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Analysis

As job losses mount, normal remains a long way off

David Robinson

With more than one of every four local workers unemployed, the hits keep coming to the local job market.

And with each one, the hope for a quick return to normal becomes more unlikely, especially with job losses across the Buffalo Niagara region topping 11,000 for six straight weeks.

It's likely to be far more gradual.

The hope still is that many of the job losses will only be temporary, with businesses rehiring many of those workers as the economy gradually opens back up. A survey of more than 1,800 Western New York businesses released this week by the Buffalo Niagara Partnership found that more than 40% of those companies had cut staff, while another 40% had either cut wages or reduced hours. Nearly half have imposed a hiring freeze.

The silver lining, said Dottie Gallagher, the Partnership's president, is that only about 16% of the companies said the job cuts they had made are permanent.

"The combination of temporary layoffs and furloughs indicates that there's confidence that these people will get their jobs back," she said.

There also are some hopeful signs that the deluge of job losses is easing slightly. General Motors resumed production on a limited basis at its Lockport auto parts plant, recalling 235 workers. Ford Motor Co. will start stamping metal parts for cars and trucks again, beginning on May 18.

When that will happen more broadly, though, is anyone's guess. Erie County Executive Mark Poloncarz said this week that the lockdown is unlikely to be lifted before June 1 and the state's plan to ease the restrictions in four phases, with at least two weeks between each one, means that a local Phase 3 business, like a restaurant or a hotel, could be looking at July 1 before they would be allowed to reopen.

Even then, it won't be a full reopening. Restaurants will likely have fewer tables and need fewer workers, said Lindsey Piegza, the chief economist at investment firm Stifel. Stores limiting the number of customers may need fewer clerks. And the longer it drags on, the greater the chance that the smallest businesses won't be able to reopen at all, turning temporary job cuts into permanent ones.

"The smaller the business, the bigger the risk," said Katie Bender, the Eric Mower and Associates research director who helped compile the Partnership survey.

With so much uncertainty around how quickly the lockdown will ease, businesses of all sizes are hunkering down. They are cutting costs wherever they can. Three of every five businesses in the Partnership survey said they were postponing planned investments, with two-thirds of those delays expected to stretch into 2021 or indefinitely.

"This is not great news. This is really about how quickly we come out of this as a community," Gallagher said. "When you talk about investments, that's really about how do we get back to normal."

That's a long way away.

Nearly 11,400 people across the Buffalo Niagara region lost their job last week, bringing the total job losses since March 15 to a staggering 119,000, according to state Labor Department data.

That's enough to push the unemployment rate to around 26%, according to a Buffalo News analysis of local jobless claims and employment data.

That's worse than unemployment during the Great Depression, which peaked around 25%. And it's nearly twice as bad as it was during the worst month of the Great Recession a decade ago.

In all, one of every nine local workers has filed for unemployment benefits in a period of just seven weeks as efforts to contain the coronavirus closed many businesses and put restrictions on others.

Equally troubling, the wave of workers filing for jobless benefits shows no sign that it is slowing to anything close to a normal level. Claims spiked above 33,000 during the last week in March and averaged around 22,000 a week during the first half of April before stabilizing at around 12,000 a week for the last three weeks.

That's still about 10 times higher than a year ago and it's an indication that the job cuts are continuing. It also reflects the difficulty many workers are having in signing up for jobless benefits. A worker is counted as having filed a claim if they have started the process. But economists believe there are many workers who haven't been able to file because the state's system is swamped with people filing claims.

The national employment report for April, released Friday, provided the first official evidence of the scope of the job losses across the country, with unemployment hitting 14.7%, more than triple the March jobless rate of 4.4%, as 20.5 million jobs disappeared.

But that snapshot only captured a portion of the devastation. The April data is based on information compiled during a week during the middle of the month. It does not include job losses that happened later in the month – and we know from the weekly jobless claims data that workers continue to lose their jobs at an alarming pace.

That context is important to remember next week, when the state Labor Department will release data that will reveal how many jobs across the Buffalo Niagara region disappeared last month. That report will show staggering losses, with somewhere around 80,000 local jobs vanishing in a single month. But that report will only tell part of the story, since it will reflect job losses that took place through mid-April, and none that happened beyond.

That's important because we know from the weekly jobless claims data that nearly 24,000 people have lost their jobs during the last two weeks alone. That's almost as many people who were out of a job and looking for work locally in mid-March, before the coronavirus lockdown hit with full force.

As long as that continues, normal will be a long way off.

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