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“ This is the 10th week that initial jobless claims are three times the worst week of the Great Recession.’ ”
More than 3.1 million workers applied for unemployment benefits in the last recorded week, according to data released Thursday by the Bureau of Labor Statistics. That includes 1.9 million people who applied for regular state unemployment insurance, plus 1.2 million people who applied for Pandemic Unemployment Assistance or PUA. That’s a a new federal program for people who are jobless, but are not eligible for traditional unemployment insurance, including those who are self-employed.
“At this point, 15 states and the District of Columbia are not yet even reporting PUA data. This means PUA claims are still being under-counted,” said Heidi Shierholz, a senior economist and director of policy at the progressive Economic Policy Institute, a Washington, D.C.-based think tank. “This is the 10th week in a row that initial unemployment claims are more than three times the worst week of the Great Recession.”
“The unemployment situation is going to get worse before it gets better, and unemployment benefits applications will continue to flood in,” Shierholz said, “and we should never forget that overall numbers mask the fact that recessions do not hit different race and gender groups in the same way, because of things like occupational segregation, discrimination, and other labor market disparities.”
“Policy makers need to do more,” she said. “For example, a prolonged depression is virtually guaranteed without significant federal aid to state and local governments. We also must provide more funding to state unemployment insurance agencies to hire staff to speed up processing and to make improvements to websites and other administrative infrastructure.”
Others have pushed back on fears of a Great Depression. Cullen Roche, author of the “Pragmatic Capitalism blog,” said it’s “virtually impossible” to make such a prediction. “The U.S. economy is massively different than it used to be,” he wrote. “In 1929, the economy was basically a manufacturing and agriculture economy, with over 40% of GDP coming from those two sectors. In the post-war era, it became massively more diverse. Manufacturing and farming are now only 10% of GDP, and no sector makes up more than 10%.”
The number of confirmed COVID-19 cases and the number of deaths continues to rise. Coronavirus had infected at least 216,768 people in the U.S. as of Thursday afternoon, and killed at least 100,871 people, with 29,537 deaths occurring in New York State alone, according to Johns Hopkins University’s Center for Systems Science and Engineering. Worldwide, there were 5,925,063 confirmed cases of the virus and 357,533 reported deaths.
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Since the coronavirus pandemic and lockdowns started in mid-March, about 48 million people have applied for jobless benefits, on an unadjusted basis. Initial claims have fallen steadily since hitting a record 6.9 million in the week ended March 28. Shierholz, however, takes a more cautious approach and calculated that approximately 34.2 million workers are now either on unemployment benefits or have applied very recently and are waiting for approval.
“ ‘One of the most effective parts of the CARES Act should be extended well past its expiration at the end of July.’ ”
Calculating that number is complicated. “A total of 19.1 million workers had made it through at least the first round of regular state UI processing as of May 16, and 4.1 million had filed initial UI claims on top of that but had not yet made it through the first round of processing,” she said, “and 7.8 million workers had made it through at least the first round of PUA processing by May 9, and 3.3 million had filed initial PUA claims on top of that but had not yet made it through the first round of processing.”
Even using that more conservative estimate for the number of people who are unemployed, roughly two-thirds of those on traditional unemployment insurance, and one-third on PUA, are now out of work, Shierholz said. “Together, that is more than one in five people in the U.S. workforce,” she said. Seasonal adjustments of unemployment insurance claims data do not make sense during such an unprecedented time, she said, adding that PUA claims are only available on an unadjusted basis.
The $2 trillion CARES Act stimulus package, passed by the Senate last month, will help the U.S. through the COVID-19 pandemic, of which New York City remains the epicenter, and created a $250 billion expansion of unemployment insurance. It will pay workers $600 a week on top of whatever sum they receive in their state-level unemployment claim for a period of up to four months, according to provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
“One of the most effective parts of the CARES Act should be extended well past its expiration at the end of July — until unemployment is falling rapidly and is at a manageable level,” Shierholz added. If that extra $600 expires, millions of Americans will have less money to spend in stores, and that could lead to more unemployment, she added.
Cullen Roche, meanwhile, said this is a self-imposed recession to save lives, not an uncontrollable downturn: “The policy response is completely different. In 1929, the government responded in all the wrong ways. It tightened monetary policy, tightened trade, tightened fiscal policy. That exacerbated all the problems that led up to the Depression.” Others say the $600 discourages lower paid people from going back to work. If the U.S. Senate and President Trump pass the $3 trillion HEROES Act, that would extend it into January 2021.
