Second flood of coronavirus-driven layoffs may come as states delay, roll back reopening

Effects of virus-related uncertainty will filter through entire economy, expert warns

As coronavirus cases spike in some areas of the U.S. – including in Texas and California – reopening plans have been paused or even scaled back, which could be bad news from some in the labor force.

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In hard-hit industries like retail and dining, many businesses were on the path toward returning their workforces to full capacity before the latest outbreak changed the course of tiered reopening in some areas.

“I do think it’s likely we’re going to see furloughs happen again with those workers,” Dr. Anthony Harris, WorkCare’s chief innovation officer and medical director, told FOX Business. “Hopefully it’s temporary but the indicators in terms of the incidence of illness are pointing in the wrong direction.”

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After a spike in cases, Texas re-closed bars and restricted restaurant capacity, for example. California Gov. Gavin Newsom will require certain areas, like Los Angeles, to discontinue indoor dining and other indoor activities.

The evolution of the domestic outbreak has impacted regions of the country differently. Yet the uptick in cases throughout several states has caused concern even in areas where confirmed instances of COVID-19 have been on the decline.

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In New York City, which bore the brunt of cases early on in the pandemic, Mayor Bill de Blasio announced Wednesday that plans to allow indoor dining would be put on pause indefinitely after a similar announcement was made by New Jersey Gov. Phil Murphy.

Uncertainty regarding reopening plans in these areas of the country could also cause business owners to put hiring plans on hold – or keep workers operating on limited schedules.

“This slowdown nationwide has created greater uncertainty in the environment, and with greater uncertainty in the environment people are going to slow down consumer spending decisions,” Brian Marks, senior lecturer at the Pompea College of Business at the University of New Haven, told FOX Business. “Any uncertainty that reduces the possibility of expenditures just filters through the entire economy.”

Business owners will likely react to consumer spending decisions by slowing down their spending plans, too.

“They’re trying to determine, ‘Are we going to have adequate business?’” Harris said.

On the bright side, Harris noted that there are some employers in the Midwest that have successfully adopted social distancing guidelines and technologies to protect workers and patrons, which has allowed them to be back up and operating, as well as hiring.

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About 47 million Americans have filed new jobless claims since mid-March. A read on the employment situation in June will be released Thursday, but both Harris and Marks cautioned we won't see the effects of the current slowdown until the July report.

Marks noted that the unemployment rates have been severely underreported – as the Bureau of Labor Statistics explained in footnotes for its April and May reports – which is something to keep in mind if the data slows down.

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