The state Department of Labor and Workforce Development saw an “unprecedented spike” in new unemployment claims amid the COVID-19 crisis as Tennesseans filed 39,096 initial claims for unemployment insurance benefits for the week ending March 21, a 20-fold increase from 2,702 the previous week.

State data shows 4,355 jobless claims were filed for the week in greater Memphis. In northern Middle Tennessee, 16,993 claims for unemployment were filed.

The news is drawing demands from state lawmakers that Tennessee needs to do more to help keep businesses afloat.

The Memphis economy is likely to be hit hard over the high number of unemployment claims, though it may only be “temporary,” according to John Gnuschke, director of the Sparks Bureau of Business and Economic Research at University of Memphis.

“We’re going to see a spike in unemployment insurance claims over the next few months, that will seem devastating to us,” he said. “But over time, the economy will get back in shape. People who’ve delayed the purchases of cars and things like that will come back online. Partly, because we’ll have incredibly low interest rates … We’re going to see a bounce back.”

Nationally, Americans filed 3.28 million new unemployment claims, an increase of 3 million from the previous week’s revised level, according to a state release.

Jobless toll mounts as hotels furlough, eateries close

“We are in unprecedented times, setting records that we don’t want to be setting. We are like the rest of the country in not only the volume but the suddenness of the volume,” said Labor and Workforce Development Commissioner Jeff McCord.

As part of its response, the state is starting a partnership with the Tennessee Grocers and Convenience Store Association, Tennessee Retail Association and Hospitality TN to create the Tennessee Talent Exchange through Jobs4TN.gov. It is designed to match laid-off workers with jobs that coming open, such as those in the grocery industry, according to Gov. Bill Lee.

“As we know, we not only have a health care crisis in Tennessee, we have an economic crisis in Tennessee, and it’s one that we take very seriously, and we know it’s impacting the health of individuals above and beyond COVID-19,” Lee said during his Thursday press conference.

The Department of Labor and Workforce Development put 100 more people into processing the claims as quickly as possible to determine eligibility and send out the payments, according to McCord. It trained 200 department employees to shift their work to unemployment.

The maximum unemployment benefit is $275 a week before the deduction of federal taxes, and the payment can be received through a debit card or direct bank account deposit.

The U.S. Senate passed a $2 trillion relief package to help those affected by COVID-19 Wednesday, March 25. That legislation also “relaxes” the requirements for those seeking unemployment benefits, said Alan Crone, a local lawyer who deals with employment matters.

Two requirements that will change is that you will not have to be seeking a new job to get benefits, and how long you have been working in that previous job will not be a factor, Crone said. This will benefit those who hope to return to their previous job once the COVID-19 pandemic subsides.

While he said the application process is very simple, Crone recommends you have a copy of a recent paystub, previous employer’s address and full name of the company.

The relief package must still be voted on and approved by the U.S. House, likely Friday, before it goes into effect, but Crone said not to wait on that.

“I would go ahead and get in the line. I would not wait for all of this to shake itself out,” Crone said. “And, if you get turned down, because of some quirk, rather than appealing that I might just apply again once the new act is passed.”

With businesses letting people go because of the national pandemic, state Rep. Jesse Chism said the state needs to do more than let small businesses rely on Small Business Administration loans to survive.

“The SBA loan’s fine, but you still have to go through the process, and you still have to go through the approval process. And you may have a lot of businesses that may fall while they’re waiting on a response,” said Chism, a Memphis Democrat who serves on the House Commerce Committee.

Businesses that do receive an SBA loan, a low-interest loan for up to $2 million, still won’t be able to make up the revenue lost during the crisis, Chism said.

The governor said Thursday he expects the state to receive $2 billion to $3 billion through the $2 trillion federal stimulus plan, once Congress approves, to go toward small and large business relief, as well as unemployment and increased services to the health crisis. The money could come down in two to three weeks.

“There are huge economic losses associated with what’s happening across this state,” he said. “We have hotel companies operating at 10% capacity. We have major entertainment companies in the state that have laid of 90% of their workers.”

Consequently, the state is suffering losses for small businesses and pay for workers he said.

