COVID-19 job cuts: Layoffs accelerate as coronavirus disrupts American economy
For kitchen cabinet seller Wayzata Home Products, the coronavirus outbreak was the worst possible timing.
The Connersville, Indiana-based home improvement company ceased operations on Friday "due to significant and recent unforeseeable business circumstances, including the market and financial impact of the global spread of COVID-19," senior vice president Keith Hug told the state of Indiana in a letter.
Wayzata's abrupt closure, which Hug said came after investors lost confidence in the company's future, comes amid an expected wave of layoffs and job reductions tied to the coronavirus pandemic.
If the outbreak worsens, some 24% of employers plan to downsize, according to a survey of business owners conducted March 7-13 by the wealth manager UBS.
"It does feel like just impossible still to project at this point what the ultimate number of layoffs is going to look like," said Andrew Challenger, vice president of Challenger, Gray and Christmas, an outplacement firm. "It really depends on how long this crisis persists."
In the restaurant sector alone, there could be a deluge of job cuts. In states that have shut down dining areas of restaurants and bars – including California, Illinois, New York, Pennsylvania, Michigan and Ohio – the leisure and hospitality sector employs about 7.4 million workers whose jobs could be affected, according to Challenger, Gray and Christmas.
Employees in the travel sector, including airlines, lodging and logistics, are particularly at risk, according to economists.U.S. companies have already announced more than 1,000 job cuts as a result of the outbreak, according to Challenger, Gray and Christmas and USA TODAY research. The losses include the 165 workers at Wayzata, 145 drivers at the Port of Los Angeles, 360 by Oyo Hotels and 250 by Christie Lites, a stage lighting company.
On Tuesday, hotel giant Marriott International set in motion plans to place tens of thousands of workers on unpaid furlough as room cancellations escalate.
The American Hotel & Lodging Association and the U.S. Travel Association estimated that 1 million hotel jobs, or about 45% of the industry's employment, "have either been eliminated or will be eliminated in the next few weeks."
Taken together, the actions illustrate how the coronavirus outbreak threatens to derail the nation's employment market, which was in excellent shape with a national unemployment rate of 3.5% in February, according to the Bureau of Labor Statistics.
Canceled events have already led to 300 layoffs, including 175 related to the South by Southwest technology and media conference in Austin, Texas, Challenger says.
At establishments like casinos, job cuts are widely expected. Sahara Las Vegas announced "drastic cuts to its operations," including "closing or reducing hours for many outlets and resort amenities resulting in a temporary reduction of workforce." MGM Resorts announced furloughs amid temporary closure of its casinos.
Challenger said hopes of a rapid economic recovery after the coronavirus pandemic is fading, suggesting that job cuts could deepen.
"Hour by hour, that snapback feels less likely," he said. "Things are really accelerating quickly."
To be sure, it's not all bad news for jobs. The UBS survey found that 26% of business owners plan to hire workers even if the outbreak worsens.
Some retailers – in particular, grocery stores – are ramping up hiring for positions ranging from the warehouse to the checkout counter, as delivery and service workers increasingly become indispensable to Americans largely confined to their homes because of concerns about the coronavirus.
Amazon said it will hire 100,000 workers to assist with online orders in the U.S. and raise their minimum pay to at least $17 an hour through April.
Many of the job cuts are temporary, with workers likely to be rehired as the outbreak abates.
Challenger said job cuts will likely come in waves, with manufacturing and supply-chain companies and travel and tourism hit initially, followed by consumer service providers such as theaters, stores, restaurants and hair salons. If the outbreak causes a deep recession, virtually all industries will shed workers, he said.
Contributing: Charisse Jones, Paul Davidson
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.