U.S. railroad Amtrak warns of 2,400 additional job losses without new bailout

  U.S. government-supported passenger railroad Amtrak said on Thursday that without a new government bailout it could be forced to cut more spending and train services which could lead to the loss of another 2,400 jobs.

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Amtrak last month told Congress it needs up to $4.9 billion in government funding for the current budget year, up from the around $2 billion in annual support it usually receives.

The railroad, which said last month it was cutting 2,000 jobs, said on Thursday that without more support from Congress, reduced capital spending would result in the loss of 775 jobs and further reductions in train service by state partners would likely result in 1,625 job losses.

Without the new funding, Amtrak chief executive Bill Flynn said, “we will be unable to avoid more drastic impacts that could have long lasting effects on our Northeast Corridor infrastructure and the national rail system.”

U.S. transit and airline demand has been devastated by a massive falloff in travel due to the coronavirus pandemic.

In April, Congress gave Amtrak a $1 billion bailout after daily ridership fell by 96%.

Amtrak said on Thursday demand remains at about 25% of pre-COVID levels. It forecasts ridership and revenue for the 2020-21 budget year that started Oct. 1 will improve to “about 40% of pre-COVID levels, which is weaker than anticipated.”

U.S. passenger airlines are seeking a new $25 billion bailout to keep tens of thousands of workers on the job, while major U.S. public transit systems have sought $32 billion to keep municipal buses and trains running.

That’s on top of a $25 billion bailout public transit received in April.

Last week, the U.S. private motorcoach, school bus and domestic passenger vessel industries said they collectively furloughed or laid off an estimated 308,000 employees over the last eight months.

“Unlike other modes of transportation, such as airlines, rail and public transit, these transportation industries have not received direct economic relief to date, putting them in peril,” several trade groups said in a joint statement.

Wells Fargo & Co WFC.N said that its diversity initiatives comply with federal employment laws after it received a letter from the U.S. Labor Department questioning whether the steps were unlawful or discriminatory.

The Wall Street Journal newspaper reported on.wsj.com/2GEGkkD on Thursday that the Labor Department is probing companies with federal contracts which have specific goals to increase diversity.

The department’s Office of Federal Contract Compliance Programs (OFCCP) has sent a letter to Wells Fargo, a company spokesman said late on Thursday.

“Wells Fargo is committed to and taking action to become a more diverse and inclusive company. Numerous efforts are underway to implement changes at all levels of the company, and we are confident that they comply with U.S. employment laws”, the spokesman said.

Microsoft Corp MSFT.O received a similar letter last week. It responded on Tuesday by denying the department's suggestion that its plan to bolster diversity, including by investing $150 million and doubling the number of Black employees in high-ranking positions, amounted to illegal race discrimination..

The death of African-American George Floyd in May, after a white police officer knelt on his neck, fueled protests across the United States, prompting companies to confront the issue of inequality.

Late last month, Trump issued an executive order that he said would ban the military, government contractors and federal grantees from some diversity training.

According to the Wall Street Journal, the Labor Department said it will send letters to federal contractors if it felt a probe was needed to confirm companies were not using race- or sex-based hiring preferences or quotas.

 AT&T Inc's T.N WarnerMedia is preparing a restructuring that aims to cut costs by as much as 20% and would result in layoffs, the Wall Street Journal reported on Thursday, citing people familiar with the matter.

The overhaul, which is expected to begin in the coming weeks, would result in thousands of layoffs across Warner Bros Studios and TV channels like HBO, TBS and TNT, according to the report.

“We shared with our employees recently that the organization will be restructured to respond to those changes and prioritize growth opportunities, with an emphasis on direct-to-consumer,” the company said in a statement.

Earlier in August, WarnerMedia said it would cut jobs as part of a broad restructuring focused around its HBO Max streaming business.

The reorganization included the consolidation of its film and TV studios, creation of HBO Max operating business unit and the exit of executives Bob Greenblatt and Kevin Reilly, who oversaw the creation of the streaming business.

The number of Americans seeking unemployment benefits dipped last week to a still-high 840,000, evidence that layoffs remain elevated seven months into the pandemic recession.

Yet economists say they are increasingly dubious about the unemployment claims figures, even though there is little doubt that hiring has slowed and employers have continued to lay off workers.

One reason layoffs remain high is that companies often hold on to workers when a recession begins, if they can, in hopes of outlasting the downturn. Yet if the recession drags on, many will eventually give up and cut jobs.

“Some of these new layoffs are coming from firms that didn’t want or didn’t have to lay people off at first,” said Constance Hunter, chief economist at KPMG. Now, “they have no choice but to start reducing their workforce.”

