'Devastated': As layoffs keep coming, hopes fade that jobs will return quickly

Updated at 8:44 a.m. ET

From airlines to paper mills, the job news is grim, and there are growing signs it won't be getting better anytime soon. On Thursday, the Labor Department reported nearly 2.4 million new applications for state and federal unemployment benefits last week.

And United Airlines is warning that it may have to furlough as many as 36,000 employees this fall. Demand for air travel has collapsed as a result of the coronavirus pandemic.

The president of the flight attendants union called the warning a "gut punch" but also "the most honest assessment we've seen on the state of the industry — and our entire economy."

Union President Sara Nelson tweeted that demand for air travel had recovered a small fraction of its pre-pandemic levels this summer and "even those minimal gains evaporated over the last week due to surging COVID-19 cases across the country."

Jobs in other industries are facing similar threats as the coronavirus tightens its stubborn grip on the country.

Derse Inc. in Wisconsin builds exhibits for trade shows — a business that's been decimated by the pandemic. Last month, the company notified state officials it was cutting 87 jobs in Milwaukee. The last of those layoffs come next week.

"They're devastated," said Dean Wanty, who represents some of the affected workers in the International Union of Painters and Allied Trades, Local 770. "This is something I hope I never have to see again in my lifetime."

Wanty said that when trade shows started getting canceled this spring, he thought it would be a short-term problem — certainly not one that would drag into the summer. But while other countries have managed to flatten the curve, the pandemic is accelerating in the United States, with daily infections now topping 60,000.

"Week after week, stuff just keeps getting canceled, further and further and further out," Wanty said.

Derse's letter described the situation as unpredictable but warned that some of the layoffs may last more than six months.

"To me, it's not a matter of if our industry comes back. It's a matter of when," CEO Brett Haney said. "Unfortunately, it probably won't happen until some point next year."

To be sure, many bars, restaurants and retail shops have reopened, and millions of workers who were furloughed in March and April have now gone back to work. But two out of three jobs cut during the pandemic have not returned. And week after week, millions of new people apply for unemployment.

Last week's jobless claims were down only slightly from the week before. While state claims dipped by 99,000, claims under a special federal program rose by 42,000.

"I think that's a really distressing and concerning sign for the labor market," said economist Nick Bunker of the Indeed Hiring Lab, the research arm of the job search website.

While weekly unemployment applications have fallen sharply from their springtime peak, they're still high by historical standards. And the longer the recession drags on, the more lasting the damage may be.

"Earlier in the crisis there was some optimism that people would return to their job fairly quickly," Bunker said. "What we're seeing now is more indication that lots more people who are unemployed are going to be unemployed for a longer period of time."

Verso Corp., for example, is idling a paper mill in Wisconsin later this month and cutting 900 jobs. The company blames a sharp drop in demand for advertising paper used by retailers, sports teams and the tourist industry — all because of the pandemic. Verso said while the mill could be restarted if conditions improve, the shutdown may be permanent.

What's more, there are few openings for people seeking new jobs. Bunker said listings on the Indeed website are down about 25% from this time last year. That's an improvement from the springtime when listings were down nearly 40%. But Bunker said listings for higher-paid jobs have been slow to recover, likely reflecting employers' uncertainty about where the economy might be six months to a year from now.

"The concern is that the damage starts to ripple out to other parts of the economy that are indirectly affected by the virus," Bunker said.

Many of the federal relief programs approved early in the pandemic assumed the economy and the job market would be well on the road to recovery by now. Relief payments of $1,200 were not intended to cover more than a month or two of expenses. And supplemental unemployment benefits of $600 per week are set to expire at the end of July.

With double-digit unemployment and infections growing by the day, however, policymakers may have to rethink that timeline.

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