Shockingly high jobless claims figures have become surprisingly common.
Another 6.6 million people filed initial claims for unemployment last week, according to new federal data released Thursday.
It was the third record number in as many weeks, bringing to nearly 17 million the number of newly unemployed Americans. That’s about 11% of the total labor force.
How many of those unemployed are restaurant workers is uncertain, but the number appears to be staggering.
According to a recent survey from the National Restaurant Association, for instance, about 44% of restaurants are temporarily closed, and another 3% are permanently closed. And many restaurants that remain open have cut staff as they’ve reduced operations.
It doesn’t take long from there to suggest a potentially huge number. In February, the restaurant industry employed about 12.2 million people. It’s entirely possible that 6 million of those have lost their jobs because of the coronavirus shutdown. That would reduce the industry’s employment to levels not seen since the early 1990s.
What it looks like in a few weeks remains to be seen, however. Many restaurants are expected to bring people back to comply with new federal disaster relief loans.
Huge numbers of restaurant companies applied for the loans, and they are required to spend 70% of the funds on payroll. That suggests a surge in reemployment in the coming months, though some operators might wait until they’re closer to reopening so the workers have something to do.
Still, the number of people joining the unemployment line is indicative of the fast pace of the shutdown. In short order, as state governments began restricting Americans’ movement and gatherings, the economy has largely shut down, leaving huge swaths of the country without work.
How quickly it’s able to recover once those restrictions are lifted is uncertain. It will take a while for many workers to be brought back, and restaurants will need suppliers to ramp up production themselves.
Joel Naroff, president of Naroff Economic Advisors and an economist for Black Box Intelligence, believes there could be a “very strong” initial surge in business once the economy does reopen.
But he also believes that could be a “head fake.”
“We need to look not at the first months after reopening but the following six to 12,” he said in a statement. “That is when economic fundamentals take over.”
He said unemployment could hit 20%, and it could take years to return to a normal level.
For restaurants, the outlook is simple: Any initial surge seems likely to be followed by an economy that is nowhere near its pre-COVID-19 levels. So while there may be an initial spike in demand, it could wane because so many consumers will still be out of work.