Major U.S. companies announce barrage of layoffs over virus crisis
03 October, 2020
Hit hard by the coronavirus crisis and with new government stimulus funding in limbo, Disney, American Airlines and United Airlines announced 60,000 layoffs in just a day -- leading a barrage of job losses per month prior to the U.S. election.
Insurance firm Allstate warned Wednesday that it could have to cut 3,800 jobs, and Marathon Petroleum is slashing a lot more than 2,000 jobs -- 12 percent of its workforce.
No sector is expected to be spared in the wave of layoffs and furloughs.
Financial giant Goldman Sachs is cutting what it called a "modest" total around 400 people, ending a moratorium on job reductions that it imposed as the pandemic took hold.
New jobless claims data from the Labor Department didn't brighten the picture, with 837,000 new filings the other day -- down 36,000 from the week prior but nonetheless well above the single worst week of the 2008-2010 global financial meltdown.
"The levels remain extraordinarily high," said Rubeela Farooqi of High Frequency Economics.
"It is especially concerning that the pace of layoffs hasn't slowed more materially despite the fact that the economy has reopened more fully, and more and more businesses have come back online."
When the COVID-19 crisis struck america earlier this season, the tourism and hospitality industry -- hotels, restaurants, and leisure activities -- were the first forced to make huge job cuts to remain afloat.
Some major companies, just like the airlines, got government aid to save tens of thousands of jobs.
But much of that aid expired on Wednesday, and partisan bickering has stalled a new package on Capitol Hill.
Financing package announced Tuesday for seven U.S. airlines -- totaling up to $25 billion -- will provide funds for the carriers to ride out an extended downturn, but won't stave off furloughs.
American and United were to begin furloughing 19,000 and 13,000 workers, respectively, on Thursday. Other smaller airlines like Hawaiian may also have to let some workers go.
"Thousands of essential aviation personnel will wake up with no employment or healthcare, and tens of thousands more will be with out a paycheck," said Sara Nelson, president of the Association of Flight Attendants.
"They don't understand how they will pay rent, feed their families, or cover the price of their prescriptions or health care," Nelson added. "It did not have to be in this manner."
Overall, more than 26.5 million Americans are getting some sort of aid associated with a loss in income.
When it announced 28,000 layoffs on Tuesday, Disney said it had "worked tirelessly" to attempt to avoid any job cuts.
But the major financial hit suffered by the business because of its derailed theme park business and shuttered concert halls made the move unavoidable.
Some companies are however trying to keep their personnel, in order that they are able to bounce back more quickly to full strength when enough time comes, with already trained staff.
"The first phase of the crisis... has given way to a scenario where demand has partially returned, however in that your most vulnerable sectors remain in serious trouble," said Gregory Daco, an analyst at Oxford Economics.
For Daco, some companies just like the airlines are also in a lttle bit of a "political game" -- American and United said they could avert job cuts if a fresh government stimulus package were to come quickly.
Up to now, it hasn't.
All of the news on the U.S. jobs front is not terrible, however.
Beyond the federal government jobless claims data on Thursday, U.S. private employers added 749,000 jobs in September, payroll services firm ADP said this week -- besting analyst expectations and the August total.
After an April peak of 14.7 percent, unemployment dropped to 8.4 percent in August -- encouraging but well above the pre-pandemic figure of 3.5 percent.
Economists at the Federal Reserve Bank of St Louis said the higher jump in unemployment in the U.S. in comparison with other western countries comes down to government strategy.
"In Europe and Japan, the government's method of unemployment during COVID-19 has focused on maintaining employer-employee relationships," they said in a recent blog post.
"In the U.S., policy has centered on providing unemployment benefits to workers that have recently been let go or furloughed," they added.
For several sectors and companies, the pandemic is a boon -- online sales have exploded, which is very good news for Amazon, which announced the creation of 100,000 new jobs in North America in September.
Walmart and FedEx also have hired lately.
Source: japantoday.com
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