Layoffs spike in US, Europe as virus shuts businesses

WASHINGTON (AP) — Just a couple of weeks ago, Erika Vega hoped her temp job at a cafeteria would soon become permanent. But instead, the viral outbreak shut down the building where she worked and left her wondering where her next paycheck will come from.

Like millions of Americans and people around the world, the viral outbreak has left Vega in financial limbo, without income as her bills pile up. The U.S. and global economies have come to a shuddering stop, unleashing a wave of layoffs that is much larger and moving much faster than job losses in previous downturns. They are swamping state unemployment benefits systems and leaving many Americans still working anxious about whether they will be next.

Vega, 45, worked as a food preparer and dishwasher at a lower Manhattan office tower until last Thursday. The company that owned the cafeteria liked her work and said they wanted to hire her permanently. But she was still a temp when the building closed and her staffing agency says it has no more work available as the city has shut down bars and restaurants.

“The people who worked for the company get paid to stay home, but I don’t,” she said. “Everybody wants to be safe and be at home but at the same time, we have bills that need to be paid.”

Tens of thousands of laid-off workers have already flooded state unemployment websites across the country to apply for jobless benefits. In the week ending March 14, the number of people seeking unemployment aid soared by 70,000 to 281,000 , the Labor Department said Thursday.

That figure is still low historically, but it may soon surpass the record high of 650,000 in January 2009.

Many states are already reporting big increases in benefit applications this week, which weren’t included in Thursday’s figures.

In Ohio, more than 48,000 people applied for jobless benefits just this Monday and Tuesday. That’s up from 1,825 in the same two days the prior week.

And in neighboring Pennsylvania, about 70,000 people sought unemployment aid on Tuesday, six times the total for the entire previous week. A flood of claims has crashed unemployment claims websites in New York, New Jersey and states across the nation.

Layoffs are rippling through many companies, large and small. Each one means less income for those out of work, forcing them to cut spending, which can push still other businesses to cut jobs. Marriott International said Tuesday it has begun to furlough tens of thousands of employees. Furloughs are essentially temporary layoffs. Furloughed workers can receive unemployment benefits.

The three major American automakers are temporarily shutting their North American factories, idling 150,000 workers. So are Toyota and Honda.

Smaller companies have shut their doors with little time to prepare. Restaurants, bars, movie theaters, gyms, and other firms have been ordered to close by states and cities. In Portland, longtime independent bookseller Powell’s closed its five stores last weekend and has since laid off more than 300 workers. Compass Coffee, a small chain in Washington, D.C., has laid off 150 workers, or about 80% of its staff.

The travel industry is at risk of being particularly devastated, with airlines grounding planes and hotels increasingly empty. The U.S. Travel Association predicts that 4.6 million jobs in the industry could be lost, which by itself would push the unemployment rate to 6.3%, from its current level of 3.5%.

Jon Bortz, CEO of Pebblebrook Hotel Trust, which owns 54 hotels in major cities including New York, San Francisco and Seattle, said occupancy levels have dropped into the single digits. The company has laid off more than 4,000 of its 8,000 employees, and is likely to let go another 2,000 by the end of March, he said.

“We are looking at closing the doors at more than half of our properties,” he said.

Vega, the former cafeteria worker, said her husband was scheduled to have hernia surgery next week, but was told the hospitals are overwhelmed and the operation has been postponed. Her husband is still working for New York’s bike sharing program, City Bike, sanitizing bicycles.

“At least one of us is still working, but I don’t know how much longer he can go on like that,” she said.

In Europe, job losses are piling up by the hundreds of thousands, though solid figures are not yet available.

Airlines have announced tens of thousands of job cuts already, including 7,300 at Norwegian Air alone, while UK airline Flybe collapsed with a loss of 2,000 jobs.

The auto industry is also likely to suffer. In Spain, about 100,000 people have been laid off already by one estimate, with Volkswagen’s local unit putting 14,000 on temporary unpaid leave after idling production.

In Las Vegas, where the governor has ordered casinos, restaurants and other nonessential businesses to close for 90 days, Andrea Henderson has been laid off from her job as a dealer supervisor at the Bellagio casino-resort. She was laid off once before, after the Sept. 11, 2001, terrorist attacks, but that was only for five days. This time, no one knows how long it will last.

“If it stretches into three months, then we’ve got a problem,” she said. “We’re just hoping that it doesn’t extend into the late spring. That would suck.”

Jessica, 35, who asked that her last name not be used, decided with her husband in January to move from Seattle to Atlanta after her husband accepted a new job with higher pay at Delta Air Lines.

Now, with air travel tumbling, she worries that he will be laid off — the company has cut most of its contractors — and the couple spent their savings on the move. She fears they might have to declare bankruptcy.

“Who knew four months ago when we made this decision that the world would be in the position it is now?” she asked. “There’s an element of standing back and watching a train wreck happening that you can’t stop and you didn’t cause.”

Some firms are struggling but have figured out how to avoid layoffs, so far. In Nevada, Managed Sales Pros, a telemarketing firm, has lost four clients. To save the Las Vegas-based company from losing more business — and laying off employees — CEO Carrie Simpson has lowered rates for her other clients, and her 24 staffers have all agreed to take pay cuts to keep everyone employed.

Simpson has cut her own pay too.

“We will all make $10 an hour while we brace and ride out the fallout from this,” she said.