Categorized | USA

In Just Two Months, More Than 33 Million Americans Have Filed for Unemployment

Congress must act.

byHeidi Shierholz

Many of the jobs that have been lost in this recession are low-wage service, retail sales, and office jobs.

Many of the jobs that have been lost in this recession are low-wage service, retail sales, and office jobs. (Photo: Angela Weiss/AFP via Getty Images)

In the last eight weeks, more than 33 million people—more than one in five workers—have applied for unemployment insurance (UI) through regular state UI programs. That is more than five times the worst eight-week stretch of the Great Recession.

Some good news is that regular state UI claims have declined in each of the last five weeks. Though last week’s number is still close to three times the worst week of the Great Recession, the improvement is welcome. However, regular state UI claims do not include people who applied for Pandemic Unemployment Assistance (PUA), the federal program that extends unemployment compensation coverage to many workers who are out of work because of the coronavirus but are not eligible for regular UI—people like independent contractors, gig workers, and people who had to leave their job to take care of a child whose school closed. It took quite some time for the PUA programs to get set up in most states, but they are now largely operational. The Department of Labor (DOL) reports that 3.4 million people had had PUA claims processed by April 25th, and another 2.6 million have filed initial PUA claims on top of that.

Last Friday, the monthly employment situation report showed that the U.S. labor market saw a net decline of 20.5 million jobs between mid-March and Mid-April. (Note, that number is not just layoffs where people filed for UI—it also accounts for a drop in hires, job losses where people didn’t file for UI, quits, and worker deaths.) The monthly employment numbers are from a survey that is taken mid-month. Today’s weekly UI claims numbers show that things have further deteriorated—drastically—since mid-April. An additional roughly 9.0 million people have applied for regular UI and 2.6 million have applied for PUA since that time. The May jobs number is going to be grim. 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.

It is worth noting that DOL reports that 36.5 million workers applied for regular state unemployment compensation during the last eight weeks on a “seasonally adjusted” basis, compared to 33.4 million on an unadjusted basis. Seasonal adjustments are usually 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, typically providing a clearer picture of underlying trends. However, the way DOL does seasonal adjustments is distortionary at a time like this, so I focus on unadjusted numbers here.

Because of things like occupational segregation, discrimination, and other labor market disparities, women and black and Hispanic workers are more concentrated in these jobs and as a result are facing greater job loss.

Many of the jobs that have been lost in this recession are low-wage service, retail sales, and office jobs. Because of things like occupational segregation, discrimination, and other labor market disparities, women and black and Hispanic workers are more concentrated in these jobs and as a result are facing greater job loss.

Goldman Sachs is now projecting that the unemployment rate will average 25% in the second quarter of this year. Given that the unemployment rate was 14.7% in April, that means they are projecting the unemployment rate will average 30.15% in May and June. Further, the Congressional Budget Office projects that without additional relief, the unemployment rate will average 10.1% for the calendar year of 2021. Democrats in the House of Representatives introduced a bill on Tuesday that would provide critical relief and recovery and is an essential step forward. It includes substantial aid to state and local governments, an extension of the UI provisions in prior packages, and other key provisions such as investments in coronavirus testing and contact tracing, which is necessary to reopen the economy. However, an enormous concern with the legislation is that it will be negotiated down. This should not be allowed to happen since the bill is the bare minimum of what is needed to address the scale of the crisis. For example, we project that state and local governments will need up to $1 trillion by the end of 2021.

Another grave concern with the legislation is the lack of automatic triggers for the expiration of the bill’s provisions. Arbitrary end dates for provisions to sustain the economy make little sense given how much uncertainty there is about how the impact of the virus will unfold. Provisions should phase out as key labor market indicators (like the unemployment rate or the employment-to-population ratio for prime-age workers) are restored to near pre-virus levels. Using automatic stabilizers would not be any more expensive than the cumulative cost of multiple extensions of the programs in the bill—but it would prevent destructive lapses in critical programs like PUA and it would alleviate corrosive uncertainty by giving businesses, states, and households the ability to plan.

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