Restaurant owner

The number of people seeking unemployment aid soared in early January to 965,000, the most since late August and a sign that the resurgent virus has likely escalated layoffs.

The latest figures for jobless claims, issued last week by the Labor Department, remain at levels never seen until the virus struck. Before the pandemic, weekly applications typically numbered around 225,000. They spiked to nearly 7 million last spring, after nationwide shutdowns took effect. Applications declined over the summer but have been stuck above 700,000 since September.

The high pace of layoffs coincides with an economy that has faltered as consumers have avoided traveling, shopping and eating out in the face of soaring viral caseloads. More than 4,300 deaths were reported last Tuesday, another record high. Shutdowns of restaurants, bars and other venues where people gather in California, New York and other states have likely forced up layoffs.

Some states and cities are resisting shutdowns, partly out of fear of the economic consequences but raising the risk of further infections. Minnesota allowed in-person dining to resume last week. Michigan is poised to do the same. Some bars and restaurants in Kansas City are extending their hours.

Initial unemployment claims

Seasonally adjusted figures

Economists say that once coronavirus vaccines are more widely distributed, a broader recovery should take hold in the second half of the year. The incoming Biden administration, along with a now fully Democratic-led House and Senate, is also expected to push more rescue aid and spending measures that could accelerate growth.

Yet many analysts also worry that with millions of Americans still unemployed and as many as one in six small companies going out of business, people who have been hurt most by the downturn won’t likely benefit from a recovery anytime soon.

“While prospects for the economy later in 2021 are upbeat, the labor market recovery has taken a step backward,” said Nancy Vanden Houten, an economist at Oxford Economics, “and we expect claims to remain elevated, with the risk that they rise from last week’s levels.”

Many people in the arts and entertainment fields have lost most or all of their incomes as the coronavirus has shut down performance venues.

In addition to recent first-time applications for unemployment aid, the government said last week that 5.3 million Americans are continuing to receive state jobless benefits, up from 5.1 million in the previous week. It suggests that fewer people who are out of work are finding jobs.

About 11.6 million people received jobless aid from two federal programs in the week that ended Dec. 26, the latest period for which data is available. One of those programs provides extended benefits to people who have exhausted their state aid. The other supplies benefits to self-employed and contract workers.

Those two programs had expired near the end of December. They were belatedly renewed, through mid-March, in the $900 billion rescue aid package that Congress approved and President Donald Trump signed into law. That legislation also included $600 relief checks for most adults and a supplemental unemployment benefit payment of $300 a week. Congressional Democrats favor boosting the checks to $2,000 and extending federal aid beyond March, as does President-elect Joe Biden.

The losses last month were concentrated among restaurants, bars, hotels and entertainment venues – places that provide in-person services that some governments have restricted or that consumers are avoiding. Educational services, mostly colleges and universities, also cut workers in December. So did film and music studios.

Those job losses have fallen disproportionately on women, who are more likely to work in the affected industries. They are also more likely to have quit jobs to stay home and care for children, many of whom are engaged in online schooling.

Most other large industries, though, reported job gains. Many economists had expected last spring that job losses would spread to more industries. Though all sectors of the economy initially laid off workers, most of them have avoided deep job cuts. Manufacturing, construction and professional services like engineering and architecture, for example, all added jobs in December.