Home > News Articles > Texas unemployment claims jump as economic turmoil from virus hits
Texas unemployment claims jump as economic turmoil from virus hits
March 18, 2020
First-time claims for unemployment insurance in Texas last week jumped nearly 40 percent from a year ago as local governments shut down events, low oil prices buffeted the energy industry and customers stayed home to prevent exposure from the new coronavirus.
Last week, more than 16,000 people applied for unemployment insurance in Texas, nearly 4,500 more claims than the same week last year, according to data provided by the Texas Workforce Commission.
“If there’s no demand for what you’re providing – whether it’s restaurants or airline flights – you have to cut your supply, and the first thing you cut is personnel,” said Patrick Jankowski, an economist at the Greater Houston Partnership, a business-financed economic development group.
Texas is taking steps to expedite the payment of unemployment benefits to laid off workers. Governor Greg Abbott instructed the Texas Workforce Commission to waive a one-week waiting period and begin paying benefits as soon as claims are processed. The TWC will also waive work search requirements, which usually requires individuals to register for work search and complete a minimum number of work search activities per week.
Cutting back on staff
Some of the first jobs to go are those associated with expanding a company, such as sales roles, marketing, and contract workers needed for expansion projects, experts said.
Keith Wolf, the managing director of Murray Resources, a Houston staffing company that works with around 300 employers in the Houston region, said that typically between 40 and 60 companies contact them per month. Now, that’s on pace to be down between 60 and 70 percent this March.
A big chunk of the losses are coming from the oil and gas industry, he said. Oil prices are now lower than the bottom of the last bust — considered the worst in a generation — when they hit $26.21 a barrel in February 2016. On Wednesday, oil prices crashed below $23 a barrel in late morning trading in New York, down more than 10 percent and the lowest since prices 2002, during the SARS epidemic.
While Wolf said he’s still seeing some demand for jobs like mechanics and accountants in the energy sector, roles that the companies need to keep the business running, “growth” roles, associated with expansion, are essentially nonexistent.
“Those have really stopped,” he said.
Murray Resources typically opens 150 new jobs per month, and he expects that figure to drop by at least 40 percent by the end of March.
Contracted workers are particularly vulnerable during the downturn. Amid the uncertainty, some companies have told Murray they’ve implemented a hiring freeze. That’s hurting contract workers who were slated to start this month, and are now out of a job. Hiring has been indefinitely postponed.
“Most companies anticipate bringing them on, they just don’t know when,” Wolf said.
Washington trying to keep up
The virus is tearing through the economy faster than policy makers can implement emergency measures. Within a week, the Federal Reserve has responded as quickly as it possibly can, cutting its target interest rate to near zero, re-introducing bond purchases to lower long-term rates and pump money into the economy, and started buying short-term corporate loans called commercial paper, a move intended to support lending for companies.
“These are things that took months to quarters during the financial crisis,” points out Matthew Luzzetti, chief economist for Deutsche Bank.
The White House and Congress are working to pass a stimulus package, likely this week. Initially, leaders were considering a $850 billion package, around the same magnitude as the packages passed in 2009, but Treasury Secretary Steven Mnuchin told reporters Wednesday that the package could be as large as $1 trillion.
Economists have said that fiscal and monetary policy makers are pulling out all the stops to deal with the unprecedented disruption to the U.S. economy.
“The shock is very different now,” Luzzetti said. “It’s hitting consumers and employment much more abruptly and more rapidly.”