Tag Archives: Unemployment

Half of U.S. states easing coronavirus restrictions as jobless numbers grow

By Doina Chiacu and Maria Caspani

WASHINGTON/NEW YORK (Reuters) – The White House let its 2-week-old economic reopening guidelines expire on Thursday as half of all U.S. states forged ahead with their own strategies for easing restrictions on restaurants, retail and other businesses shuttered by the coronavirus crisis.

The enormous pressure on states to reopen, despite a lack of wide-scale virus testing and other safeguards urged by health experts, was highlighted in new Labor Department data showing some 30 million Americans have sought unemployment benefits since March 21.

The jobless toll amounts to more than 18.4% of the U.S. working-age population, a level not seen since the Great Depression of the 1930s.

Physical separation of people – by closing schools, businesses and other places of social gatherings – remains the chief weapon against a highly contagious respiratory virus with no vaccine and no cure.

But with economic pain reaching historic proportions, agitation to relax stay-at-home orders and mandatory workplace restrictions has mounted.

For the second time in two weeks, hundreds of protesters – including armed militia group members – thronged Michigan’s state Capitol in Lansing demanding an end to Governor Gretchen Whitmer’s stay-at-home orders.

The latest protest was sparked by the Democratic governor’s request, ignored by Republican lawmakers, to extend emergency powers she had invoked in a state hard hit by both the virus and closures to combat it.

WHITE HOUSE STEPS BACK

Weeks after insisting he had “total” authority to decide when and how to reopen the nation’s economy, President Donald Trump has largely left it to each governor to decide on a state-by-state basis.

Although the White House declined to extend its April 16 reopening guidance, which recommended an economic restart in stages only after strict precautions are put in place, medical experts said those conditions remained unmet and that acting prematurely risked a resurgence of the outbreak.

Safely lifting social distancing rules, they insisted, will require vastly expanded virus screening and the means to trace close social contacts of infected people so they too can be tested and isolated.

“You can’t just leap over things to a situation where you’re really tempting (the virus) to rebound. That’s the thing I get concerned about,” Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told NBC’s “Today” show.

In a breakthrough announced Wednesday that could prove to be a national model, Los Angeles County became the first major U.S. metropolitan area offering free coronavirus tests for all, though high demand has strained the website for sign-ups.

The tests, funded in part with a Rockefeller Foundation grant through a charity co-founded by actor Sean Penn, are to be made available by appointment to anyone in the county of roughly 10 million residents – the most populous in the nation.

Across the country, New York Governor Andrew Cuomo said his state would hire thousands of workers for the labor-intensive job of tracking down human contacts of individuals who test positive for the virus.

As of Thursday, the number of known infections nationwide had climbed to well over 1 million, including more than 62,000 deaths, far exceeding the tally of American war dead from all the years of U.S. military involvement in Vietnam.

But pressures to return to some semblance of normalcy have only grown as the outbreak appears to have waned across much of the county.

PATCHWORK OF STATES

About two dozen states, mostly in the South, the Midwest and mountain West, have moved to relax restrictions since Georgia led the way late last week. Texas and Florida, among others this week, outlined plans for doing so in the days ahead.

But no companies are required to reopen, and it was not clear how many business owners and their employees would return to work, and how many patrons would venture back into stores and restaurants.

The number of coronavirus cases is still climbing in many parts of the country, although peaks appear to have been reached in New York state, the epicenter of the U.S. outbreak, and other places.

Pennsylvania, Kansas, Wisconsin, Virginia, Arizona, Minnesota and Nebraska all reported a record number of new cases on Thursday, though greater testing could account for some of the increases, revealing infections already present but undetected.

Several states, including New Jersey, Texas, Massachusetts, Ohio, Indiana, West Virginia and New Mexico, posted new highs in their daily death tolls.

New Jersey Governor Phil Murphy, who plans to reopen state parks and golf courses on Saturday, paid a visit to the White House on Thursday. Afterward he said the federal government was giving his state 550,000 coronavirus testing kits, along with 750,000 swabs to take samples, marking a “huge step” toward his goal of doubling New Jersey’s testing capacity by late May.

In California, Governor Gavin Newsom announced beach and park closures in Orange County, south of Los Angeles, after crowds jammed the popular shoreline last weekend.

Newsom, a Democrat, has said that curbside retail, manufacturing and other “lower-risk workplaces” should reopen in California within weeks as testing and contact-tracing improve.

In one of the first major reopenings anticipated in U.S. sports, NASCAR announced its auto racing competition would return with 10 races at its North and South Carolina tracks in mid- to late-May.

Some segments of the commercial U.S. workforce kept on the job during the health crisis have begun to push back against what they see as deteriorating conditions.

Workers at leading retailers including Amazon, Walmart and Target, as well as delivery service Instacart and FedEx, were planning strikes on Friday to protest a lack of safety equipment and other protections at a time when their services are deemed essential, according to information circulated on social media.

