Just a week after the U.S. saw a record-breaking 3.3 million people file jobless claims, retail industry furloughs have put another 600,000 people out of work.
Several of the country’s biggest chains, including Macy’s, JCPenney, Gap Inc. and Kohl’s this week announced that they would furlough the majority of their store associates in response to COVID-19-induced closures. While many retailers extended pay to these employees for the duration of a two-week shutdown, more than half of brick-and-mortar stores across the country are now closed indefinitely, and most businesses can’t afford to keep bleeding cash.
While on temporary unpaid leave, most employees may continue to receive existing health benefits while also collecting unemployment. Under the $2 trillion stimulus package signed last week by President Trump, eligible workers can receive $600 of federal pandemic unemployment compensation on top of existing state unemployment benefits. Part-time workers, gig workers, freelancers and independent contractors are all eligible for the federal check, as are those who were about to start a new job or were laid off before traditional benefits kicked in.
Even with the new protections, the mass furloughs impact a particularly vulnerable subset of industry workers. About 5 million of retail’s 16 million workers are store associates, according to the U.S. Bureau of Labor Statistics. They make an average of $11.70 an hour, or around $24,000 per year, meaning many were living paycheck to paycheck even before the coronavirus crisis.
Few corners of the industry have been spared from workforce reductions: Companies that announced furloughs this week include footwear retailers Designer Brands Inc. and Steve Madden Ltd., mall owner Simon Property Group, Urban Outfitters Inc. and beleaguered luxury department store Neiman Marcus. According to a Bloomberg analysis, the total number of furloughed employees exceeds 600,000 and industry experts expect more to come as the current uncertainty continues.
Economists at the Federal Reserve Bank of St. Louis warned last week that the unemployment rate could reach 32.1% if coronavirus-related shutdowns continue, topping the Great Depression’s peak of 24.9%. The Fed counts sales and service workers among the “occupations with a high risk of layoff due to social distancing measures.”
Of course, some retailers are still ramping up hiring for roles in this category: Walmart Inc., Kroger Co. and CVS Health Corp. are staffing up by the thousands to serve customers’ needs for groceries and essentials as they stay home to flatten the curve.