sudden drop in travel. The reductions will come at every level of the business and include a wide range of staff as the company attempts to preserve liquidity.
Marriott has had to shut down a number of its properties in response to the pandemic and those that remain open have been running with skeleton crews. It remains to be seen exactly how many workers the hotel chain lets go, but the cuts will likely continue until the chain can re-open.
Like the rest of the travel industry, though, Marriott is unlikely to see a surge in demand once lockdowns are lifted as social distancing will probably remain in place and discourage travel.
These weren’t the only employers to let staff go over the past few days, and they likely won’t be the last. Survey data show almost 50% of U.S. companies are likely to conduct layoffs over the next three months.
The survey took place during the week of March 20, when Donald Trump was still pointing to reopening America’s business by Easter. That suggests this figure is likely much higher as more companies have started to understand the magnitude of the coronavirus shutdowns.