(Reporting by Doina Chiacu in Washington and Maria Caspani in New York; Additional reporting by Lucia Mutikani, Lisa Shumaker, Michael Martina, Nathan Layne, Jessica Resnick-Ault, Sharon Bernstein and Dan Whitcomb; Writing by Maria, Sonya Hepinstall and Steve Gorman; Editing by Frank McGurty, Howard Goller, Cynthia Osterman and Michael Perry)

Millions of Americans locked out of unemployment system, survey finds

By Andy Sullivan

WASHINGTON (Reuters) – Millions of Americans who have been thrown out of work during the coronavirus pandemic have been unable to register for unemployment benefits since the U.S. economy entered a free fall, according to a poll released on Tuesday.

The left-leaning Economic Policy Institute found in an online poll that for every 10 people who have successfully filed unemployment claims, three or four people have been unable to register and another two people have not tried to apply at a time of acute economic crisis.

Official U.S. statistics show that 26.5 million people have applied for unemployment benefits since mid-March, wiping out all of the jobs gained during the longest employment boom in U.S. history.

EPI’s survey indicates that an additional 8.9 million to 13.9 million people have been shut out of the system, said Ben Zipperer, the study’s lead author.

“This study validates the anecdotes and news reports we’re seeing about people having trouble filing for benefits they need and deserve,” Zipperer said.

Idled workers say they have encountered downed websites and clogged phone lines, as the state governments that administer the program have been overwhelmed by applicants.

“It’s a shame how you work for so many years and then when you need it, you can’t get it,” said Jim Hewes, 48, who said he was unable to file a claim online for more than two weeks after he was furloughed from his job at an Orlando, Florida, second-hand store in March.

Hewes said he mailed off a paper application on April 9 but had not heard back from the state.

“It’s almost set up to fail. It was made complicated so people would get discouraged and give up,” he said.

EPI surveyed 24,607 U.S. adult internet users using Google Surveys between April 13 and April 24. The poll has a confidence interval, an indicator of accuracy, of plus or minus 1%.

Some 9.4% of poll respondents said they had successfully applied for unemployment benefits, while 3.4% said they tried but could not get through.

A further 1.9% said they did not apply because the process was too difficult.

STILL NO PAYMENTS FOR MANY

States like New Jersey and Georgia have struggled to find staffers who know how to update computer systems that run on decades-old technology. Others that have moved to newer technology have also encountered technical woes.

States have also had to incorporate enhanced federal benefits that provide an extra $600 per week and extend coverage to Uber drivers and other independent contractors.

On top of that, many states entered the crisis with fewer workers to handle unemployment claims as an improving economy had allowed them to cut staff.

States had the equivalent of 26,360 full-time workers in their unemployment offices in the 2018 fiscal year, according to the U.S. Labor Department, down 30% from staffing levels during the peak of the Great Recession in 2009 and 2010.

Many Americans who managed to file claims have yet to receive payments weeks after they lost their jobs.

Labor Department statistics show that 71% who apply are getting payments, although that figure varies significantly by state.

Florida, for example, said on Saturday it had sent payments to roughly one in five of those who had successfully submitted claims.

Among those waiting are Rachel Alvarez, 44, who says she now hides snacks in her bedroom so her three children cannot eat them too quickly. The former restaurant server in Naples, Florida, says she has run through her savings since she was laid off on March 25.

“I have nothing,” she said. “As much as I don’t want my kids to see me stress out, each one has seen me cry.”

(Reporting by Andy Sullivan; Editing by Scott Malone and Peter Cooney)

Millions filed for U.S. unemployment – many are still waiting for the cash

By Jonnelle Marte and Andy Sullivan

(Reuters) – A shocking 16.8 million people filed for U.S. unemployment benefits in the last three weeks as the country shut down to stop the spread of the novel coronavirus, overwhelming state labor departments and creating a large backlog of pending applications.

A month after the virus was declared a pandemic, many newly jobless Americans are still waiting desperately for their unemployment checks.

After going weeks without a paycheck, they are falling behind on their bills and drastically ratcheting back spending. The delays come as other federal stimulus, including a small business lending program, also experience hiccups.

The slow federal response could ultimately make the economic hit from the shutdown worse, economists warn.

Zaborah Roane, 48, a laid off daycare worker from Raleigh, North Carolina, said her application for unemployment benefits was still pending Thursday, about two weeks after she applied.

“Every day you just have to see what that day brings to help you decide what your next move is going to be,” said Roane, who was able to buy groceries with help from the National Domestic Workers Alliance, a nonprofit group raising money for workers affected by the virus.

The North Carolina Department of Commerce says people typically receive payment within 14 days of filing their initial claim.

The $2.3 trillion stimulus act signed March 27 includes a $600 a week across-the-board unemployment payout. Some states have started issuing the benefits, but it could take until May in some states for this money to filter through creaky federal and state bureaucracies into the bank accounts of Americans.

STATE OFFICES REV UP

The unemployment benefits program is administered by states using guidelines set by federal law.

States facing a surge in applications are increasing staff, expanding call center hours and changing their application processes to make it easier for people to file for benefits.

