In a matter of days, the novel coronavirus has cratered the U.S. job market, reversing its reign as the best in decades to now the worst.
The Treasury department said unemployment could skyrocket to 20 percent, while St. Louis Fed President Jim Bullard said joblessness could soar to 30 percent — higher than during the heart of the Great Depression.
“It is quite clear that we’re facing a toll of furloughs and job cuts, which are unprecedented in recent American history,” says Mark Hamrick, Bankrate’s senior economic analyst and Washington bureau chief. “We are bracing for ugly numbers.”
If you’ve faced job loss because of the coronavirus, here are 13 steps you should consider taking to help lessen the financial blow and prepare you to bounce back once the economy recovers.
1. Apply For Unemployment Benefits
If you’re out of work, one of your first steps should be filing for unemployment benefits. And even if you haven’t completely lost your job but have seen your hours significantly reduced, you can still qualify.
The program typically pays half of what individuals were normally making at their jobs, for an average of 26 weeks, though the system differs across states. Nationwide, the average weekly payout reached $385 as of January 2020, but it was as high as $546 in Massachusetts and as low as $213 in Mississippi, according to the Center for Budget and Policy Priorities.
“But that total weekly payout could soon be increased, as could the number of weeks, as Congress passes new measures to contain the coronavirus’ economic blow,” says Michele Evermore, senior policy analyst at the National Employment Law Project who specializes in unemployment insurance (UI).
Congress’ third emergency response bill, which could be passed as soon as this week, would hand an additional $600 to individuals in their weekly checks. Meanwhile, some states with stricter programs than others, such as Kansas and Michigan, have already increased the duration of benefits, she says.
Applying immediately can help ensure that you get your check as soon as possible, she says. With thousands of workers applying for claims all at once, it’s been a challenge for states to administer and process claims. In the worst of cases, states such as New York and Oregon have even had UI websites crash amid unprecedented traffic levels.
Workers typically can expect to see their unemployment checks within two to three weeks, Evermore says. Right now, however, it might be a little longer. The system also has what’s called a “waiting week” different from the general processing time, where individuals are unable to claim pay through the program. But Congress’ second fiscal response to the coronavirus waived this.
“Once claims are approved, people will get benefits going back to the first week that they were unemployed rather than skipping that week,” Evermore says. “It means more money as quickly as possible into the pockets as jobless workers. To currently be eligible for unemployment benefits, you can’t have been fired from your job for gross misconduct, quit without a good cause or be classified as an independent contractor. But it looks like Congress could soon pass measures that allow gig economy workers — such as Uber drivers or Instacart delivery persons — to file for unemployment benefits. It’s also already eliminated work-search requirements. Even if you’re not sure you qualify for UI benefits, you should still apply. Apply, and try as hard as you can. If you apply and get denied, give it another shot. Eligibility is expanding by the week. Keep an eye on the newspaper. Whenever this new legislation is signed into law, a lot more people will be eligible.”
2. Have Emergency Savings? Now’s The Time To Use It
There’s a tried-and-true piece of financial wisdom: Individuals should maintain a cushion of three to six months’ worth of expenses — that way, if they face an unexpected cost or emergency, they’ll be better equipped to weather it without having to borrow money.
If you’re fortunate enough to be in a financial situation that allows for one, now is the time to utilize it and put it toward any bills you have forthcoming. But that may be tough for some Americans, who were living paycheck-to-paycheck before the outbreak began. Nearly four in 10 said they would have to borrow money to cover an unexpected $1,000 expense, a Bankrate survey from January found. Even if you don’t have enough to sustain you for very long, every little bit will count.
“Many people don’t have emergency savings, and we saw that during the government shutdown last year,” says Barbara O’Neill, CFP, professor emerita at Rutgers University and CEO of Money Talk, a financial planning and education firm. “Now we’re seeing the rest of America being challenged. It’s not pretty for a lot of people.”
