Payroll services firm ADP reported that private payrolls expanded in June as pandemic stay-at-home orders lifted and employees returned to work, rebounding from a troubling drop in May, the Washington Post reported. The nation’s private employers expanded by more than 2.37 million positions in June, according to ADP. It also revised its May figures to show a net gain of 3.1 million jobs instead of the loss of 2.76 million reported last month. Still, the gains are tenuous — stores, restaurants and other businesses that were allowed to reopen weeks ago are shutting down as coronavirus infections spike, leading to new layoffs. California, Florida and Texas have implemented new policies that partly restrict restaurant or bar service, and at least nine other states have postponed or slowed reopening plans. The monthly ADP report, produced in collaboration with Moody’s Analytics, noted that small businesses (those with fewer than 50 employees) added 937,000 jobs. Franchises saw a 4,500-job increase, with growth at restaurants, auto dealers and parts sellers and declines in food retailers, business services, accommodations and real estate.
The top Republican in the U.S. House of Representatives said yesterday that it would not be productive to extend extra unemployment benefits that were included in coronavirus relief legislation earlier this year but that expire on July 31, Reuters reported. “I don’t think it’s productive to extend the added money from the federal government. We’re finding numerous people... that it’s becoming a hardship for individuals to go back to work,” said House Minority Leader Kevin McCarthy (R-Calif.). Republicans and Democrats have been debating over what else needs to be done to help the country recover from the economic effects of the novel coronavirus, which led to business closures that left millions of Americans out of work. McCarthy was referring to statistics showing many Americans are paid more thanks to the extended unemployment benefits than they earned when they were at work. Instead, he said, the focus should be on getting people back to work. The loss of the safety net of $600 per week looms well before a sustained recovery is likely to take hold from the sudden and deep recession brought by the pandemic.
At least 4 million private-sector workers have had their pay cut during the pandemic, according to data provided to the Washington Post by economists who worked on a labor market analysis for the University of Chicago’s Becker Friedman Institute. Workers are twice as likely to get a pay cut now than they were during the Great Recession, according to the group’s analysis of data from the payroll processor ADP. Salary cuts are spreading most rapidly in white-collar industries, which suggests a deep recession and slow recovery since white-collar workers are usually the last to feel financial pain. Companies have also trimmed employee hours, leaving many hourly wage workers with leaner paychecks as well. More than 6 million workers have been forced to work part time during the pandemic even though they want full-time work, Labor Department data show. Widespread pay cuts are highly unusual. In downturns, firms typically lay off workers rather than dealing with the administrative challenges and morale effects of slashing pay across the board. But as the United States faces the worst economic crisis since the Depression era, some business leaders have tried to save jobs by cutting pay between 5 and 50 percent. The median wage reduction was 10 percent, economists who worked on the Becker Friedman Institute study found.
Twelve midsize to large corporations — all with more than $10 million in debt — filed for chapter 11 protection during the third week of June, another consequence of the coronavirus pandemic and continued trouble in America’s oil industry. The filings represent the highest weekly total of the year, and experts believe this is just the beginning of a bankruptcy tsunami that will wash over the country’s largest companies this summer and then drench both smaller businesses and individuals if government stimulus money dries up, USA Today reported. “I very much expect to see the numbers continue to rise” said Ed Flynn, a consultant for the American Bankruptcy Institute, a nonpartisan research organization. The types of companies affected are unsurprising. Since the start of the pandemic, they have included businesses that consumers have studiously avoided, from rental car companies, restaurants and department stores to gyms and health care companies offering elective surgeries and procedures. At least 24 oil and gas companies filed from April through June — nearly twice as many as during the first three months of the year, according to Haynes and Boone LLP, an international law firm based in Texas. Four of those companies — Texas-based NorthEast Gas Generation, Colorado-based Extraction Oil & Gas, and Chisolm Oil and Gas and Chesapeake Energy, which are both from Oklahoma — filed in the last two weeks of June. “This trend should continue through the remainder of 2020 and into 2021,” said Charles Beckham, a partner in Haynes and Boone's restructuring practice. “Unless commodity prices have a majestic increase, many producers will seek relief in bankruptcy court with the hope that will bring them back to a rational place where they can continue to produce and service their debt.” Melissa Kibler, senior managing director in the Chicago office of Mackinac Partners — a turnaround and restructuring firm — also believes the U.S. economy is at a turning point and bankruptcy courts will play a major role in determining the way forward. “Any time you have a significant disruption like this it’s going to create winners and losers and systemic change,” Kibler said. “We have industries that are evolving, and on top of that we have overlaid the COVID pandemic and that has forced a lot of changes.” Read more.