Some states, including Illinois, Michigan, New Hampshire and New York, are asking people to apply on certain days of the week based on their name.

Others, including Maine, have told independent contractors, who are supposed to be eligible for benefits under the stimulus package, that their benefits are not yet available but they are coming.

Jason Suggs, an unemployment claims processor for the state of Maryland, estimates that the state has lost two-thirds of its claims processing staff over the past decade to retirement and attrition.

“The first thing someone says to you when you answer the phone is, ‘I’ve been on hold for four hours,” Suggs said on a conference call organized by public sector employee unions.

Simon Tung, 38, and his wife Christina shut down their two Manhattan macaron bakeries and a cat cafe on March 15 and had to lay off their more than 20 employees.

Some employees have not been able to apply for unemployment benefits, Tung said Thursday, while other employees have received full benefits.

Filing their own claims was an odyssey, Tung said. He first filed for unemployment online on March 22, but was notified he needed to call to submit more information.

He called hundreds of times. When he did get through, sometimes he would get a message saying the system was overwhelmed and to call back. On April 2, he received his first direct deposit from New York state – for $0.

“It got to a point where it went from anxiety to frustration to defeat, and you’re just laughing at everything,” he said.

The New York State Department of Labor launched a streamlined application process Thursday with a “call back” system for people who need to submit additional information.

Other workers faced several weeks of anxiety before securing benefits.

Desiré Nesmith, 24, who was laid off as a substitute teacher and child-care worker in Fort Worth, Texas received a payment last week but was immediately told she needed to send the money back after the department struggled to contact one of her former employers.

It was a frustrating turn after weeks of struggling to have her claims processed online. Nesmith placed about 400 phone calls into the Texas employment office on Tuesday alone, she said, before she received a call in the afternoon letting her know the error was cleared up and her payments were approved.

“I was on the verge of tears,” she said of the relief she felt.

(Reporting by Jonnelle Marte. Additional reporting by Hilary Russ and Andy Sullivan. Editing by Heather Timmons and Chizu Nomiyama)

U.S. companies criticized for cutting jobs rather than investor payouts

By Alwyn Scott, Ross Kerber, Jessica DiNapoli and Rebecca Spalding

NEW YORK/BOSTON (Reuters) – U.S. companies laying off workers in response to the coronavirus pandemic but still paying dividends and buying back shares are drawing criticism from labor unions, pension fund advisers, lawmakers and corporate governance experts.

While most U.S. companies are scaling back payouts after a decade in which the amount of money paid to investors through buybacks and dividends more than tripled, some are maintaining their policies despite the economic pain.

Royal Caribbean Cruises Ltd <RCL.N>, Halliburton Co <HAL.N>, General Motors Co <GM.N> and McDonald’s Corp <MCD.N> have all laid off staff, cut their hours, or slashed salaries while maintaining payouts, according to a Reuters review of regulatory filings, company announcements and company officials.

“This is the time for large companies to try to help, for systemic reasons, to keep things flowing,” said Ken Bertsch, executive director of the Council of Institutional Investors. The council’s members include public pension funds and endowments that manage assets worth about $4 trillion.

Royal Caribbean, which has halted its cruises in response to the pandemic and borrowed to boost its liquidity to more than $3.6 billion, said it began laying off contract workers in mid-March, though the moves did not affect its full-time employees.

The company has not suspended its remaining $600 million share buyback program, which expires in May, or its dividend, which totaled $602 million last year and is set quarterly.

“We continue to take decisive actions to protect (our) financial and liquidity positions,” Royal Caribbean spokesman Jonathon Fishman said. He declined to comment specifically on the layoffs or shareholder payouts.

While Royal Caribbean’s rival Carnival Corp <CCL.N> has also laid off contract workers, it has suspended dividends and buybacks as it raised more than $6 billion in capital markets to weather the coronavirus storm.

UNEMPLOYMENT SURGE

Goldman Sachs analysts forecast this week that S&P 500 companies would cut dividends in 2020 by an average of 50% because of the fallout from the coronavirus pandemic.

For a graphic on S&P 500 shareholder payouts from 2009 to 2018, please click on: https://reut.rs/349G2JV

While there has been criticism of companies maintaining investor payouts, only those receiving financial support from the U.S. government under a $2.3 trillion stimulus package are obliged to suspend share buybacks.

Layoffs contributed to U.S. unemployment skyrocketing last month. Jobless claims topped 6.6 million in the week ended March 28 – double the record set the prior week and far above the previous record of 695,000 set in 1982.

Companies say job cuts are necessary to offset a plunge in revenue but their critics say they should consider turning off the spigots to shareholders before letting employees go.

“If companies are paying dividends and doing buybacks, they do not have to lay off workers,” said William Lazonick, a corporate governance expert at the University of Massachusetts.

Workers at franchised McDonald’s restaurants say they are getting fewer shifts since dining areas were closed in March, leaving only carry-out and drive-through services open.

Alma Ceballos, 31, who has worked at a franchised McDonald’s near San Francisco for 14 years, said she could not pay her rent after her schedule was cut to 16 hours from 40 and her husband, a janitor at Apple Inc’s <AAPL.O> Cupertino, California, campus was laid off.

