The coronavirus pandemic could cause the loss of 47 million jobs. If that estimate pans out, that would translate to a 32% national unemployment rate.
Macy’s said it will stop paying most of its 130,000 employees after plummeting sales driven by the coronavirus pandemic forced the chain to close its stores. The retail giant made the announcement Monday, saying that it was transitioning to the “absolute minimum workforce” needed to continue basic operations.
“This means the majority of our colleagues will go on furlough beginning this week. There will be fewer furloughs in our digital business, supporting distribution centers and call centers so we can continue to serve our customers online,” the company said in a press release.
While the company is furloughing workers, those who were previously enrolled in health insurance coverage through Macy’s will still receive their benefits through at least the month of May, according to the release. Macy’s, which also owns Bloomingdale’s and Bluemercury, has lost “the majority” of its sales due to the store closures that began on March 18.
The company has also taken other steps to limit the damage, including drawing down on its line of credit, reducing receipts, and freezing hiring and spending, and canceling some orders.
“While these actions have helped, it is not enough,” the company said.
The move is perhaps one of the biggest indications yet of just how severe the economic fallout of the coronavirus pandemic will be. With dozens of states and hundreds of municipalities across the nation enacting “stay-at-home” orders and shuttering malls and non-essential businesses, retailers like Macy’s are being pushed to the brink of collapse.
Macy’s is not alone, either. Nordstrom announced last week it would furlough some corporate employees while Swedish retailer H&M said earlier this month that it may be forced to permanently lay off tens of thousands of its employees after closing more than 3,400 of its roughly 5,000 stores across the world.
The trend of retail layoffs and furloughs is expected to continue as the timeline for store openings appears to grow further and further away. President Trump on Sunday announced that the federal government would extend its social distancing guidelines through at least April 30, despite prior suggestions that he might open the country back up by Easter.
“The floodgates are wide open,” Mark Cohen, director of retail studies at Columbia Business School and the former chief executive of Sears Canada, told the Washington Post. “Now that the pipe dream of an Easter opening is over, companies are trying to figure out how to protect their ability to come out of this when it’s all over, whenever that might be.”
Workers of all stripes in all industries have lost their jobs and seen their hours cut. The sudden economic collapse has been so extreme that 3.3 million Americans filed for unemployment during the week of March 16. In Pennsylvania alone, 378,908 people filed unemployment claims that week, the largest number of claims in the nation and a more than 2,300% increase from the 15,439 claims filed the week prior.
Nationwide, another 2.65 million Americans are expected to file claims this week, according to a Dow Jones survey of economists. The surge in claims has overwhelmed state systems, crashing websites and clogging phone lines, and making it increasingly difficult for anyone to file a claim. A New York woman who lost her job as a bartender at a movie theater grew so desperate for money that she started selling her blood. It was only after 11 days of trying that was she finally able to file the first portion of her unemployment claim online.
Americans were already struggling before the coronavirus pandemic, with six out of 10 living paycheck to paycheck and 40% unable to afford a $400 emergency. Now, many of those very people are on the brink of financial ruin and could soon be joined by millions more.
In total, the coronavirus pandemic could cause the loss of 47 million jobs, according to a new estimate from economists at the Fed’s St. Louis district project. If that estimate pans out, it would translate to a 32% national unemployment rate, well above the 24.9% peak unemployment rate during the Great Depression.
“These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years,” St. Louis Fed economist Miguel Faria-e-Castro wrote in the research paper published last week.
Faria-e-Castro’s “back-of-the-envelope” calculations don’t account for the impact of the government stimulus, passed last week, which expands and guarantees unemployment benefits to workers who do not ordinarily qualify for unemployment insurance, such as freelancers, furloughed workers, and independent contractors. Under the new legislation, newly furloughed workers at Macy’s will be among those able to apply for unemployment.
Still, no matter how you look at it, the numbers are grim. The damage to retailers like Macy’s will be felt particularly acutely because retail supports one in four American jobs.
“This could push us further into a damaging recession that will last longer than the duration of the crisis,” Neil Saunders, managing director of GlobalData Retail, told the Associated Press.
In what might represent a tiny silver lining, Macy’s plans to bring back many of its workers as soon as it can. “We expect to bring colleagues back on a staggered basis as business resumes,” the company said in its release.
But when that happens, or whether it happens at all is—like so many other facets of American life in the age of the coronavirus—entirely up in the air.