U.S. employers announced an additional 170,219 job cuts in June as the recession caused by the COVID-19 depresses demand and pushes companies into bankruptcy, a report showed on Wednesday.
FILE PHOTO: People line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort, Kentucky, U.S. June 18, 2020. REUTERS/Bryan Woolston/File Photo
Though the layoffs reported by global outplacement firm Challenger, Gray & Christmas were down 57% from May, they jumped 306% compared to June last year. The job cuts explain why new filings for unemployment benefits have remained extraordinarily high even as businesses have reopened after closing in mid-March to slow the spread of the coronavirus.
“We are beginning to see the impact of the recession spreading to companies that were not directly impacted by the virus,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. “At the same time, companies that attempted to reopen but were only able to attract a fraction of their pre-COVID customers are closing down again. Meanwhile, a number of high-profile companies are filing for bankruptcy.”
Initial weekly claims for unemployment benefits have been stuck around 1.5 million, though applications have dropped from a historic 6.867 million scaled at the end of March.
About 30.6 million people were collecting unemployment checks in the first week of June.
According to Challenger, Gray & Christmas, layoffs totaled an all-time high of 1.238 million in the second quarter, up 257% from the January-March period.
It expected job cuts to remain elevated as rising cases of the respiratory illness across the country and unemployment undercut consumer and business spending.
COVID-19 was cited as the reason for 1.011 million of the 1.585 million job cuts this year. About 9,581 layoffs so far this year were due to bankruptcy.
Overall, the bulk of the job cuts have been at bars, restaurants, hotels, and amusement parks. Retailers and companies providing catering, linen, marketing, and administrative services have also laid-off workers.
In the auto sector, manufacturers, suppliers, and dealers have shed workers. But the government, healthcare, technology, aerospace, and defense are hiring. So far this year, 1.836 million hiring plans have been announced, with 75,454 in June.