Staggering 10 Million Jobless Claims in Two Weeks

Update: Seasonal adjustment factors to the UI data are pushing up the headline numbers a bit above the unadjusted number of initial claims in March. Without the seasonal adjustment, 5.8 million new claims were filed last week, on top of 2.9 million claims the week before. The loss of 8.7 million jobs is still a staggering clip, amounting to a little less than a 6% decline in U.S. employment in just two weeks. Seasonal adjustments generally make for much better data comparisons within a year, as the spikey unadjusted figure below suggests. Unless otherwise noted, all data presented here are seasonally adjusted…

Original Post: Another 6.6 million people filed initial unemployment insurance (UI) claims in the week ending Saturday, March 28. This follows an unprecedented 3.3 million initial claims filed the previous week, ending Saturday, March 21. This is truly unprecedented, as depicted by this graph via Heidi Shierholz, Director of Policy at EPI:

Scary contrast with job loss during the Great Recession via economist Martha Gimbel at Schmidt Futures, another great labor market expert to follow on Twitter:

In a recent post I did some back-of-the-envelope math for last week’s initial claims report: If we see, say, 4 million 10 million workers transition from employment to unemployment in March, the unemployment rate would surge from 3.5% in February to 5.9% 9.6% in March (15,787,000/164,546,000=0.096). That’s nearly the peak unemployment rate we hit during the Great Recession, of 10% in October 2009.

Not all of these job losses will be reflected in Friday’s release of the March jobs report by the Bureau of Labor Statistics, largely due to the timeframe for statistical sampling.  So some of these job losses will be reflected in the April report, which comes out in early May. On the other hand, remember that these UI claims understate the severity of job loss because many workers do not qualify for UI: Part-time workers not meeting hours requirements, workers who recently moved states, some independent contractors, and anyone who voluntarily quit a job, e.g. to take care of children or sick family members.

I recently noted that economist Miguel Faria-e-Castro at the St. Louis Fed has warned that, based on back-of-the-envelope calculations, the U.S. unemployment rate could rise to somewhere between 10.5% and 40.6% by June. Perhaps that sounded alarmist or sensationalist to some, when first reported. But based on today’s UI claims, the U.S. labor market will almost surely have deteriorated so much as to fall within that lower bound when the April jobs report is released.

A different way to think about the staggering and heartbreaking magnitude of job loss in the past two weeks is to look at cumulative changes in employment. U.S. nonfarm payroll employment totaled 152.5 million in February. Using 10 million job losses as the proxy for job losses to date, we’re looking at a 6.6% collapse in employment in just a month or two, if not substantially worse two months out. Here’s a comparison with other recent recession, again via EPI:

EPI Cumulative Job Losses

U.S. employment cumulatively fell 6.25% during the Great Depression over the course of two years. That was by far the worst of any downturn since the Great Depression. We’re now surely looking graver relative job losses in the span of just two months. Congress has much more work ahead in providing lifelines to households, states, and businesses—the CARES Act won’t cut it.

Further related reading:



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