%1

United Airlines yesterday said that it is warning about 36,000 front-line employees — more than a third of its staff — about potential furloughs as the coronavirus pandemic continues to roil travel demand, CNBC.com reported. The potential for the mass job cuts, the largest announced by a U.S. airline so far, comes as signs of a recovery in air travel fade with new coronavirus infections and travel restrictions. Other airlines have warned employees about possible staff reductions and are likely to follow suit with similar formal notices in the coming weeks. Federal law requires employers to give staff notice about possible layoffs or temporary furloughs 60 days in advance. United and other airlines that took $25 billion in federal payroll support are prohibited from laying off, furloughing or cutting the pay rates of staff until Oct. 1. In a memo sent to employees Wednesday, United said workers who are informed that their jobs are at risk might not ultimately get furloughed. The company said it will exhaust voluntary measures before cutting employees. Some of the furloughed staff may be called back to work but that will depend on a return to demand, which some industry executives say could take years. 

Technology startups have been laying off tens of thousands of workers to cope with the economic fallout of the coronavirus pandemic, potentially blunting a key innovation pipeline for the enterprise information-technology market, according to industry analysts, the Wall Street Journal reported. Max Azaham, a senior research director at research and consulting firm Gartner Inc., said that the coronavirus has made startup investors far more risk averse, resulting in a sharp downturn in investment capital for IT companies looking to raise less than $100 million. As of last week, nearly 70,000 tech-startup employees world-wide had lost jobs since March, led by ventures in the transportation, financial and travel sectors, according to a report by U.K.-based brokerage BuyShares.co.uk. Startups in the San Francisco region, including Silicon Valley, have shed more than 25,500 jobs, including layoffs at high-profile companies such as Uber Technologies Inc., Groupon Inc. and Airbnb Inc., the report said. Uber in May announced more than 6,500 layoffs, cutting roughly a quarter of its workforce. A month earlier, Lyft Inc. said it would cut about 17 percent of its workforce, furlough workers and slash pay in cost-cutting efforts to cope with lost sales during the coronavirus pandemic.

The number of Americans dismissed from their jobs fell sharply in May to match levels recorded before the coronavirus pandemic and related shutdowns caused widespread layoffs, the Wall Street Journal reported. In May, 1.8 million workers were laid off or otherwise discharged from their jobs, the Labor Department said yesterday. That was down from 7.7 million in April and 11.5 million in March. May’s dismissals were in line with the numbers reported in January and February, before the pandemic shut swaths of the U.S. economy. Yesterday’s report showed hirings and the number of open jobs also rose in May from April, signs that the labor market was healing this spring. However, the 5.4 million openings in May were dwarfed by the 21 million Americans unemployed that month. “Layoffs and discharges are settling back to levels similar to those we saw before the virus, and hiring snapped back as employers recalled workers,” said Nick Bunker, an economist with job-search website Indeed. But employer demand for workers moving forward is depressed, he said, noting job openings are down 23 percent compared with February. The numbers, which reflect the job market through the last business day of May, are consistent with other measures showing that hiring picked up and layoffs eased late this spring. The data don’t capture the recent increase in COVID-19 cases in several states and related moves by governors to halt or reverse plans to reopen their economies. The separate monthly jobs report, released last week, showed U.S. employers added about 7.5 million jobs to payrolls in May and June, after losing 22.2 million in March and April.

There is a growing recognition across party lines that Congress will need to spend more money, and soon, to continue to prop up the American economy during the coronavirus recession, the New York Times reported. But there is little consensus on what that next aid package will look like and how quickly it will arrive before the end of summer, and there is a sense among Republicans and Democrats that the next bill will spend far less to help people and businesses than the nearly $3 trillion that Congress approved in March in a series of rapid-fire bills. Some economists say that lawmakers are risking further damage to an already fragile recovery by not moving more quickly. The unemployment rate has dropped from its April peak but was still at 11.1 percent in June. Forecasters at the Congressional Budget Office said on Thursday that they expected the economy to shrink by 5.9 percent this year, a contraction that would be more than twice as large as the one the U.S. experienced during the Great Recession in 2009. Federal Reserve officials are worried that a possible “second wave” of the pandemic would further depress economic growth in a way that would be “more severe and protracted” than the current forecast, according to minutes from their most recent meeting published on Wednesday. Real-time indicators of shopping patterns and business openings suggest that a once-brisk economic rebound stalled in June as the virus began spreading more rapidly in Texas, Florida and other states.

