Record number of unemployed Americans underscores urgency of coronavirus relief package

People gather at the entrance of the New York State Department of Labor offices, which closed to the public due to the coronavirus outbreak, on March 20, 2020.
People gather at the entrance of the New York State Department of Labor offices, which closed to the public due to the coronavirus outbreak, on March 20, 2020.PHOTO: REUTERS

WASHINGTON - The record 3.28 million Americans who applied for unemployment benefits last week highlighted the deep blow dealt to the American economy by the Covid-19 pandemic and underscored the urgent need for Congress to quickly roll out its US$2.2 trillion ($3.1 trillion) relief package, said experts.

The data released by the Labour Department on Thursday (March 26) was the worst in American history, outstripping previous highs seen in the 2009 and 1982 recessions by more than five times.

They represent 2 per cent of the American workforce, a figure that is expected to rise even more in coming weeks as states further restrict movement and close businesses to curb the spread of the virus, which has infected at least 81,000 Americans and killed at least 1,100 to date.

Many workers have also been unable to file for unemployment as the surge in claims overwhelmed state websites.

The United States, the third most populous nation in the world, now has more cases than any other country, including China and Italy.

The fresh numbers "display the shocking and historic impact of the spread of the coronavirus and the resulting economic collapse in the United States", said Atlantic Council global business and economics senior fellow Bart Oosterveld in a commentary on the think-tank's website.

The figures underscored the urgent need for Congress to quickly pass and implement its relief package, which includes emergency cash to low and middle-income households and loans to small businesses to encourage them to keep workers on their payroll.

The bill was passed by the Senate on Wednesday and is now before the House, which could pass it on Friday.

American workers making up to US$75,000 a year will receive a one-time payment of US$1,200, and parents will get US$500 for each child. Those making between US$75,000 to US$99,000 will get less, while those earning more than that will not get anything.

 
 

Out-of-work Americans will also get an extra US$600 a week for four months, on top of the unemployment benefits they are already getting from their state, which can range from US$250 to US$550.

Small businesses can also apply for loans that can be used to pay workers and other expenses, some of which will not have to be repaid, an effort to encourage them to retain or rehire employees despite the economic uncertainty.

Treasury Secretary Steven Mnuchin said the direct payments could come within three weeks, but experts said that help could take more time to arrive.

Said former US Treasury Department Fiscal Assistant Secretary Donald Hammond and Peterson Institute for International Economics senior fellow David Wilcox in a commentary online: "Getting one-time cash payments out to so many households at breakneck speed will not be easy.

"No set of existing financial pipes was designed for a crisis requiring payments to more than 100 million individuals or households within days or weeks."

 
 
 

Tax Policy Centre senior fellow Janet Holtzblatt noted that stimulus payments in 2008 started three months after they were passed by Congress. Other payments of tax rate reductions in 2001 and child tax credits in 2003 were also made six weeks, at minimum, after they were approved by Congress.

Measures to combat the Covid-19 pandemic, such as making more Internal Revenue Service employees work from home, may also slow the distribution of payments this time, she added on the think-tank's website.

"In the face of the pandemic, it seems unrealistic to expect the IRS can do a much better job than in 2001, 2003, and 2008 in disbursing payments," she wrote.