As coronavirus cases rise, jobless claims and bankruptcies also continue to climb, despite the Paycheck Protection Program (PPP).
Initial claims for people filing for jobless benefits, a proxy for layoffs, reached a seasonally adjusted 742,000. That is an increase of 31,000 claims up from the 711,000 filed for the previous week.
The coronavirus pandemic has dramatically increased the number of unemployment claims from their standard rate. According to The Wall Street Journal, the unemployment level is three times higher than the normal rate of roughly 210,000 jobless claims filed each week in the first two months of 2020.
“Momentum in the economy, all else equal, should continue, but the virus might cause a rise for a few weeks, which then will dip down as the virus’s spread gets better,” said Michelle Meyer, head of U.S. economics at BofA Global Research.
According to data compiled by Johns Hopkins University, the U.S. reported nearly 162,000 new coronavirus cases for Tuesday, Nov. 17. That marks the 11th consecutive day that newly reported cases of the coronavirus surpassed 130,000.
The number of deaths from coronavirus has remained above 1,000 deaths a day for eight of the last nine days, according to a seven-day average of data compiled by Johns Hopkins.
Part of the problem could be attributed to the increased bankruptcies that have resulted from the companies which have gone bankrupt following the funds from the PPP loan drying up.
However, in a Wall Street Journal analysis of government data and court filings, it appears that roughly 300 companies that received as much as half a billion dollars in pandemic-related government loans have filed for bankruptcy. That means that about 285 medium-sized companies went under and probably thousands of smaller companies as well.
The bankruptcies mean that at least 23,400 jobs are no longer available to the American populous, if not more.
These bankruptcies also mean that a large junk of the loans will not be repaid. The Wall Street Journal estimates that the federal government awarded between $228 million and $509 million to companies that ultimately went bankrupt.
The problems facing the PPP’s failure to keep Americans securely employed the way it was intended to does not even account for the fraud facing the program.
The Small Business Administration’s inspector general counted tens of thousands of companies that received PPP loans for which they appear to have been ineligible. Such companies include those created after the pandemic began, businesses that exceeded workforce size limits of roughly 500 employees or fewer, or those listed in a federal “Do Not Pay” database because they already owe money to taxpayers.
In addition to the issues faced by small companies going bankrupt, larger companies continue to announce job cuts for their employees. In the last few weeks, companies including Boeing, Walt Disney Company’s ESPN, and Exxon Mobil Corp. all announced rollbacks and furloughs for employees.