McDonald’s, which has suspended buybacks but maintained its annual dividend, worth $3.6 billion in 2019, told Reuters its staffing and opening hours were not related to “making a choice between employees and dividends”.

About 95% of its U.S. restaurants are run by franchisees who decide staffing. McDonald’s said it was offering rent deferrals and other help to keep franchises open and employing workers.

“McDonald’s could commit to 30 days of income for all workers,” Mary Kay Henry, president of the labor union SEIU which has 2 million members, said in an interview with Reuters. “Corporations need to pay their fair share here.”

‘IT’S JUST WRONG’

General Motors has halted normal production in North America and temporarily reduced cash pay for salaried workers by 20%. It paid its first-quarter dividend on March 20 and has a month before declaring its next dividend, a spokeswoman said, adding that GM would assess economic conditions before deciding.

“Our focus in the near term is to protect the health of our employees and customers, ensure we have ample liquidity for a very wide range of scenarios, and implement austerity measures to preserve cash,” spokeswoman Lauren Langille said.

Oilfield services firm Halliburton furloughed about 3,500 workers in its Houston office starting on March 23, according to a letter sent to the Texas Workforce Commission obtained by Reuters. It has also cut 350 positions in Oklahoma.

Halliburton cited disruption from the coronavirus as well as plunging oil prices as the reason for the furlough. In March, it paid its first-quarter dividend to shareholders as planned.

A Halliburton spokeswoman declined to comment on the furlough and the company’s dividend policy.

Some of the companies laying off workers while still paying out shareholders, such as General Motors, signed an initiative last year from the Business Roundtable, a group of chief executives, pledging to make business decisions in the interest of employees and other stakeholders, not just shareholders.

Large asset managers such as BlackRock and Vanguard have cited managing “human capital” as a priority for companies in which they invest. Yet they have been reluctant to publicly press companies to avoid layoffs during the crisis.

Vanguard told Reuters it “recognizes the need for companies to exercise judgment and flexibility as they balance short- and long-term business considerations”.

BlackRock did not respond with a statement when contacted for comment.

“Profits should be shared with the workers who actually create them,” U.S. Senator Tammy Baldwin, a long-standing critic of share buybacks, told Reuters in an email.

“It’s just wrong for big corporations to reward the wealthy or top executives with more stock buybacks, while closing facilities and laying off workers.”

(Reporting by Alwyn Scott, Jessica DiNapoli and Rebecca Spalding in New York and Ross Kerber in Boston; Additional reporting by Hilary Russ in New York; Editing by Greg Roumeliotis and David Clarke)

Layoffs and food lines: How the pandemic slams the poorest U.S. workers

By Brad Heath and Veronica G. Cardenas

Laredo, Texas (Reuters) – Alberto Mendoza figures he can make it a couple of weeks on unemployment benefits before starting to decide which bills won’t get paid. The 26-year-old father of three lost his job training cooks when all the local restaurants started closing their doors and laying off staff.

“I have to pay rent, my truck bills; I have three children to support,” he said.

Mendoza is among thousands here in Laredo, Texas, along the southern U.S. border, who are teetering on the edge of financial ruin as the coronavirus pandemic takes hold – even though Laredo has seen no deaths and confirmed just nine cases by Tuesday evening. That’s a tiny figure compared to thousands of other hard-hit communities.

For an interactive graphic tracking coronavirus in the United States, click https://tmsnrt.rs/3bmK7N3

The plight of Laredo – a city of 260,000 located in one of America’s poorest counties – illustrates the breadth and depth of the economic pain radiating across the world as governments scramble to shut down commerce and issue stay-home directives to slow the pandemic. When city officials limited public gatherings – even funerals – to no more than 10 people, the local economy went off a cliff, despite the comparatively minor health impacts so far. The city’s rapid decline underscores the magnified fallout from the pandemic in economically fragile communities where most families live one or two missed paychecks away from desperation.

Poverty makes it much harder for people to isolate themselves to guard against infection or to seek proper care when they get sick, said Sandra Quinn, a professor at the University of Maryland’s School of Public Health.

“A pandemic like this just feeds on social inequities and existing health system disparities,” she said.

In surrounding Webb County, which includes Laredo, nearly a third of residents live beneath the federal poverty line, according to the U.S. Census Bureau. About as many don’t have health insurance. Nearly all the students in the city’s school system — now shuttered — were eligible for subsidized lunches or other government benefits.

Mendoza’s kids have insurance through Medicaid, the government-run health program for low-income families. Mendoza has no insurance at all. If he gets sick, he said, he would “go to the doctor and ask for a payment plan.”

Other families are already in the food line. One day last week, more than 800 people showed up at the South Texas Regional Food Bank for boxes of pasta, rice and other supplies. On a typical day before the pandemic, just 25 or 30 people might have stopped by the organization’s warehouse to get food to sustain their families through a rough patch.

