The Department of Labor reports 6.6 million Americans made initial claims for unemployment benefits during the week that ended April 4. You may recognize 6.6 million also as the number of new unemployment claims that was reported the prior week, but that number has now been revised up to 6.8 million as more data rolled in from states. Added together with the two weeks prior to these, and we are looking at 17 million Americans and counting who have told the government they lost their jobs during the coronavirus crisis.
The states reporting unemployment claims data to the Bureau of Labor Statistics also provide qualitative information about what’s driving increases in unemployment. Here’s what unemployment officials in Texas say they have been seeing: “Layoffs in the accommodation and food services, manufacturing, other services, health care and social assistance, administrative, support, waste management, and remediation services, professional, scientific, and technical services, arts, entertainment, and recreation, information, mining, agriculture, forestry, fishing, and hunting, retail trade, real estate rental and leasing, construction, transportation and warehousing, and management of companies and enterprises industries.” So, pretty much most of the private sector.
Because of the huge number of new claims, insured unemployment (the number of people receiving unemployment benefits) is now at a record level. I should say, insured unemployment reached a record level as of March 28 — the insured unemployment data is a week older than the initial claims data — so we can expect the new record to be soundly broken next week and the week after, as people who start receiving benefits in April get added to the count. The count of people receiving benefits will keep going up for two reasons: More people have lost work, and more people who already lost work are becoming eligible for unemployment benefits as states implement the expansion of benefits that was authorized and funded in the CARES Act. For example, self-employed people and people who quit jobs due to coronavirus are becoming newly eligible for unemployment because of the law. States only got guidance from the federal government about exactly how to pay out these new benefits this past weekend, and it’s taking every state some time to get the system set up and the money flowing. New York expects to start paying the expanded benefits this week, while some other states say they expect to start paying next week or the week after. Once the benefits are being paid out, they will be retroactive, which will provide significant financial relief to households that have been struggling to pay bills despite lost income.
The good news is that the increased breadth and generosity of those benefits will go a long way toward keeping household finances healthy during the shutdown. As the expanded CARES Act unemployment benefits come on line in more and more states, the vast majority of workers who lose their incomes can expect to be eligible and to receive full replacement of their income up to an annualized salary of about $50,000. The small-business payroll support provisions of the CARES Act will encourage other firms to keep their employees on payroll or even to rehire them after layoff. All that means households should be better positioned to maintain something close to financial normalcy and that many people could return to their previous jobs as soon as epidemiological conditions make it possible to reopen parts of the economy that are closed.