3. Find Ways To Cut Back On Monthly Expenses
After tapping into your emergency savings, your next step should be looking over your monthly expenses and finding ways to cut back. You’ll have to keep paying nondiscretionary bills such as rent, utilities and groceries, but other added expenses that aren’t crucial to you or your family’s survival — from online subscriptions to meals and entertainment away from home — might have to take a breather during a spell of unemployment.
4. Have A Mortgage? Inform Your Lender And Servicer
If you’re worried about making your monthly mortgage payments, you’re not alone. But thankfully, many states and the federal government have rolled out programs to help homeowners who may be experiencing financial distress during the outbreak.
President Donald Trump on Saturday ordered foreclosures and evictions to cease for 60 days across the U.S. Meanwhile, the Federal House Finance Agency (FHFA) has instructed lenders Fannie Mae and Freddie Mac to allow borrowers to suspend their payments for up to 12 months. Find out if these servicers own your loan by searching Making My Home Affordable’s database.
Even if your servicer isn’t on this list, it’s worth reaching out, O’Neill says. Take advantage of these programs — which O’Neill calls “goodwill programs.” They offer Americans reprieve and are normally only put in place during times of economic distress. For renters, the situation is trickier. Communicate with your landlord about your specific financial situation to avoid eviction or reach out to local organizations for help.
“When things seem out of control, control what you can,” O’Neill says. “There’s going to be all sorts of various leniency announcements. People need to take advantage of those. Obviously, it will cut you some slack.”
5. Have Student Loans? You Can Suspend Your Payments
Similar to homeowners, student borrowers have the option to suspend their payments on federal student loans if they’re facing financial distress. And even better, interest won’t continue to accrue, thanks to an executive order from the president.
Secretary of Education Betsy DeVos said federal student loan borrowers can go on forbearance for 60 days without penalty, but if the hardship continues, that length could likely be extended. If you need to suspend your student loan payments, be sure to reach out to your servicer.
6. Get In Touch With Your Bank
Banks across the country are also taking steps to help mitigate the financial impact from the virus. From waiving fees and minimum balance requirements to letting individuals withdraw their certificates of deposit (CDs) early without penalty, this may help free up extra cash.
Some lenders, such as Marcus by Goldman Sachs, are even allowing borrowers to suspend their loan payments. A number of credit card issuers are offering reprieve to customers on monthly payments too.
“Even if you don’t work with a national bank, it’s worth reaching out to ask,” O’Neill says. “If you do need to borrow money, your bank can likely work out an option for you to take out a small-installment loan with a flexible and low-interest payment plan. But be sure to still compare your options. Utilize the rule of three. Look at what three different banks are offering. One could be your local community bank, another could be a commercial bank and a third could be a credit union. Even online banks may have some good, reliable options. It’s always a good idea to just find out what they have available”
7. Stay Away From Payday Loans
But if you need to borrow money, be sure to steer clear of payday loans. Those typically come with high interest rates — sometimes of 300 or 400 percent, O-Neill says. Even if you take out a small loan to cover a two-week period, it may still be incredibly hard to pay back.
“People don’t have paychecks, and they don’t know when they’re going to get their next paycheck,” O’Neill says. “Stay away from anything to do with a payday loan because you have no concept of what the time frame is.”
8. Communicate Wth Utility And Service Providers
If you’re unable to pay your utility bills, you might not have to worry. Many companies are creating their own leniency policies, with some electricity providers saying they won’t shut off lines if a customer misses a payment. This also includes internet providers. The Federal Communications Commission has a full list of those that won’t shut off your service if you miss a bill, which includes major firms such as Verizon and AT&T. As always, it’s better to inform the utility or internet service provider you work with about any financial hardship before skipping a payment.
“This is a situation where overcommunication is better than insufficient communication in order to avoid problems with having utility cutoffs or foreclosure,” Hamrick says.
9. Use A Retirement Accounts’ Hardship Withdrawal — But Avoid If Possible
Many retirement accounts offer individuals what’s called a “hardship withdrawal,” where individuals under financial distress can tap into their accounts for immediate cash.