Now, instead of coming inside to ask for help, they sat at laptop computers under an awning outside, no more than 10 at a time, using video chat to talk with workers who didn’t want to run the risk of becoming infected.

“You have to feel for these people,” said Alma Boubel, the food bank’s director.

The severity of the U.S. economic crisis will soon become more clear with releases of new data. Federal Reserve Bank of St. Louis President James Bullard recently predicted the U.S. unemployment rate may hit 30% in the second quarter – higher than during the Great Depression of the 1930s. Goldman Sachs analysts estimated that more than 2 million people applied for unemployment benefits last week alone, more than triple the previous record.

The unemployment rate in Webb County, estimated at 4.1% in January, was above the national average before the virus hit. Many of the region’s jobs are tied to the transportation industry that moves goods back and forth across the border with Mexico – traffic that U.S. President Donald Trump and the Mexican government have sharply curtailed in an effort to contain the disease.

Officials in Laredo and Webb County did not respond to questions about how they planned to handle the public health or economic shocks.

The realities of lower-wage work also often mean that people can’t shift their livelihoods to a home office, as professionals in higher-end jobs often can. That dynamic also complicates government efforts to stop the spread of disease through social isolation.

“Social distancing is hard, and of course many low-income people work at jobs that are physical, in-person, manual, and you have to show up,” said Sara Rosenbaum, a professor at George Washington University’s Milken Institute School of Public Health.

Studies after an outbreak of the H1N1 flu virus in the United States a decade ago found that minorities and lower-income families had a harder time separating themselves from other people in the way health authorities recommend. “They were less likely to be able to avoid public transportation, lived in larger households,” and had jobs that couldn’t be done remotely, Quinn said.

Ricarda Rios, 65, worked as a substitute teacher in Laredo before the schools closed. The system’s employees are still on the payroll, but not the subs. He said he is already “completely out of resources.”

That’s made it harder to steer clear of other people, especially when stores run short of basic supplies. “I have to go to different places until I get lucky and buy a dozen of eggs or a gallon of milk,” he said.

Carmen Garcia, the executive director of the Laredo Regional Food Bank, said she grasped the enormity of the crisis when she exhausted the supplies she bought for all of March just ten days into the month. Many of the people who come to her for help live in large families and work low-wage jobs that are now threatened. Many regularly seek cheaper medical care on the opposite side of the border with Mexico, which has been closed to non-essential travel.

“There’s a lot of worry now,” Garcia said. “Our clients, what they’re saying is they don’t know where else they can get assistance. They’re willing to risk their health. They can’t work right now, so they don’t have a paycheck. They need whatever food they can get.”

(Reporting by Brad Heath and Veronica G. Cardenas; Additional reporting by Ned Parker; Editing by Brian Thevenot)

As U.S. workers file for unemployment, some states are less prepared

By Jonnelle Marte

(Reuters) – The U.S. unemployment benefits program, a key part of the safety net for the labor market, is about to face its biggest test in more than a decade.

More than 1.5 million applications could be filed this week, economists said, as people who work for restaurants, bars, hotels and other businesses suddenly find themselves out of work because of the coronavirus.

States that cut unemployment staff and benefits during better economic times may be unprepared for the deluge in applications, analysts say.

“States are just not in a position to respond to this,” said Michele Evermore, a senior policy analyst at the National Employment Law Project in Washington, D.C. “They’re at historically low levels of funding and they’re moving into a state where there may be historically high levels of claims within a couple of weeks.”

The pandemic is dealing a blow to states already facing budget shortfalls. Twenty-three states were short on unemployment insurance trust funds as of last year, before the coronavirus shock, a Department of Labor calculation shows .

Some workers who applied for the program this week were met with downed websites, long waits on phone lines and other delays.

After being laid off from her job as a bar tender in New York City, Caitlin Ma, 29, went online to apply for unemployment and food stamps on Thursday. “But the systems are so bogged down,” she said. To expedite her food stamp application, Ma will have to go physically to the offices, despite health officials’ recommendations.

Making things worse, qualifications and benefits available may also vary based on where workers live.

The U.S. Department of Labor, which sets federal guidelines for the program, recently gave states the flexibility to provide benefits to people temporarily out of work. But states administer the benefits, and not all have made the change.

California made unemployment benefits available to people who had their hours cut because of the virus. New York waived the one-week waiting period for people who are out of work because of closures or quarantines related to the coronavirus. And Massachusetts is providing more leeway for people who are currently receiving benefits but miss a deadline because of the virus, along with other changes.

North Carolina, where filings have already jumped, this week said that anyone “separated from employment” by the virus, including having their hours reduced though still retaining a job, is entitled to unemployment insurance “to the maximum extent” permitted under federal law.

But lawmakers in Mississippi did not agree on a bill to extend access to jobless benefits, and are now on recess until April 1, according to a report in Mississippi Today.

Ten states, including Florida, Alabama, North Carolina and Georgia, have cut their maximum length of benefits over the last several years to be less than 26 weeks, which is the standard for most states.

