New US layoffs show mixed impact of small business loans
by John Biers
Faced with then near-complete shutdown of travel, and a devastating hit to its business from the coronavirus, Arrangements Abroad mobilized to secure a $597,000 loan under the Paycheck Protection Program.
The funds allowed the New York company to pay salaries for a couple of months, but last week it laid off six of 30 employees.
“We spent every penny,” said Jim Friedlander, president of the firm that specializes in cultural and educational package tours for museum and alumni groups, among others.
And now he is implementing furloughs for the remaining staff.
Arrangements Abroad’s plight shows how the US economy continues to bleed jobs in the aftermath of COVID-19 shutdowns, even as the economy reopens and despite federal initiatives like the PPP that aim to mitigate some of the downturn’s harshest impacts.
The US jobless claims data due out Thursday is expected to show another 1.35 million people applied for unemployment benefits last week, fewer than the prior week, but many times the pre-pandemic levels.
“The worst of the layoffs are behind us,” said Lydia Boussour, senior economist at Oxford Economics. “But there will still be some.”
Oxford is predicting a “two-phase” recovery following COVID-19, with about 60 percent of the jobs returning by the end of 2020 and remaining workers taking much longer to find opportunities, Boussour said.
Federal Reserve Chair Jerome Powell also has warned of the dangers of “persistent unemployment” that he said would “negate the gains made by many disadvantaged Americans during the long expansion.”
The steady stream of layoffs also points to the PPP’s mixed record, with some companies still cutting jobs, and others like Minnesota’s Legacy Toys still unable to rehire a majority of staff. (AFP)
