Study shows second wave of layoffs underway

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A person looks inside the closed doors of the Community Job Center in Pasadena, California, during the coronavirus outbreak on May 7, 2020. (AP / Damian Dovarganes)

(NEWS10) — A study released Tuesday indicates that workers who’ve returned to work after a widespread first round of layoffs and furloughs caused by the pandemic are already facing another round.

A real-time survey collected data from July 23 to August 1 demonstrates that employers who have returned workers to their payrolls are renewing layoffs. The study tested whether employees were endangered by the fact that most employers have already burned through $521 million in forgivable Paycheck Protection Program loans through the CARES Act.

A condition of forgiveness for those loans is using the funds to keep workers on the payroll, or return them to it.

The study found that:

  • 37%, reported having been laid off or furloughed since March 1
  • 31% of workers report being laid off a second time
  • 26% have been told by employers that they are at-risk for another layoff
  • 57% said they were back on payroll after an initial dismissal
    • 39% of those back on payroll report not actually being asked to return to work even though they were being paid
  • 28% of respondents, working and non-working consider themselves self-employed
    • 32% of self-employed respondents received federal Pandemic Unemployment Assistance

The study also comparing “healthy” states—which are not on New York’s travel advisory—to “surge” states that are on the travel advisory. In “healthy” states, there were more respondents who said they’ve been laid off or furloughed twice. The study’s author’s suggest that indicates that repeated dismissals are linked more closely to exhausted PPP funds rather than any resurgence of the virus.

Tons of jobs have been eliminated again, or are soon likely to be. The data suggests that employment gains so far have not reflected laborers returning to work in the conventional sense, but those who were being “re-payrolled” without actual available work, so the employer could meet loan forgiveness requirements.

The findings seem to suggest that PPP loans were the only source of payroll income for those businesses, whose usual cashflow still have not returned to normal. PPP-supported businesses received about eight weeks of payroll costs—plus 25% more for particular fixed operating expenses—and more companies could shutter unless they cut workers they paid with PPP dollars.

The study concludes:

Regardless of the trajectory of COVID-19 caseloads and additional economic shutdowns (which will only make matters worse)[,] it would therefore appear incumbent on the federal government to continue to support employers and households with extensions to existing CARES Act programs or risk exacerbating the economic distress already
evidenced. Failing to do so would risk employers no longer being around to pay their workers when the virus itself has been contained or controlled.

A total of 6,383 individuals responded to the study, which was conducted by Real-time Interactive Worldwide Intelligence, and backed by the U.S. Private Sector Job Quality Index and Cornell Law School Senior Fellow, Professor Daniel Alpert. The team behind the study anticipates continued high levels of weekly unemployment claims and increasing unemployment rates over the coming months.

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