A bill passed by the Senate this week could increase funding for state labor departments and would make extended benefits available in the states where the unemployment rate rises by at least 10%. That funding could provide needed support to states that are now hiring rapidly to rebuild their staffs, Evermore said.

Broader access to unemployment benefits can help stabilize the economy after a downturn – and speed up the recovery – by providing people who lose their jobs with cash they can use to buy groceries, gas and other necessities. The changes some states are making may help lessen the blow to their local economies.

“It’s unfortunate that it takes a crisis for us to realize how important it is for people to have good unemployment insurance programs,” said Dave Cooper, a senior economic analyst for the Economic Policy Institute in Washington D.C.

Still, the recent adjustments may not fully close the gaps in the system. Self-employed people and contract workers who experience a drop off in business because of the virus may not be able to qualify for help, said Stephen Wandner, a research fellow at the W.E. Upjohn Institute.

“There are all of these other people who are losing their jobs who are not covered by unemployment insurance in the first place,” said Wandner.

(Reporting by Jonnelle Marte. Additional reporting by Jessica Resnick-Ault. Editing by Heather Timmons and Chizu Nomiyama)

U.S. companies facing worker shortage race to automate

U.S. companies facing worker shortage race to automate
By David Randall

NEW YORK (Reuters) – U.S. companies are responding to the lowest unemployment rate in almost 50 years by increasing their focus on automation in order to maintain healthy margins as labor costs tick higher, a Reuters analysis of corporate earnings transcripts shows.

The attempt to save money through technology does not come down to just installing more robots in factories. Instead, companies appear to be confronting the lack of low-cost workers by investing in software and machines that can perform tasks ranging from human resources management to filling prescriptions.

Citigroup Inc, for instance, said that it is expanding its cloud infrastructure to replace routine tasks that used to require human labor. Health insurance company UnitedHealth Group told investors that its automation efforts should save the company over $1 billion next year. And Corona beer brewer Constellation Brands Inc said that its spending on automation should increase the efficiency in which it packs bottles in a variety pack, shaving costs.

Those investments are helping keep wage growth in line despite historically-low unemployment. Average hourly earnings were unchanged in October despite the unemployment rate falling to 3.5% from 3.7%, while the annual increase in wages fell slightly to 2.9%.

“I’m not at all worried about margin pressure from wages” because of increased productivity due to corporate spending on automation, said Jonathan Golub, chief U.S. equities strategist at Credit Suisse Securities.

Overall, companies have discussed automation on quarterly earnings calls more than 1,110 times since the beginning of the year, a 15% increase from this time last year and nearly double the mentions by this time in October, 2016, according to Refinitiv data. Corporate orders of robotics alone rose 7.2% over the first half of this year compared with 2018, totaling $869 million in spending, according to the Association for Advancing Automation.

Fund managers and analysts say that corporate spending on automation is contributing to positive earnings surprises. Nearly 83% of companies in the S&P 500 that have release third quarter earnings so far have reported earnings above expectations, compared with an average 65% beat rate since 1994, according to I/B/E/S data from Refinitiv.

“You’re seeing companies benefit in ways that aren’t easy to see when you look at the balance sheet, and all those investments start to add up and help protect margins,” said Matt Watson, a portfolio manager at James Investment Research.

Watson said that he is now buying companies that are benefiting from the use of automation because they trade at much more attractive valuations than the companies that provide it, which he is steering clear of.

FedEx Corp, for example, is investing in systems to both automate its shipping facilities and is testing robots that can handle some deliveries, he said. He is also buying shares of broker-dealer LPL Financial Holdings Inc, which is automating more of its client-relations platform to increase efficiency, he said.

“You don’t need to get into the nitty gritty when it’s back-of-the-napkin obvious that these companies are saving money” through increased productivity, Watson said.

The fastest-growing sectors of automation are in logistics and healthcare, said Jeremie Capron, head of research at ROBO Global, the company behind the $1.2-billion Robo Global Robotics & Automation ETF <ROBO.P>. The firm’s ETF is up nearly 20% for the year to date, in line with the performance of the benchmark S&P 500 index.

Capron sees the greatest opportunity in companies like Zebra Technologies Corp <ZBRA.O>, which makes radio-frequency identification device readers and real-time location systems that are used in hospitals and e-commerce fulfillment centers, he said. Shares of the company are up nearly 30% for the year to date.

Declining costs and a new generation of smaller systems should continue to push revenue growth in the sector, he said.

“We’ve hit the level where you don’t need great engineering skills to deploy automation because the software has made it so much easier to use,” he said. “You’re seeing not only large multi-national groups automate, but those technologies are increasingly available to smaller and mid-sized businesses.”

(Reporting by David Randall; Editing by Alden Bentley and Nick Zieminski)

U.S. unemployment rate falls to 3.5%; job growth steady

By Lucia Mutikani

WASHINGTON, (Reuters) – U.S. job growth increased moderately in September, with the unemployment rate dropping to near a 50-year low of 3.5%, assuaging financial market concerns that the slowing economy was on the brink of a recession amid lingering trade tensions.

