- The typical post-World War II recession has seen the U.S. unemployment rate increase about 2 to 2.5 percentage points.Â
- That would translate to about 3.5 million jobs being lost in today’s environment, according toÂ David Wilcox, a senior fellow at the Peterson Institute for International Economics.
- Companies aren’t required by federal law to pay severance to employees they lay off. Those that do have widely diverging pay practices.
The odds of slipping into a recession are increasingly likely as the global coronavirus outbreak puts acute stress on the U.S. economy. That could be bad news for American workers, who may lose jobs by the millions in a downturn.
For those workers who don’t receive severance pay, the financial impact could be especially devastating.
“It’s really hard to predict how it’s going to play out,” said Wayne Outten, founder and chair of Outten & Golden, an employment law firm in New York, of the coronavirus fallout. “The ripple effect can be dramatic in so many different industries.”
The coronavirus, which causes a disease officially known as COVID-19, has spread rapidly around the globe since it originated in China late last year. More than 169,000 people have been infectedÂ worldwide, and more than 6,500 have died.
Financial markets have cratered. American life has come to a screeching halt, as schools and cultural institutions have closed, sports leagues have suspended their seasons, major events have been canceled and state officials have moved to ban large gatherings. Officials from major cities like New York have ordered bars and restaurants to close to limit community spread.Â
Economic cracks are beginning to emerge. Small-business owners are starting to report supply-chain problems and lost sales. The travel industry is reeling. Big oil and gas companies are slashing spending and cutting dividends amid a plunge in oil prices. Consumer spending has fallen as Americans pull back from their daily routines.
“I wouldn’t be one bit surprised if when we look back at the data, it is decided … that the recession started in March,” Blinder, a former Federal Reserve vice chairman and now a professor at Princeton, told CNBC’s “Squawk Alley.”
Some reports have emerged that layoffs have already begun in businesses across the country.Â
Many workers don’t have an adequate financial backstop in layoff situations, experts said.
Half of U.S. adults expected to be living paycheck to paycheck this year and 53% did not have an emergency fund that covers at least three months of expenses, according to a financial planning survey conducted prior to the coronavirus outbreak by First National Bank of Omaha in Nebraska.
Federal law doesn’t require American companies to pay severance in the event of layoffs, leaving it up to the discretion of business owners.