The number of new jobless claims looks bad. The reality’s almost certainly worse.
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Last week, first-time claims for state unemployment benefits rose by 70,000. That was steep, but it’s nothing compared to what’s coming.
Today, new numbers covering the week that ended Saturday, March 21 show 3,283,000 first-time claims — an increase of 3,001,000 from the previous week’s revised level. That’s the highest level in history, and nearly five times the highest level of claims seen during the Great Recession.
And layoffs and unemployment claims are likely to keep rolling in for weeks, or months, as the nation struggles with the COVID-19 pandemic. The data we’re getting from government agencies might not be capturing the full scope of the damage.
Lisa Tongel is a 49-year-old acupuncturist in Portland, Oregon. She’s been pretty much stuck at home since March 13, when she shut down her practice.
“I don’t have any income coming in at this point because my job is in-person and service-based,” Tongel said. “It’s not just me. My heart is breaking for everyone out there who has had to shutter their businesses.”
Millions of business owners and independent contractors like Tongel don’t have any work right now.
But they’re not likely to show up in the government’s jobless claims report— at least not in the short run, said Heidi Shierholz, who served as the Labor Department’s chief economist in the Obama administration.
“Our unemployment insurance system has huge holes in it,” Shierholz said.
For instance, people who work for themselves typically can’t claim benefits if their work dries up. Meanwhile, she said, the Labor Department’s monthly jobs report often undercounts unemployment when a recession hits. People are only counted as unemployed if they’re looking for work.
“You get laid off, you’re not allowed to look for work unless you’re in essential services because things are totally shut down. And so many people when they are asked by the survey takers, ‘Are you looking for work?’ they will honestly say, ‘No.’ ” (:14)
Economic statistics aren’t likely to capture the full scope of the downturn right now, according to James McCann, senior global economist at Aberdeen Standard Investments. But he said it isn’t hard to see the broad outlines.
“How sudden this decline has been, and how dramatic it’s been, really what we’re seeing through March is an economy go from relative good health to wide-scale contraction,” McCann said.
At this point, it’s anybody’s guess how much further the economy will fall.
COVID-19 Economy FAQs
What’s the outlook for vaccine supply?
Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
How has the pandemic changed scientific research?
Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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