The number of unemployment claims across the country have skyrocketed as the world comes to a standstill due to the COVID-19 pandemic.
According to the U.S. Department of Labor (DOL), more than 2.6 million more unemployment claims were filed in the week ending March 21 than the previous week, more than a 1,000 percent increase.
Unemployment claims in Indiana increased by more than 59,000 the week of March 21 compared to the previous week, DOL data shows.
While the country is seeing a large spike in unemployment claims, Michael Hicks, a professor of economics and the director of the Center for Business and Economic Research at Ball State University, said the economy is still in relatively good standing.
“What’s scaring most of us … is the uncertainty, is anxiety about the duration of this,” Hicks said.
Hicks compared the scale of widespread stay-at-home orders to life during World War II, when rationing closed down a “significant” amount of consumer spending.
“If you were a baker or a butcher or a gas station or an auto dealer in 1942, you were put into a recession, but it didn’t look that way because all the people who were unemployed either joined the military or found work in a defense plant,” Hicks said.
He explained that the difference is that rationing during WWII lasted for nearly four years and while there was a boom after the war, it took a lengthy period for the economy to fully recover.
“Most of the economy really isn’t shut down … maybe 40 percent of the economy has stopped … We can do this for about two to three months before we start worrying about lasting damage to the economy,” Hicks said.
He said that the economy is experiencing deferred spending rather than lost spending, meaning it will likely experience a boom once the pandemic is over.
“What we’re going through right now, as bad as it is to the economic data, that doesn’t really give a clear picture of the long term effects, which could be very modest. We could easily be back to where we were in six months or less after the disease goes away,” Hicks said.
Though Hicks said the unemployment rate could jump up to 10 percent or more in the coming weeks, he said many citizens who’ve been laid off could find other jobs during the pandemic.
According to LinkedIn, companies like CVS, Pizza Hut, Walmart, Dollar Tree, Big Lots and Domino’s are all looking to take on more employees, some permanently.
While some local factories, like the General Motors facility in Marion, have cut back on their operations or closed their doors entirely during the pandemic, others, like Café Valley, are still hiring.
According to Café Valley representative Paul Dash, Café Valley has been screening employees as they enter the facility through a designated entrance. Dash also said they’ve created a designated exit and specific break rooms to help control the flow of traffic and better protect their employees.
While some individuals might find different work, Hicks said he knows times will be tough for small businesses and their employees.
He encourages employees to maintain a relationship with their former employers so that they can discuss what to do when these orders and advisories are lifted.
For those who are struggling, Hicks suggests reaching out to lenders or communicating your needs with your banks, utility companies and landlords.
But the COVID-19 pandemic extends to all aspects of life.
“This is an event that has really impacted the entire societal fabric,” Grant County Economic Growth Council Director Tim Eckerle said.
According to Eckerle, local industries are taking a hit, especially food service, as roughly 40 percent of their business is dine-in.
A press release from the American Hotel and Lodging Association estimates approximately 55,846 jobs will be lost in the Indiana hotel industry because of the pandemic.
“As a hotelier in Indiana I have experienced firsthand the tremendous impact the crisis has had on industry. Numerous conventions and sporting events have all canceled. Corporate travel has ceased. After a weak winter, the hope of spring and summer seems bleak. We are reducing our workforce to minimal levels. We are cutting costs. However, there is only so much we can do,” Columbus hotelier Nicholas Sprague wrote in the press release.
While Eckerle said many local companies are following government guidelines and using a “great deal” of energy and resources to help their employees, citizens are feeling the effects of the uncertainty.
Hicks suggests people use this time as an opportunity to get involved in industries that are thriving and greatly needed at this time, like healthcare.
According to LinkedIn, the U.S. healthcare industry had a 35 percent increase in average daily job postings in March compared to January.
“Hospitals are taking extreme measures to staff up: New York called back retired nurses; doctors are reducing elective surgeries, and even med school students can choose to graduate early to join the front lines,” LinkedIn Editor Katie Carroll wrote.
Hicks also said people could work toward becoming first responders, who are also highly sought after at this time.
Although it’s not yet clear when the COVID-19 pandemic will come to a close, Hicks said there’s no indication that the economic effects of the crisis will extend into late 2021.
“This is not the Great Recession,” Hicks said.