Lee previously directed the Department of Commerce & Insurance to request flexibility from insurance companies in canceling people’s policies for failure to pay. The Department of Revenue also has been ordered to allow businesses to delay the filing of franchise and excise taxes until July 15, the governor said.

Chism, though, said more steps need to be taken.

“Even before the crisis, you had so many businesses that were hanging on by a string, anyway.”

Lee temporarily suspended Tennessee’s one-week waiting period for receiving benefits as part of an executive order.

The state usually pays the first week of benefits after four consecutive weekly certifications, but during the temporary suspension the state will pay the first week of benefits as soon as the claim is approved.

Shutdown due to COVID-19 is a new reason for job separation “due to no fault” of the person filing the claim, according to the Tennessee Department of Labor and Workforce Development.

Based on an executive order by Lee, people could be eligible for unemployment if quarantined because of COVID-19 by medical professionals or a health authority and will be returning to their employer later.

In addition, people can apply for unemployment because of self-quarantine without medical professional or health authority proof. But those claims will depend on facts from the claimant and employer and can be approved or denied under unemployment laws.

For Memphis’ hotels, restaurants, retailers and small businesses it is unlikely they’re fortunes change until the U.S. stems the spread of COVID-19, Gnuschke said.

“They would be fine if it were not for the virus,” Gnuschke said. “So, they’re going to find it difficult to recover until the virus actually is resolved. We don’t know how long that’s going to be.”

Memphis’ bigger employers including FedEx, International Paper and AutoZone, however, remain in “good shape” even in a possible recession and with rising unemployment rates, Gnuschke said.

“They’re not going to be as devastated as many of the smaller businesses,” he said.

State Rep. G.A. Hardaway said this unemployment emergency is just one more reason a legislative task force should be formed to provide advice to the governor’s administration for handling the crisis.

“Those numbers are always just the tip of the iceberg. It’s scary, not just the numbers themselves, but our lack of strategic planning in addressing small business, which composes the overwhelming majority of jobs in our community and addressing the needs of small business in order to sustain them,” said Hardaway, a Memphis Democrat who also serves on the House Commerce Committee.

Only businesses considered essential are operating, and many restaurants have been scaled back or closed, even though they’ve been allowed to offer drive-through service and alcohol sales.

By helping small businesses survive the social shutdown with federal funds and state funds, the state can deal with the unemployment numbers, Hardaway said.

Businesses also can comply with medical advice and continue to operate by using social distancing and personal protective equipment, he added.

State Sen. Raumesh Akbari called the unemployment numbers “significant” but said she is encouraged by the state’s move to expedite claims so people can receive payments within a week. She pointed out the federal government’s stimulus plan will provide an additional $600 a week, “which will help individuals significantly.”

The Memphis Democrat also noted many mortgages, credit card bills and other financial obligations are being given a 90-day deferral, while state financial cash payments can be made through Temporary Assistance for Needy Families.

State offers cash to families hit by coronavirus

“Right now, people need to focus on staying home and staying safe,” said Akbari, who remained in Memphis out of health concerns last week as the Legislature wrapped up work until June 1. “We must flatten the curve and protect life at all costs.”

To assist those who may have recently been laid off, the Greater Memphis Chamber launched a jobs listing page Monday, March 23, for Memphis-area companies who need immediate hires. The jobs listing page can be found on the chamber’s website at www.memphischamber.com.

“One positive thing we have seen is that we have been able to begin connecting workers who have been displaced with openings in other industries,” said Beverly Robertson, Greater Memphis Chamber president and CEO. “We are in constant communication with business owners and leaders in our community and right now we have more than 30 companies in Memphis, Tennessee with immediate hiring needs.”

One industry hit extremely hard by coronavirus is tourism and hospitality. Memphis Tourism President Kevin Kane said he expects at least 30,000 to 35,000 of the 50,000 hospitality and tourism employees in Memphis and Shelby County to be impacted by coronavirus.

Kane believes, however, once the pandemic subsides and travel restrictions are eliminated that the industry will make its comeback locally.

“You can see all those things just really paralyzes an industry like this,” Kane said. “Businesses large and small have no choice but to layoff or furlough employees, because there’s a lack of work, but I do think it will come back very quickly once this thing turns around.”