The second wave of layoffs underway amid coronavirus pandemic
The second wave of layoffs is hitting American workers during a surge in coronavirus cases nationwide, and a Congressional stalemate over stimulus relief, according to a new survey by Cornell University and RIWI.
The researchers conducted the survey between July 23 and Aug. 1, and found that 31% of workers who had been placed back on payrolls after initially being laid off have now been laid off for a second time. Additionally, 26% of rehired workers say they’ve been told that they may be laid off again.
Interestingly, recurrent layoffs were actually more likely to happen in states that have not experienced coronavirus surges recently. The researchers attribute this to underlying economic problems that are exacerbated by the exhaustion of stimulus funds like the Paycheck Protection Program.
“The fact that there were actually more respondents reporting that they were laid off or furloughed twice in ‘healthy’ states, versus surging states, appears to indicate that the repeat layoffs and furloughs are not directly related to the resurgence of the COVID-19 virus (and renewed economic shutdowns in affected states), but are rather linked to overall economic conditions in the U.S. and – likely – the exhaustion of the PPP funds by businesses that had used such loans to place their former employees back on the payroll, whether or not they had worked for them,” the researchers explained.
Since the CARES Act’s Paycheck Protection Program started in April, more than 5 million loans have been taken out, totaling $521 billion. This gave small businesses some welcome relief for a while, but those funds are starting to dry up.
Goldman Sachs predicted in mid-July that 84% of businesses that took PPP loans would run through their funds by the first week of August. The bank also reported that only 16% of loan recipients were very confident that they would be able to maintain their payroll without more help from the government.
To say above water through the rest of the pandemic, small business owners are calling on Congress to pass another round of PPP as well as other measures.
"While the Paycheck Protection Program has provided short-term relief for many, that lifeline is coming to an end," a group of CEOs wrote in a letter to Congress Monday. "Another round of PPP would certainly be helpful for many of these businesses, but the hardest-hit sectors will need much more significant and sustained support."
People who are newly unemployed will also not be able to get the $600 federal unemployment supplement because it expired last week. Democrats and Republicans are debating whether to extend the supplement or replace it, but they don't appear close to an agreement.
