How Is COVID-19 Affecting Unemployment?
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The devastation of the COVID-19 pandemic has extended far beyond the loss of life. The virus has also wreaked havoc on jobs, as 18 percent of American employees either had their work hours reduced or eliminated entirely within the first two weeks of the pandemic. Following this early phase of the pandemic, employment rates have sunk even lower, and recent numbers indicate a dramatic effect on the American workforce. Here’s how COVID-19 is affecting unemployment.
Millions of weekly unemployment claims
Earlier today, the United States Labor Department revealed that last week, 4.4 million Americans filed for unemployment insurance. This amount of claims is a sharp increase from the number of unemployment claims made during the pandemic’s early weeks. During the week of March 14, which was the first full week after President Trump banned travel between the U.S. and Europe, there were 281,000 new claims.
Economists expected these newest unemployment claims, but even these experts underestimated how many claims there would be. When Dow Jones surveyed economists, the average guess for new unemployment claim numbers was 4.3 million, meaning that 100,000 more people than economists predicted applied for unemployment benefits. This difference between expert estimates and reality is roughly one-third the size of the initial number of unemployment claims made at the crisis’ outset.
As with much of the most devastating news related to the pandemic, there is a small silver lining to be found. Last week’s 4.4 million unemployment claims represented a decrease of 810,000 claims from the week prior. This one-week decrease may point to a permanent downward trend, though the overall unemployment rate has already proven historic.
Virtually unprecedented unemployment rates
Last week, the insured unemployment rate climbed to 11 percent, as compared to 8.2 percent the week before. This rate represents the ratio of people currently receiving benefits to the total size of the American workforce, which does not necessarily include all Americans. Some economists say that when the U.S. Labor Department releases its revised national unemployment rate next week, this new rate will reach 23 percent. During the Great Depression, the national unemployment rate peaked at 24.9 percent.
In total, 26.5 million Americans have filed jobless claims in the five weeks since the pandemic began. Weekly jobless claims have exceeded three million during each of these five weeks, peaking at nearly seven million for the week of March 28. During the Great Recession of the late 2000s, weekly jobless claims never surpassed one million.
States have struggled to keep up with the rapid influx of unemployment claims. In Hawaii, Michigan, and Kentucky, over 20 percent of the workforce has applied for unemployment, in turn flooding and even crashing state unemployment phone lines and websites. In Florida, the number of unemployment requests has grown so large that the state has only been able to pay 14 percent of claims that its residents have filed since March 14, roughly the start of the pandemic.
Although the dire nature of the situation may discourage you from applying for unemployment if you need it, there are certain steps you can take to make your process easier. Find some helpful tips here.