You posted an analysis estimating that there were more than 3 million unemployment claims for the week ending on March 21. Can you put the scale of that figure in context?
This is a record-shattering number; 3.3 million is four times higher than any previous week of unemployment insurance (UI) claims (the previous record was 695,000 in October 1982). To put this in context, 3.4 million Americans moving from employment to unemployment would imply a 2% increase in the unemployment rate in a single week, jumping by more than half from 3.5% to 5.5%.
What is also important to emphasize is how fast of a change this was—most recessions involve a slow build-up as the recession begins to set in. This was a sudden, sharp increase in UI (a 1,200% increase over last week) that looks to continue for the foreseeable future.
You suggest that even that number doesn’t capture everything that’s going on. How would you describe the likely state of employment in the U.S. over the next few weeks?
Unfortunately, the number of unemployment insurance claims may miss things we would view as job loss. For one thing, not everyone will necessarily file for UI—perhaps they can’t get through, or aren’t aware of how to do it. Second, they may not be eligible; not all jobs are covered for UI. For example, you may be self-employed and lose your contracts. However, these types of self-employed workers are now being covered under the new federal assistance packages.
Looking at the next few weeks, it seems like this will continue at the same pace. This week looks like it’s going to beat last week’s record: Pennsylvania and Wisconsin, the two states that report daily data, broke last week’s UI amounts. I would unfortunately expect this for another couple of weeks until the initial layoffs die down—the worst will happen before it gets better.
How should governments react?
An easy thing (which states are already doing) is scaling up their UI offices to deal with the surge in claims. This way everyone who is eligible is able to get access.
A more general set of policies is complicated, and many economists have proposed policies. One letter proposing policies, that I and others have signed onto, is the “Economists’ Statement on Support for Jobs and Businesses in Response to the Coronavirus Pandemic,” which concludes: “We call on Congress to pass and the President to sign broad economic support for impacted individuals and businesses as quickly as possible. The most important thing is to provide help quickly—if we expend a great deal of time creating the perfect bill we will have already failed.”