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With restaurants, retailers and hotels laying off thousands of Tennessee workers, the number of people filing new claims for unemployment benefits in the state spiked last week by the biggest weekly jump in history.

For the week ending last Friday, Tennesseans filed 39,096 initial claims for unemployment insurance benefits, including 4,211 new claims in the 10-county Southeast Tennessee district around Chattanooga, according to government figures released Thursday. That was up nearly 20-fold from the previous week, when new claims for jobless benefits in the state totaled only 2,702 before most businesses had shut down and laid off staff.

"We're going from 250 to 300 claims a day being filed two weeks ago to already more than 7,000 claims coming in every day — it's a massive increase and I'm afraid it's going to continue for some time," said Dr. Bill Fox, director for the Boyd Center for Business and Economic Research at the University of Tennessee.

In Chattanooga, the region's biggest hotel chain, Vision Hospitality, gave notice to the state that it has laid off 756 employees. The job cuts will temporarily idle nearly half of the staff Vision employs to operate and develop more than 40 hotels across eight states, including 15 hotel and apartment properties in Chattanooga.

The hotel industry has been especially hard hit, with most travel suspended indefinitely and major attractions and convention facilities all closed. Chattanooga area companies have already announced more than 2,000 job cuts in the past month and more are expected as the virus threat continues to shut down many business operations and is likely to slow the economy through at least this summer.

Nationwide, the U.S. Department of Labor reported a similar jump with nearly 3.3 million new unemployment claims filed last week and more expected to come this week.

"These latest unemployment claims are really just the first wave of bad numbers that are going to be coming in because of the impact of the coronavirus," said Jeffrey M. Humphreys, director at the Center for Economic Growth at the University of Georgia. "We've experienced an unprecedented deliberate shutdown of the U.S. economy and that is costing millions of jobs nationwide."

  

Major announced job cuts in area:

— Vision Hospitality Group, 756 jobs

— Mount Vernon Mills in Alto, Ga., 600 jobs

— Shaw Industries Plant 23 in Dalton, Ga., 275 jobs

— 3H Hotels, 200 jobs

— Tennessee Aquarium, 112 jobs

— Creative Discovery Museum, 56 temporary jobs

Source: WARN notice filings in Tennessee and Georgia and announced layoffs

 

In Georgia, initial jobless claims filed last week more than doubled from 5,445 to 11,746, and economists expect more claims as the economy continues to shrink.

Humphreys said he expects the U.S. economy will decline by as much as 20% this spring and is likely to continue to contract this summer in what could be the biggest short-term drop in economic activity since the government has kept comparable data.

"But this is not like the Great Depression," he said. "It's more like a global snowstorm that shuts down the economy for an indefinite period. But once the storm or pandemic passes, I think we'll see a relatively rapid recovery because there is nothing fundamentally wrong with the economy."

As job losses mount, some economists say the nation's unemployment rate could approach 13% by May. By comparison, the highest jobless rate during the Great Recession, which ended in 2009, was 10%.

"What seemed impossible just two weeks ago is now reality," said Nancy Vanden Houten, an economist at Oxford Economics, a consulting firm. "The U.S. economy will experience the largest economic contraction on record with the most severe surge in unemployment ever."

The economic deterioration has been swift. Tennessee began 2020 with the lowest January jobless rate in modern history at only 3.3% and reported Thursday that the jobless rate last month was still at a historically low 3.4% rate. Employers across Tennessee added 4,800 jobs during February and added another 22,108 jobs over the past 12 months ahead of the shutdowns that began this month as schools closed, conventions were scrapped and ultimately non-essential businesses in many areas of the state were forced to close.

Last month, ahead of those closings, Georgia's jobless rate remained at only 3.1%.

  

Many people who have lost jobs in recent weeks, though, have been unable to file for unemployment aid because state websites and phone systems have been overwhelmed by a crush of applicants and have frozen up.

In Tennessee, the Department of Labor and Workforce Development said it is processing jobless claims as quickly as possible to determine eligibility and distribute benefit payments.

The maximum weekly unemployment benefit in Tennessee is $275 before the deduction of federal taxes. Claimants receive this benefit through a debit card or direct deposit to a bank account.

In Executive Order No. 15, Tennessee Gov. Bill Lee temporarily suspended the state's one-week waiting period to receive benefits. Typically, the state pays the first week of benefits after four consecutive weekly certifications. During this temporary suspension, the state will pay the first week of benefits as soon as an unemployment claim is approved.

Although Tennessee is speeding its payment of jobless benefits, the maximum amount paid to unemployed people who are seeking other work, $275, is the fifth lowest of all states.

The stimulus bill approved by the U.S. Senate and now being considered by the U.S. House would boost maximum jobless benefits in all states to $600 a week and extend the period for collecting unemployment benefits from a maximum of 26 weeks up to 39 weeks.

Although the boost in jobless benefits should help ease the economic losses for those losing their jobs, Fox said it could also discourage some low-wage workers from looking for other jobs since the $600 weekly benefit check would be equal to a $15-an-hour job with a 40-hour workweek.

"[The Senate proposal for higher jobless benefits] puts a lot of money into people's hands relative to what they would have previously gotten if they were unemployed, and that will help a lot of people," Fox said. "On the other hand, it offers some people more compensation than they would have gotten working at their old jobs [if they are paid less than $15 an hour]. Clearly, we want people who lose their jobs through no fault of their own to be able to pay their bills. On the other hand, we want an economy that still works and gives people an incentive to find jobs."

Lowest jobless benefits

The states offering the lowest unemployment benefits are:

1. Mississippi, maximum of $235 a week

2. Arizona, maximum of $240 a week

3. Louisiana, maximum of $247 a week

4. Alabama, maximum of $265 a week

5. Florida, maximum of $275 a week

5. Tennessee, maximum of $275 a week

States that provide unemployment compensation for a shorter duration:

Florida – 12 Weeks

North Carolina – 12 Weeks

Missouri – 13 Weeks

Georgia – 14 Weeks

Kansas – 16 Weeks

Source: Fileunemployment.org

 

To help handle the surge in new claims, the Tennessee Department of Labor and Workforce Development refocused its activity last week, shutting down public visits to its 23 local job centers, including its office at Eastgate Center in Chattanooga, and refocusing 200 workers to handling and processing the surge in jobless benefit claims.

Jeff McCord, commissioner for the Tennessee Department of Labor and Workforce Development, said the additional focus on processing claims, rather than job postings, assistance and counseling done at local sites, will be key as the virus hits both the physical and fiscal health of Tennessee. Workers in the department also are moving to work at home, he said.

"We are shifting resources to align with our greatest need," McCord said. "The changes we are making will go a long way in keeping up with the demand created."

Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.

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