Americans filed for unemployment pay in historic numbers last week, as coronavirus shutdown orders from Boston to Chicago to San Francisco triggered a tsunami of layoffs that is expected to swell the ranks of the jobless to levels not seen in nearly 40 years.
US first-time unemployment claims soared by more than 3 million to a seasonally adjusted 3.28 million for the week ending March 21, the Labor Department said Thursday. That shattered the previous weekly peak of new claims of 695,000, reached in October 1982, according to data going back to 1967.
In Massachusetts, claims rose almost twentyfold to 147,995 on an unadjusted basis. The previous high was more than 34,000 at the end of 1991, based on data starting in 1986.
“While it’s an historic number, it probably understates the number of people who went into unemployment last week,” said Thomas Kochan, a professor at the MIT Sloan School of Management. Under current rules, many people aren’t eligible for jobless benefits, including independent contractors and gig workers.
The surge in jobless claims was as staggering as it was inevitable, after COVID-19 fears and stay-at-home directives devastated the travel, leisure, entertainment, and retail industries. Airlines have cut their flight schedules dramatically, hotels are nearly empty, malls and movie theaters are closed, and bars and restaurants have been restricted to takeout business only.
National unemployment claims had averaged about 212,000 a week this year, until a spike two weeks ago The Massachusetts average had been 6,685
But in a matter of weeks, the coronavirus crisis has ignited a two-front war: one against the spread of the deadly virus, the other to prevent an economic collapse. With thousands of businesses closing or operating with skeletal staff, the country’s first recession since 2007-2009 is virtually unavoidable, economists say. How long the downturn lasts hinges heavily on the success in containing COVID-19 and how quickly businesses can return to normal.
Financial markets had anticipated the explosion in jobless claims, with estimates ranging from 1 million to 4 million. Stock prices surged as investors cheered that the federal rescue package was moving closer to approval.
The Dow Jones industrial average climbed 6.4 percent and has now gained 21 percent since bottoming out Monday. The Standard & Poor’s 500 index rose 6.2 percent, an increase of 17.5 percent from Monday.
Both benchmarks remain well below record highs set last month.
Among those who got pink slips last week was Wayne Steed, a 32-year-oldcook at the Renaissance Boston Waterfront Hotel. Over the past month, as the pandemic spread and businesses cut back travel, the hotel emptied out amid a flurry of cancellations.
Steed said he was “surprised but not shocked” to get laid off, even though the hotel was nearly fully booked for much of the beginning of the year.
The father of three said he filed for unemployment benefits and has been approved.
“We are fortunate to have a union,” said Steed, who is a member of Unite Here Local 26. “I am confident I will get my job back and things will get back to normal.”
Seeking to cushion the blow, the Senate Wednesday night passed a $2 trillion rescue package that includes a $280 billion boost to unemployment benefits. The bill would give laid-off employees — including newly eligible self-employed, part-time, and gig workers — $600 a week on top of their state benefits for four months. It would also extend benefits for 13 weeks beyond state limits.
In Massachusetts, eligible recipients get about 50 percent of their average weekly wage, up to the current maximum of $823 per week, for up to 26 weeks.
Those changes to eligibility “makes a statement to the country that we have a big hole in our unemployment policy in this country,” said Kochan, the Sloan School professor.
There are smaller holes still to fill, too.
“Those left out at this point are basically workers in the shadow economy with little proof of income,"said Michele Evermore, a senior researcher and policy analyst and the National Employment Law Project. “Tipped workers will still find it challenging to get an accurate base benefit, but the extra $600 per week will help a lot.”
Evermore also raised an issue that has worried her organization for a long time: State-administered unemployment systems are prone to missing people who are eligible.
“There will be people falling through the cracks,” she said.
Even with the economic aid package, which the House said it would take up Friday, job losses are projected to grow to 14 million by the summer, according to the Economic Policy Institute, a progressive think tank. In Massachusetts, job losses could total about 335,000, which represents about 10 percentof total private sector employment, according to the institute.
“We will absolutely see job losses across sectors,” said Julia Wolfe, state economic analyst at the Economic Policy Institute. “This is going to be very broad-based.”
In March, the US unemployment rate dropped to 3.5 percent, a level not seen since 1969. The US economy had added jobs for 113 straight months through February, bringing more low-income and people of color into the workforce. That record streak will end in March.
Analysts project that within a few months unemployment could easily exceed the post-World War II high of 10.8 percent in 1982, at the tail end of the recession caused when the Federal Reserve, under chairman Paul Volcker, drove up interest rates to break the back of spiraling price inflation. Job losses will mount as more states impose virus containment rules. Under worst-case scenarios, unemployment could appoach the 20 percent level seen during the Great Depression.
Hotels and restaurants dominated the first wave of COVID-19-induced reductions last week, according to state filings. They included 500 job cuts at Boston Park Plaza, 139 at Grill 23 & Bar, 142 at Wagamama noodle chain, and 90 at Post 390 restaurant.
Massachusetts had the fourth-largest number of new claims in the country, as a percentage of the workforce, at 3.86 percent, Labor Department statistics show. Rhode Island was first, at 6.36 percent, followed by Nevada, at 5.98 percent, and Pennsylvania, at 5.79 percent. These percentages may be driven by multiple factors, including the states’ mix of jobs and the timing and severity of their stay-at-home restrictions.
The virus has shuttered the Massachusetts unemployment walk-in centers and sent people to file claims online. While other states have reported their unemployment websites crashing, that has not happened in Massachusetts. The state said that it has received about twice as many new unemployment claims in the last week as it did during the worst month of the Great Recession.
“This is going to be one of the biggest challenges that states are going to face over the course of the next several weeks, which is processing an unprecedented number of new unemployment claims and trying to get them into the system and loaded and paying as quickly as possible,” Governor Charlie Baker said at a news conference. “But this is true everywhere. It’s not just true in Massachusetts.”
The state is ramping up its unemployment office, redeploying about 300 employees to help with the torrent of claims, and has conducted virtual town halls in both English and Spanish, attended by some 30,000 people. The state is also exploring the possibility of contracting with a remote call center so every claimant gets a return call.
Not all companies are cutting back. Amazon is recruiting 100,000 warehouse workers to fulfill a surge in online orders nationwide. Domino’s Pizza is bringing on 500 new drivers in Greater Boston to meet delivery demands. Walmart is looking to hire 1,900 new associates in the state, while CVS is hoping to fill 2,500 positions locally.
While some laid-off workers expect to be rehired once the economy is restarted, others can’t wait. Angel Ruiz — who held two jobs in hospitality and lost both of them last week — estimates he has applied to over 50 positions through Boston startup JobGet, an online job search platform for hourly workers.
Ruiz, 29, of Roxbury, has already landed a part-time job at Instacart, paying $17 an hour as a grocery shopper. But Ruiz will keeping looking because he lives with his uncle who has a preexisting condition and worries that he might catch COVID-19 working in supermarkets.
“I want to be safe too,” Ruiz said. “I don’t want to be exposed.”
Gal Tziperman Lotan of the Globe staff contributed to this report.