The Labor Department’s closely watched monthly employment report on Friday, however, showed wage growth stagnating and manufacturing payrolls declining for the first time in six months. The retail sector also continued to shed jobs.

The report came on the heels of a string of weak economic reports, including a plunge in manufacturing activity to more than a 10-year low in September and a sharp slowdown in services industry growth to levels last seen in 2016, that heightened fears the economy was flirting with a recession.

With signs that the Trump administration’s 15-month trade war with China is spilling over to the broader economy, continued labor market strength is a critical buffer against an economic downturn. The trade war has eroded business confidence, sinking investment and manufacturing.

Nonfarm payrolls increased by 136,000 jobs last month, the government said. August data was revised to show 168,000 jobs created instead of the previously reported 130,000 positions.

The initial August job count was probably held back by a seasonal quirk related to students leaving their summer jobs and returning to school. Economists polled by Reuters had forecast payrolls would increase by 145,000 jobs in September.

U.S. stock index futures pared losses after the release of the data and later moved into positive territory. U.S. Treasury yields jumped and the dollar trimmed losses against the yen and euro. (Full Story)

Regardless of the continued moderate employment growth and sharp drop in the jobless rate, economists expect the Federal Reserve to cut interest rates at least one more time this year, given the trade policy uncertainty.

Washington announced this week tariffs on aircraft, other industrial products and agricultural products from the European Union as part of a World Trade Organization penalty award in a long-running aircraft subsidy case. Trade experts expect the EU will impose tariffs on U.S. goods next year over state subsidies for Boeing BA.N.

The U.S. central bank cut rates last month after reducing borrowing costs in July for the first time since 2008, to keep the longest economic expansion in history, now in its 11th year, on track. Growth estimates for the third quarter range from as low as a 1.3% annualized rate to as high as a 1.9% pace. The economy grew at a 2.0% pace in the second quarter, slowing from a 3.1% rate in the January-March period.

STRONG GOVERNMENT HIRING

Steady job growth last month came despite the Institute for Supply Management’s (ISM) measure of manufacturing employment tumbling to more than a 3-1/2-year low. In September, the ISM’s gauge of services industry employment fell to its lowest reading since February 2014.

While September’s job gains were below the monthly average of 161,000 this year, they were still above the roughly 100,000 needed each month to keep up with growth in the working-age population. The two-tenths of a percentage point drop in the unemployment rate from 3.7% in August pushed it to its lowest level since December 1969.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, declined to 6.9%, the lowest level since December 2000, from 7.2% in August.

Despite the tight labor market, average hourly earnings were unchanged last month after advancing 0.4% in August. That lowered the annual increase in wages to 2.9% from 3.2% in August. The average workweek was unchanged at 34.4 hours.

Hiring is slowing across all sectors, with the exception of government, which is being boosted by state and local government recruitment.

Private payrolls increased by 114,000 jobs in September after rising by 122,000 in August. Manufacturing shed 2,000 jobs last month, the first decline in factory payrolls since March, after hiring 2,000 workers in August.

Factory employment growth has slowed from last year’s brisk pace. Manufacturing has ironically borne the brunt of the Trump administration’s trade war, which the White House has argued is intended to boost the sector.

Last month’s decline in manufacturing payrolls was led by the automotive sector, which lost 4,100 jobs. There were also job losses in machinery, fabricated metals products and primary metal industries.

Construction employment increased by 7,000 jobs last month after rising by 4,000 in August. Retail payrolls dropped by 11,400 jobs, shedding employment for an eight straight month.

Government employment increased by 22,000 jobs in September after surging by 46,000 in August. Hiring was boosted by state and local governments. Only 1,000 workers were hired last month for the 2020 Census. Government payrolls have increased by 147,000 over the year, driven by local governments.

((Reporting by Lucia Mutikani; Editing by Sandra Maler and Paul Simao))

U.S. weekly jobless claims fall; labor market strong

FILE PHOTO: People wait in line to attend TechFair LA, a technology job fair, in Los Angeles, California, U.S., January 26, 2017. REUTERS/Lucy Nicholson

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits unexpectedly fell last week, suggesting the labor market remains strong even as the economy is slowing.

The jobless claims report from the Labor Department on Thursday, however, does not fully account for the impact of the recent escalation in the bitter trade war between the United States and China, which has led to an inversion of the U.S. Treasury yield curve and raised the risk of a recession.

Worries about the trade war’s impact on the U.S. economic expansion, the longest on record, prompted the Federal Reserve to cut interest rates last week for the first time since 2008. Financial markets have fully priced in another rate cut next month.

Expectations for a 50-basis-point cut at the Fed’s Sept. 17-18 policy meeting have also risen.

“Initial claims have been sending a reasonably upbeat message about conditions in the labor market,” said Daniel Silver, an economist at JPMorgan in New York. “Today’s report likely doesn’t contain much information about the period since the recent escalations in trade tensions.”

Initial claims for state unemployment benefits declined 8,000 to a seasonally adjusted 209,000 for the week ended Aug. 3, the Labor Department said. Economists polled by Reuters had forecast claims would be unchanged at 215,000 in the latest week.

