During the Great Recession, the Rochester region’s unemployment rate rose sharply but remained in the single digits. This time, it will not be so fortunate.
The state Labor Department’s latest report on initial claims for unemployment benefits, released today, showed 18,808 new filings in the Finger Lakes region for the week ended April 11. That brings the total number of claims here since New York’s coronavirus lockdown began to 67,249—and it does not include cutbacks the University of Rochester announced today.
By comparison, the region’s jobless count in January—the most recent data available—was 26,800, or 4.7 percent of the labor force. If that count remained steady until the coronavirus shutdown went into effect on March 22, the total jobless number in the Rochester labor market has now soared to approximately 94,000—or an unemployment rate approaching 20 percent.
The state defines the labor market here as metropolitan Rochester—Monroe, Ontario, Orleans, Wayne, Genesee, Livingston and Yates counties—plus Seneca and Wyoming counties.
The jobless surge locally mirrors the picture nationwide. This morning, in the U.S. Labor Department’s latest weekly report, more than 5.2 million workers joined the ranks of the unemployed. That means in the last four weeks, the number of initial unemployment claims has reached 22,034,000—or roughly the net number of jobs created in the nearly 10-year period since the end of the Great Recession.
The latest increase was smaller than the 6.6 million filings in the week ended April 4 and the record 6.9 million filing in the week ended March 28, but pushed the U.S. to a level of unemployment not seen since the Great Depression.
Real-time labor market estimates by a pair of professors from Arizona State University and Virginia Commonwealth University put the current U.S. jobless rate at 20.2 percent, up from 4.5 percent in the second week of March.
Rochester’s situation also has much in common with other upstate labor markets. Among them, Western New York—the Buffalo metro area plus Allegany, Cattaraugus and Chautauqua counties—appears hardest hit. In the week ended April 11, its initial unemployment filings jumped by 27,335—bringing Western New York’s four-week total to 97,146, and its jobless rate to approximately 25 percent.
An uncertain outlook
At this point, it is impossible to know whether unemployment will remain at historic levels through the rest of this year, or return to more normal levels when the lockdown is eased. Two economists with the Federal Reserve Bank of New York think the coronavirus economic crisis looks more like a natural disaster than a cyclical downturn.
In an April 10 blog post, Jason Bram and Richard Deitz wrote that “it’s tempting to compare the economic fallout from the coronavirus pandemic to prior business cycle downturns, particularly the Great Recession. … A more appropriate comparison would be to a regional economy suffering the effects of a severe natural disaster, like Louisiana after Hurricane Katrina or Puerto Rico after Hurricane Maria.”
In the wake of Hurricane Katrina in 2005, for example, the unemployment rate in Louisiana surged from 5.4 percent in August to 11.3 percent in September, and remained above 11 percent for three months before falling to a new low of 4.9 percent by January 2006.
Bram and Deitz acknowledged there are “clearly some major differences between the current pandemic and Hurricane Katrina,” but pointed to a number of parallels and argued that “analysts (should) think twice about assuming that every jobless claim translates into a net job loss.”
A new survey of update business leaders, however, suggests a longer-lasting downturn may be in the cards. Results of the Siena College Research Institute survey, released today, show fewer than one-third of top executives expect New York’s economy to return to pre-coronavirus levels of employment and revenue within the next six months.
“Eighty-nine percent of the survey respondents predict somewhat (32 percent) or significantly (57 percent) less revenue,” Siena reported, “and 87 percent forecast somewhat (27 percent) or significantly (60 percent) less profits. Forty percent have already laid off employees and an additional eight percent anticipate more layoffs by August 1.”
Only 5 percent of the upstate business leaders surveyed said their business has not suffered due to the pandemic. Among the others, “35 percent think that their business will recover within six months, a quarter say by the end of 2020 and 35 percent don’t think their business will return to pre-virus levels until 2021.”
Further darkening the outlook, the U.S. Small Business Administration said today that the $350 billion Paycheck Protection Program and smaller Economic Injury Disaster Loan program have run out of money. The PPP was launched a few weeks ago to help businesses with under 500 workers by extending loans that are forgivable if they keep workers on their payroll. The SBA website today posted a notice that the agency “is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.”
A few hours after the state today released the new weekly report on initial unemployment claims, UR—the region’s largest employer—announced furloughs and other steps it will take to deal with the financial impact of the pandemic.
“We hope to minimize the period of time these furloughs will be in effect,” the university’s leadership team said in a statement.
This afternoon, Gov. Andrew Cuomo said all New York State on Pause restrictions and closures will be extended until at least May 15. Clearly, whether the period of unprecedented job cuts at UR and other area employers lasts for weeks or for months is a question no one can answer today.