Of the 87 firms in the S&P 500 to announce staff reductions from early March through the end of June, 65 chose to furlough workers, according to an analysis of securities filings by data provider MyLogicIQ, the Wall Street Journal reported. In June, 10.6 million workers were temporarily laid off, meaning they expected to be recalled to their jobs, down from a peak of 18.1 million in April, according to the U.S. Labor Department. The jobless rate fell to 11.1 percent from 13.3 percent a month earlier, the department said. Even though a furlough is a continuing expense, the costs of one-time layoffs can add up quickly, outweighing the intended benefit, said Richard Cardillo, principal for the Hackett Group, a consulting firm. A layoff takes time to execute and typically involves some lump-sum severance payment to terminated workers. And if the company has to rehire staff a few months later as demand ramps up, those recruiting and training expenses add to the cost of the layoff, Cardillo said. In such instances, a furlough is more cost-effective, he said. Furloughs are also treated differently under U.S. labor laws. A furlough is considered a temporary action and can be executed with little delay. By contrast, federal and state laws require companies to give workers 60 days of notice or more before a layoff under certain circumstances. A company’s cash balance ultimately dictates whether workers are furloughed or laid off, Cardillo said. Companies that don’t expect revenue to recover to pre-pandemic levels may be forced to lay off employees who were temporarily furloughed, he said.

The U.S. Treasury Department has paid out more than $100 billion in unemployment benefits in June, the most for a single month since the pandemic started and underscoring the importance of federal relief efforts to shore up a battered job market, Bloomberg News reported. The U.S. Treasury paid out $108.5 billion in unemployment benefits in June — the most on record dating back to 2005 — according to the department’s latest daily statement on Tuesday. That exceeded the $93.6 billion in May and $48.4 billion in April as the government continues to play catch up with the backlog in processing claims due to an overwhelming number of people applying for benefits. States have said that claims from as early as the start of February are finally making their way through the system. And with the average weekly claim amounting to a little less than $1,000 — which includes a temporary $600 pandemic benefit — backdated checks could amount to thousands of dollars. Despite the surge in payments in June, the numbers still fall short of the estimated $141.2 billion that should have been paid during the month, according to Bloomberg calculations based on weekly unemployment filings and the average size of those claims. The total estimated shortfall since March, when pandemic-related job losses began, now comes to about $105.3 billion, according to Bloomberg calculations.

U.S. President Donald Trump said yesterday that he supports another coronavirus stimulus bill but wants it to include incentives for Americans to go back to work, setting up a clash with Democrats in Congress over jobless benefits, Reuters reported. Trump said he supports direct payments to individuals as part of the so-called Phase 4 stimulus package. “We want to create a very great incentive to work. So, we’re working on that and I’m sure we’ll all come together.”  The remarks indicate the Trump administration will oppose an effort by Democrats in Congress to renew a $600 supplement to weekly jobless benefits set to expire at the end of July that was contained in earlier coronavirus relief legislation. Many Republicans have argued that the supplemental benefit encourages workers to remain unemployed and they would prefer to provide a benefit for workers returning to the job. Trump said that the structure of the last round of financial aid to struggling Americans created a disincentive for people to return to work. Administration officials have said they will calibrate their response in terms of further stimulus based on economic data set to roll in over the next couple of weeks. Negotiations over another relief bill are not expected to pick up until Congress returns from a break for the July 4 Independence Day holiday.

More than 40 million workers have filed for unemployment benefits since the early days of the coronavirus pandemic — over seven times the number of requests in all of 2019. And all of those claims have been convenient cover for identity thieves filing bogus applications that could cost billions of dollars, the New York Times reported. “Fraudsters have been able to hide in the flood of data,” said Pam Dixon, executive director of the World Privacy Forum, a public interest research group. “It is a perfect storm of identity fraud. Anyone who has experienced a major breach in the past three or four years could fall victim to this.” The coronavirus has made the unemployment system, which is administered by the states, an attractive target in other ways, too: The CARES Act relief package added an extra $600 a week to successful claims and expanded eligibility to self-employed and similar workers, who are not subject to the same employment verifications that typically apply. Having your application flagged for review doesn’t necessarily mean someone else tried to pose as you — it just means your state thought it warranted further inspection. Fraudulent claims have forced states to dial up their scrutiny and deploy systems that mark potentially suspicious claims.