Due to the weak demand, U.S. employers are forced to lay off workers. This keeps new applications for unemployment benefits extremely high despite the reopening of businesses.
The rise of confirmed COVID-19 cases in the U.S., which may be related to the reopening of businesses, makes it hard to see a bright future. According to Fox Business, around 29 million people were collecting unemployment checks at the end of May.
There are companies that are hiring, but there are also those that cut jobs at nearly the same pace.
“There were some businesses that tried to maintain their workforce, waiting to see what would happen as businesses reopened,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. “Even as the economy is picking up they are not seeing a lot of demand and are deciding that they don’t need that many workers.”
A Reuters survey shows that initial claims for state unemployment benefits likely totaled 1.3 million for the week ended June 20th. This is down from 1.508 million in the prior week.
Various industries are restructuring in order to adapt to the many changes, thus causing layoffs and bankruptcies. State and local governments are also cutting jobs.