Consider Luke McCann. He had hoped through September that business would finally pick up at his online marketing company, CollectionAgencyMatch.com, based in Winston-Salem, North Carolina.

It didn’t. So McCann was forced to lay off seven of the 15 staffers at his company, which helps businesses find collection agencies. His revenue had shrunk as small businesses either closed down or decided not to pursue customers who hadn’t paid their bills, McCann said.

A loan from the government’s Paycheck Protection Program had helped McCann stave off cutting workers. But “without more (government help) on the way and demand not picking up, we had to lay off employees to help save expenses to stay in business.”

At face value, the Labor Department’s report Thursday indicated that more than 800,000 people are still being laid off each week, a historically huge number — more than in any week during the 2008-2009 Great Recession. Weekly applications for unemployment benefits have long been considered a proxy for job cuts.

But the flood of layoffs during the pandemic recession and the creation of some new jobless-aid programs have overwhelmed state unemployment agencies. A result is that the jobless claims figures the government has been reporting have become an object of skepticism.

“We can’t view it as real-time job separation data,” said Elizabeth Pancotti, a policy adviser at Employ America, a left-leaning advocacy group, referring to layoffs. “We’re still seeing massive overcounting of initial claims.”

Some states are still processing backlogged applications from this summer, Pancotti noted. California, for example, stopped accepting new claims for two weeks so it could clear a backlog of 600,000 applications that are more than three weeks old.

In many states, the data for initial jobless claims also includes workers who had been laid off previously, then found temporary work or were recalled temporarily — only to lose their jobs again and reapply for unemployment benefits. These repeat applicants account for roughly half of jobless claims in California, according to the California Policy Lab.

Till von Wachter, an economist at UCLA and director of the Policy Lab, said that initial applications can also include workers who have used up their 26 weeks of state unemployment and are transitioning to an extended benefits program that provides three additional months of payments.

And this spring, Congress created a new program, Pandemic Unemployment Assistance, or PUA, that made self-employed and gig workers eligible for unemployment aid for the first time. Yet in many states, to qualify for the PUA program, the unemployed must first apply for regular jobless benefits. Only after they have been rejected under that system can they apply for PUA.

Last week, more than 464,000 people applied for aid through PUA. These figures aren’t adjusted for seasonal trends, so the government reports them separately from the traditional jobless claims. Yet the figure may include some people who applied under the traditional benefits program.

Organized fraud has also been a problem, particularly in the PUA program, in which it’s difficult for states to verify applicants’ incomes. Contractors and gig workers, for example, rarely have W-2 tax forms, which employees in traditional jobs receive.

Thursday’s report from the Labor Department said the number of people who are continuing to receive unemployment benefits dropped 1 million to 11 million. The decline suggests that many of the unemployed are finding work. But it also reflects the fact that some have used up the 26 weeks of their regular state benefits and have transitioned to extended benefit programs.

About 2 million people are receiving aid under a federal extended benefit program created this spring, and an additional 11.4 million people are doing so through PUA. All told, 25.5 million people were receiving some form of unemployment aid in the week that ended Sept. 19, the government said.

Yet those figures are also likely inflated, mostly by double-counting. California and other states have counted retroactive payments under PUA as multiple payments to separate individuals.

“Nobody knows exactly how many people are receiving unemployment insurance benefits right now,” said Heidi Shierholz, policy director at the Economic Policy Institute and former chief economist at the Labor Department. That is a “reminder that we need to invest heavily in our data infrastructure and technology.”

The figures nevertheless point to a flagging recovery and come two days after President Donald Trump cut off talks over a new rescue aid package that economists say is urgently needed. A failure to enact another round of government aid would crimp household income and spending, and some economists say it would raise the risk of a double-dip recession.

In the meantime, the pace of layoffs shows little sign of flagging. Disney said last week that it would cut 28,000 jobs. And American Airlines and United Airlines combined furloughed 32,000 employees last week. Airlines had been barred from cutting jobs as long as they were receiving federal aid, which expired this month. The American Hotel & Lodging Association has said that nearly three-quarters of hotels say they’ll have to lay off more workers without further financial aid.

Congress is still considering extending the airline aid in stand-alone legislation. But there is little sign that a deal will be reached with the White House.

Across the country, hiring has slowed just as federal rescue aid has run out, hampering an economy still climbing out of the deep hole created by the pandemic. Employers added just 661,000 jobs in September, less than half of August’s gain and the third straight monthly decline.

Just over half the 22 million jobs lost to the coronavirus have been recovered, leaving the economy with 10.7 million fewer jobs than in February — a figure that exceeds all the job losses from the Great Recession.

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