“If you utilize an employer 401(k), you can take advantage of a self-funded loan if your employer will allow it,” Hamrick says.
Tapping into the self-administered Roth IRA — if you have one — is also on the table. But while it’s always an option, experts say it should be a last resort. It sets back your retirement savings significantly, while also leaving you susceptible to piling penalties and fees if you aren’t careful.
10. Take Advantage Of Community Programs
While much of the news coverage surrounding the coronavirus outbreak has been focused on a federal level, many organizations in your community could also be offering assistance — from food banks to charity organizations. Stay informed with what’s going on in your community by dialing “211” or visiting 211.org.
“Find nonprofit organizations, government agencies that may be able to help, food pantries, utilities assistance, unemployment benefits,” O’Neill says. “During the government shutdown last year, these programs were a lifeline for a lot of people.”
11. Look At Job Postings
The coronavirus outbreak has been an unprecedented headwind for the job market, according to Nick Bunker, economic research director at the Indeed Hiring Lab.
“It’s so unprecedented in its sudden-stop nature, and the fact that it’s directly impacting industries that are not usually the front line of recessions,” Bunker says. “There are so many moving variables and unknowns that we don’t know how far the virus is going to spread within the U.S. Trends in job postings are down 7 percent from a year ago, according to Indeed data. Meanwhile, jobs in the hospitality industry have fallen 38 percent.”
But amid high levels of demand at grocery stores and warehouses, many places are still hiring. Dollar General announced Tuesday it would hire 50,000 new workers by the end of April to meet coronavirus demand. Walmart, CVS and Amazon are also reportedly on a hiring spree. Trends in postings for warehousing jobs, as well as stocking and logistics positions, are a bit higher right now than at this time last year, Bunker says.
“Recessions are tough, and they’re tough for job seekers,” Bunker says. “There are occupations and industries that are looking to hire and might present an opportunity.”
12. Be Flexible About New Opportunities
Workers may also want to find ways to broaden their skill sets, whether that’s by taking on new training or learning something new, Hamrick says. All of this could set them up for success once the outbreak does subside.
“We know that some businesses are benefiting from increased demand while others are being devastated by the changes,” Hamrick says. “Those who have the ability to make a career pivot or take advantage of new opportunities will fare the best. Still, others may opt to seek education or skills enhancement during this time of tremendous challenge.”
“But this may also include practicing ingenuity with the skill sets you already have,” O’Neill says. “A hair cutter at a salon near her Florida home, for example, is visiting clients directly in their homes after the hair parlor shut down. There are opportunities if people can turn their skill set into a side hustle or find something else where employers are hiring.”
13. Pay Attention To The News
Finally, it’s important to stay up to date on what’s happening in government — at the federal, state and local level. This can help you be more aware of new opportunities right when they’re available, Hamrick says.
“One should keep tuned to developing news reports on the variety of new programs being devised aimed at helping Americans cope with the economic crisis,” Hamrick says.
During times of economic distress, it’s not uncommon for scammers to try to take advantage of individuals facing financial hardship. Some methods could be as simple as circulating inaccurate financial advice, while others could be as severe as luring you into making an unsafe investment. The Federal Deposit Insurance Corporation (FDIC) said in a March 20 statement that some scammers have posed as FDIC officials to access sensitive banking information. It’s important to remember that an FDIC-insured bank is always the safest place individuals can store their money.
Think of your response to job loss as a twofold call to action: One is about addressing your expenses, and the other is about ensuring you still have an income.
Broadly speaking, make a list of what you purchase and pay for each month. This can help you identify ways to cut back, as well as loan servicers or credit card companies that you can reach out to during your time of unemployment — a period understandably wrought with unknowns.
“These are the financial costs of the pandemic hitting individuals’ well-being and lives,” Hamrick says. “We know that the contraction will be deep and immediate. It is impossible to know whether the economy snaps back fairly quickly or suffers a longer lasting downturn.”