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USA: In the last five weeks, more than 24 million workers applied for unemployment insurance benefits

Sunday 26 April 2020, by siawi3


Posted April 23, 2020 at 9:10 am

by Heidi Shierholz

In the last five weeks, more than 24 million workers applied for unemployment insurance benefits

In the last five weeks, the number of workers applying for unemployment insurance (UI) benefits has skyrocketed to well over 20 times what it was in the pre-coronavirus period, and over five times the worst five-week stretch of the Great Recession. For comparison, in the period before the coronavirus hit, just over a million workers would apply for UI in a typical five-week span, and in the worst five-week stretch of the Great Recession, it was less than four million. In the last five weeks, it was more than 24 million. That means more than one in seven workers applied for UI. (It should be noted that using seasonally adjusted numbers, the Department of Labor [DOL] reports that 26.5 million workers applied for UI during the last five weeks, and using unadjusted numbers, they report that 24.4 million workers applied for benefits. I focus on the unadjusted numbers because, while seasonal adjustments are typically helpful—they are used to even out seasonal changes in claims that have nothing to do with the underlying strength or weakness of the labor market—the way DOL does seasonal adjustments is somewhat distortionary at a time like this).

Figure here
Weekly initial unemployment insurance claimsNot seasonally adjusted, 1967–present
Week ending Initial claims

Note: Due to the scale of the chart and rapid increase in initial unemployment insurance (UI) claims, the initial UI claims for the last five weeks appear to align vertically.

Source: U.S. Employment and Training Administration, Initial Claims [ICSA], retrieved from Department of Labor (DOL), and, April 23, 2020

All else equal, job losses of this magnitude would translate into an unemployment rate of 18.3%. However, the official unemployment rate, when it is released, will likely not reflect all coronavirus-related layoffs. This is due to the fact that jobless workers are only counted as unemployed if they are actively seeking work. That means many workers who lose their job as a result of the virus will be counted as dropping out of the labor force instead of as unemployed, because they are unable to search for work due to the lockdown.

Widespread reports of UI systems collapsing under the weight of so many applications raise the question not only of how many would-be applicants have been frozen out, but also of how many of those who managed to apply are actually receiving benefits. The data to get at that last question are lagged a week, but they show that roughly 71% of applicants are receiving benefits. That is calculated from noting that between March 14 and April 11, the total number of workers receiving benefits (known as “continued claims” or “insured unemployment”) increased by 14.4 million. Over the same period, 20.1 million workers filed unemployment insurance claims. That means that by April 11, only roughly 14.4 million out of 20.1 million new filers, or 71%, were receiving benefits. Applied to the current data, that would mean that roughly 7.0 million UI applicants from the coronavirus period are still waiting to receive their benefits.

Short-Time Compensation (STC)—also known as work-sharing—is an alternative to layoffs for employers who see a drop in demand for their goods or services. STC allows employers to reduce hours of work for their workers rather than laying some workers off. The idea is basically that under STC, the UI benefits that would have gone to laid-off workers are instead spread across workers who see their hours reduced, averting layoffs. Unfortunately, the STC infrastructure is not well developed—many states do not even have an STC program. STC should be being used extensively right now to save jobs, but it is not. On April 4, less than 40,000 workers were receiving STC, a tiny fraction of the 12.4 million receiving regular state benefits at that time. Additional aid to states should be provided to implement, improve, and promote STC programs.

The UI claims of the last five weeks, while extraordinary, don’t even include most people who aren’t eligible for regular UI but are nevertheless out of work due to the virus—people like gig workers or independent contractors, and many others. The CARES Act included an extension of unemployment coverage to many who fall through the gaps in our regular UI system, called Pandemic Unemployment Assistance (PUA). In almost all states, however, the PUA system is still being set up, so the vast majority of workers who are eligible for PUA (but not regular UI) are not yet receiving benefits.

As in all recessions, job loss in this recession is not being meted out equally. Many of the jobs in at-risk sectors are low-wage jobs, like those in restaurants and bars, hotels, personal services, and brick-and-mortar retail. That means low-wage workers are seeing disproportionate job loss. We also have initial data on job loss by gender, and it shows that women have been hit harder by job loss than men. We don’t yet have solid job loss numbers by race and ethnicity, but because black and Hispanic workers are more concentrated in front-line service jobs that have been hit hard by social distancing, black and Hispanic people are almost surely experiencing greater job loss. And of course, workers aren’t just losing their jobs. Our health care system ties health insurance to work, so millions of workers have likely already lost their employer-provided health insurance.

Further, job losses are ongoing. Based on GDP forecasts, we project that the net decline in employment could exceed 30 million by the end of June. The CARES Act passed by Congress at the end of March and the interim coronavirus bill passed by the Senate on Tuesday (and that will likely pass the House today), both have some important provisions, but they are no match for the damage the economy is facing. Federal policymakers need to do more. The next relief and recovery package should provide $500 billion in aid to state and local governments, extend unemployment insurance benefits, provide better protections for workers and jobs, and include funding to safeguard our democracy. And importantly, federal government relief should be tied to actual economic conditions (and not solely the unemployment rate), so that these provisions do not expire too early, when the economy and the people in it still need them. At this point it appears that even under the best-case scenario—a rapid bounce-back in the second half of the year—the unemployment rate will still be close to 8% a year from now. Congress has the unique ability to hugely mitigate the suffering associated with the coronavirus shock and to strengthen the recovery, and they must act.