The end of federal stimulus checks added to the woes of workers across America as high unemployment rates ensured that millions remained without a job and also a source of government sustenance. But then came the layoff announcement thick and fast. It affected financial and tech firms in the latest round.
Every sector is cutting jobs even as the economy slows down. Even during the peak months of the pandemic, Americans had ready cash in hand from the multiple stimulus checks. This was majorly responsible for preventing a major recession. The stimulus checks also helped people keep the economy afloat as demand for goods remained at a healthy level throughout the pandemic.
all major tech and finance companies are trimming their workforce as the economy slows down after hiring strongly in the two years of the pandemic recovery. In the last quarter of 2022 alone, job cut notices saw a sharp spike to 154,329. That was more than double in the last quarter of 2021. That is also the highest sum since the last quarter of 2020. For all of 2022, employers announced 13% more layoffs than in 2021.
Successive Layoffs In A Period Marked By Lack Of Stimulus Checks Hurting Americans
Simultaneously, American unemployment rates fell back to 3.5% in December 2022, a five-decade low. There has been a sharp drop in first-time claims for jobless stimulus checks. It was down to 190,000 in the second week of January this year. This was a level that wasn’t seen since the pandemic first hit America in the first quarter of 2020.
But even with the unemployment and the high layoff of the pandemic years, there were always the stimulus checks to look up to. The stimulus check followed in regular succession and this ensured that people did not face the pinch of joblessness and a total lack of income.
Even with every earning member of the household abruptly losing every source of income, the households always had stimulus checks to look forward to.
Normally when the economy slows down coupled with companies responding by laying off in their tens of thousands, the claim for unemployment stimulus checks sees a sharp spike. It happened before when the recession loomed.
But experts say that it will not be the case this time around. They say that there are perfectly good reasons why there might be a lack of initial claims for stimulus checks associated with a lot of such layoffs.
Job Market Remains Tight Despite Recent Rounds Of Layoffs
Despite the recent rounds of layoffs, industry leaders say that the job market remains very tight. There are widespread openings and jobs continue to be created at a brisk and healthy pace. This is especially true for service workers in the field of hospitality and leisure as well as in the healthcare industry.
The unemployment rate remains incredibly low and that’s an encouraging sign. People continue to have high confidence that they can find another job pretty fast. This keeps them away from the unemployment insurance process.
That happens to be reflected in opinion surveys both of consumers and workers. They continue to be fairly optimistic about the prospects for the future as far as employment is concerned. The number of workers who remain apprehensive of losing their income or their jobs remains quite low despite the lack of stimulus checks to fall back upon.
There is also the accompanying trouble of people having to deal with overwhelmed and outdated systems of unemployment during the pandemic months. Filing for an unemployment stimulus check was a cumbersome and laborious process. Trying to get unemployment benefits could be complicated and time-consuming.
To compound the complication, not everyone who is out of a job is eligible for unemployment benefits. To keep receiving the stimulus checks given for unemployment, out-of-job workers have to go through a complicated process. This includes proving every week that they are on the lookout for jobs.
A lot of workers say that despite the high percentage of layoffs, job opportunities continue to be plenty. This is especially relevant for skilled workers, especially in tech and finance, where a lot of recent job cuts were concentrated.
And in many cases, workers such as there find new jobs even before they feel the need to go around and get a job, or feel the need to go looking for one. Companies announcing job cuts are also handing out generous severance pays that more than makeup for the lack of stimulus checks during the laid-off periods.
And in many states, workers are not eligible for unemployment if they take severance pay. But it is still a whole lot more generous than any government stimulus checks.
It even does away with the need for looking for part-time employment to supplement their income. They do not feel the need to even knuckle down or apply for unemployment.
Some States Continue With Inflation Relief Stimulus Check Into The Second Quarter Of 2023
States that started sending out inflation relief stimulus checks have continued with the payments in the first quarter of 2023. Some plan to continue with various forms of relief measures well in the new year.
While California authorized the inflation relief payments early in June 2022, the payment started way later in the last quarter, coinciding with the festive season. The state authorized one of the more generous relief payments. This was possible as the Golden State experienced a booming economy in the last two quarters of 2021 that led to a budget surplus of close to a hundred billion dollars.
The inflation relief measure called the Middle-Class Tax Refund payments covers over 60% of the state population of around 40 million. And the payments have also been generous, reaching up to $1,050 for a family of at least three with one dependent.
Families with a combined income of up to $500,000 for 2020 also received a stimulus check, though the payments were divided into three tiers depending on the 2020 state Adjusted Gross Income.
Only individual and joint filers with an AGI of below $75,000 and $150,000 respectively received the maximum amount of $350 for each filer or one dependent.
Other states have also given out one-off payments which have never been able to match the comprehensive support initiated by the federal government in 2020 and 2021.