“The message of the unemployment claims data into early August is that layoff activity remained subdued and the labor market is still tight,” said John Ryding, chief economist at RDQ Economics in New York. “Though equity market volatility and low bond yields are driving pessimism about the economic outlook … we would have to see initial claims sustain a rise to the 250,000 level to become concerned about recession.”

U.S. stocks were trading higher as unexpectedly better Chinese data and a steadying of the yuan provided some comfort to investors rattled by the rise in U.S.-China trade tensions. Prices of U.S. Treasuries fell while the dollar <.DXY> was slightly stronger against a basket of currencies.

INVENTORY ACCUMULATION SLOWING Last week’s drop in claims pushed them to the lower end of their 193,000-244,000 range for this year. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, edged up 250 to 212,250 last week.

While hiring has slowed, the pace of job gains remains well above the roughly 100,000 needed per month to keep up with growth in the working-age population.

Nonfarm payrolls increased by 164,000 jobs in July, down from 193,000 in June. Job growth over the last three months averaged 140,000 per month, the lowest in nearly two years, compared to 223,000 in 2018. The moderation in employment growth partly reflects a shortage of workers.

“While net employment growth depends on gross hiring as well as the pace of layoffs, and the trend in payrolls gains may have moderated a bit, major weakening in employment growth is invariably associated with an uptrend in claims,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in White Plains, New York.

The economy grew at a 2.1% annualized rate in the second quarter, slowing from the first quarter’s brisk 3.1% pace. Growth is seen below a 2.0% rate in the July-September quarter.

Slower economic growth was also underscored by a separate report from the Commerce Department on Thursday showing wholesale inventories unchanged in June instead of rising 0.2% as estimated last month.

The component of wholesale inventories that goes into the calculation of gross domestic product edged up 0.1% in June.

While inventories increased further in the second quarter, the pace of accumulation was slower than early in the year. Some of that slowdown reflects a surge in consumer spending in the second quarter.

Businesses are also carefully managing stock levels as the economy’s outlook continues to darken amid the escalation in trade tensions between the United States and China, which has roiled financial markets.

Inventories subtracted 0.86 percentage point from GDP growth in the second quarter.

Sales at wholesalers dropped 0.3% in June after falling 0.6% in May. At June’s sales pace it would take wholesalers 1.36 months to clear shelves, unchanged from May.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. weekly jobless claims retreat from one-and-a-half-year high

Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits dropped from near a 1-1/2-year high last week, but the decline was less than expected, suggesting some moderation in the pace of job growth.

Still, the Labor Department’s report on Thursday continued to point to strong job market conditions, which should underpin the economy amid rising headwinds, including a fading fiscal stimulus boost and a trade war between Washington and Beijing, as well as slowing growth in China and Europe.

The Federal Reserve last week kept interest rates steady but said it would be patient in lifting borrowing costs further this year in a nod to growing uncertainty over the economy’s outlook. The U.S. central bank removed language from its December policy statement that risks to the outlook were “roughly balanced.”

“Labor market conditions remain quite positive, good news for workers, for the consumer sector and the economy more broadly,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

Initial claims for state unemployment benefits tumbled 19,000 to a seasonally adjusted 234,000 for the week ended Feb. 2, the Labor Department said on Thursday. The drop partially unwound the prior week’s jump, which lifted claims to 253,000, the highest reading since September 2017.

Claims that week were boosted by layoffs in the service industry in California, most likely striking teachers in Los Angeles.

A 35-day partial shutdown of the federal government as well as difficulties adjusting the data around moving holidays like Martin Luther King Jr. day, which occurred later this year than in recent years, also probably contributed to the spike in filings.

The longest shutdown in history likely forced workers employed by government contractors to file claims for unemployment benefits.

The shutdown ended on Jan. 25 after President Donald Trump and Congress agreed to temporary government funding, without money for his U.S.-Mexico border wall.

Economists polled by Reuters had forecast claims falling to 221,000 in the latest week.

U.S. stocks were trading lower on renewed fears of a global slowdown after the European Union cut its economic growth forecasts and White House adviser Larry Kudlow warned there was still a sizable distance to go on U.S.-China trade talks. The dollar was little changed against a basket of currencies, while U.S. Treasury prices rose.

MOMENTUM SLOWING

The Labor Department said no states were estimated last week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 4,500 to 224,750 last week. Claims by federal government workers, which are filed separately and with a one-week lag fell 8,070 to 6,669 in the week ended Jan. 26.

“Claims remain important to watch in the weeks ahead,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in White Plains, New York. “The data are suggesting at least some slowing in employment growth.”

The government reported last Friday that non-farm payrolls increased by 304,000 jobs in January, the largest gain since February 2018. Thursday’s claims report showed the number of people receiving benefits after an initial week of aid fell 42,000 to 1.74 million for the week ended Jan. 26.

These so-called continuing claims had raced to a nine-month high in the prior week. The four-week moving average of continuing claims rose 4,250 to 1.74 million.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)