As the world is facing the huge economic crisis due to the COVID-19 pandemic, the US is about to experience a whipsaw impact on employment soon.
Earlier in March, the coronavirus relief package passed by Congress, known as the CARES Act, did its best for the economy. Despite all the help and support, the economic lockdown connected with the COVID-19 crisis is going to be affected more.
As per Business Insider report, this coming second wave of joblessness, will affect many and major companies that have in recent weeks "re-payrolled" workers in order to qualify for loan forgiveness under the Payroll Protection Program (PPP) program. (PPP funds only supply businesses with eight weeks of payroll funding.) Also, there are three reasons for this, the first two economic and the third structural:
- Many businesses will fail. A tidal wave of bankruptcies has already begun to roll in, and its crest is anticipated to be perhaps just 30 days to 60 days away as companies run out of the PPP and other cash that has been sustaining them.
- Some businesses will simply not be able to return to their scale of prior operations in the post-lockdown. The combination of social distancing and an overall collapse in demand will not support even the "re-payrolling" that the PPP has produced.
- Finally, the regulations surrounding the PPP essentially forced employers to initially rush out 75 percent of the loan amounts they received to put their entire pre-crisis body of workers back on payroll for eight weeks, in order to qualify for loan forgiveness.
The US is still experiencing a weekly level of unemployment insurance claims which is higher than for any week in the history of the data, prior to the present crisis.
So be prepared for an employment whipsaw in July and August because keeping this economy floating will need time and patience, Business Insider further reports.
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