Creative freelancers — with little job protection and incomes reliant on people leaving their homes — have been some of the hardest hit in the coronavirus-driven recession, according to economists, the Wall Street Journal reported. Performers, production crews, ride-share drivers and personal trainers were among the first to lose work and will likely be among the last to regain lost ground in the coming months, experts say. “These freelancers, they suffer more because they can’t rely on the big corporation to protect (them),” said William Yu, an economist at the UCLA Anderson School of Management. That is particularly bad news for Los Angeles, which has the country’s second-highest concentration of high-skilled creative freelancers after Nashville, according to an analysis from Fiverr International Ltd., which runs a website connecting freelancers and employers. L.A. had the sixth highest unemployment rate among major metropolitan areas in April, according to the most recent update from the U.S. Bureau of Labor Statistics. State figures for May put Los Angeles-area unemployment at nearly 21 percent. Some freelancers in L.A. say that they are thinking of leaving entirely, raising questions about the future of a city long full of creative workers who pay the bills with second, third, and fourth jobs. Nashville and New York, the other cities with highest concentrations of creative freelancers, are also outpacing national unemployment.
A properly drafted union contract still failed to leave a company officer with a nondischargeable debt for failing to make employer contributions to a union welfare fund.
Millions of Americans face a cash cliff this summer as emergency unemployment benefits instituted by the CARES Act — which lifted U.S. consumer incomes by a record 10.8 percent in April — expire, Reuters reported. The loss of that safety net looms in the weeks ahead, well before a sustained recovery is likely to take hold from the sudden and deep recession brought on by the novel coronavirus. Personal income dropped 4.2 percent in May, data Friday showed. The $600 supplement Congress added to weekly unemployment benefits is due to expire on July 31. Without new support, recipients face a substantial loss of income — particularly devastating for those who worked in hard-hit sectors like hospitality where new jobs are scarce. During high unemployment and a still-raging pandemic, the end of enhanced jobless benefits could drag on consumer spending, set off a wave of missed rent and mortgage payments and translate to a slower recovery, economists said.
Macy’s is eliminating about a quarter of its corporate workforce, slashing 3,900 white-collar jobs in a sweeping effort to cut costs during the coronavirus pandemic, the Washington Post reported. The layoffs announced yesterday come just months after the beleaguered retailer announced it would close 125 stores — about a fifth of its total — and shed 2,000 positions after a disappointing holiday season. The company also is scaling back staffing at its Macy’s and Bloomingdale’s stores, distribution facilities and customer service centers, but says that it will “adjust as sales recover.” The department store chain projected the moves would save it $630 million a year. The pandemic “has significantly impacted our business,” chief executive Jeff Gennette said in a statement. “While the reopening of our stores is going well, we do anticipate a gradual recovery of business. … We know that we will be a smaller company for the foreseeable future.”
Hundreds of thousands of Americans who have lost their jobs during the coronavirus pandemic could be confronting an added barrier as they seek to rejoin the workforce: a bankruptcy on their record, the Wall Street Journal reported. Federal law allows private employers to turn down a job applicant because of a past bankruptcy filing, which employers can ask about on a job application or learn about through a credit check. Some business groups support the practice, saying that there are instances when the information is relevant, such as in hiring for positions that handle money. Consumer advocates disagree, saying that bankruptcy isn’t necessarily a sign of financial recklessness, but rather is frequently the unintended consequence of health problems or a divorce — or this year could involve a business done in by the pandemic. “There are millions of people, some who may have to file for bankruptcy as a result of [the pandemic], that could be adversely affected when they try to re-enter the job market,” said Tara Twomey, executive director of the National Consumer Bankruptcy Rights Center. While it isn’t clear how many of the 21 million people currently unemployed may have filed for bankruptcy, University of Illinois at Urbana-Champaign law professor Robert Lawless says that the number could exceed 750,000 based on his estimate that at least 3.6 percent of the U.S. adult population has filed for bankruptcy in the last 10 years. An average of about 800,000 people filed for bankruptcy annually during the last five years, a figure that is expected to rise as the U.S. economy falters.
