The U.S. Labor Market is in Shambles (Unemployment Claims for 3/29-4/4 Edition)

Another 6.6 million Americans lost their job and filed for unemployment insurance (UI) in the week ending April 4, the third straight week of absolutely staggering and heartbreaking job losses. Unemployment insurance claims for the week ending March 28 were revised up to 6.9 million, and 3.3 million claims were filed the week ending March 21. On a seasonally adjusted basis, 16.8 million adults have filed for unemployment in the last three weeks. The weekly Bureau of Labor Statistics (BLS) report can be found here.

The staggering number of claims in either of the past two weeks are an order of magnitude worse than the worst week of the Great Recession. During the Great Recession it took 44 weeks for cumulated weekly initial claims to hit the 16.8 million mark (weeks ending December 8, 2007 thru October 4, 2008). In just three weeks the U.S. labor market has fallen off a cliff, unlike anything we’ve seen before. Via EPI:

Key Takeaway #1: 


Key Takeaway #2: “Given the extraordinary upending of the labor market we’ve already experienced and the fact that the situation is still deteriorating, federal policymakers absolutely need to do more. The next relief and recovery package should provide aid to state and local governments, extend unemployment insurance benefits, and provide better protections for workers.” The scope of “Phase 4” relief being negotiated is far too small.

It’s easy to lose sight of the human element and widespread degree economic hardship at hand with numbers this large. My partner pointed out, in horror, that the number of Americans who have lost their job and filed for unemployment in the past three weeks is equivalent to roughly half the population of her native Canada.

Remember: These UI claims are a floor for job losses, because not all workers who lose their jobs qualify for and file claims (e.g., part-time employees,  workers who recently moved between states, or anyone who quits a job to care for family). And none of these job losses were reflected in the March unemployment report released last Friday.

In that report we saw the U.S. unemployment rate jump from 3.5% in February to 4.4% March, or 7,140,000 unemployed people relative to an adult labor force of 162.9 million. Holding the size of the labor force constant, if we see an additional 16.8 million workers transition from employment to unemployment in April, the unemployment rate would surge from 4.4% in March to 14.7% in April (23,940,000/162,913,000=0.147). That would be the highest rate since June 1940, when the U.S. economy was still recovering from the Great Depression. The April report will undoubtedly come in as the worst in post-war history, surpassing the 10.8% unemployment rate we hit during the 1981-82 recession.

The BLS unemployment series only dates back to 1948 (our government statistical services improved astronomically in response to the Great Depression and WWII). Here’s the U.S. unemployment rate during the Depression from an older data series, via FRED:

Economist Aaron Sojourner at the University of Minnesota had a different take on how the labor market is deteriorating to a new post-war low: We’re almost certainly looking at a record-low share of the adult workforce that is employed come April.

The BLS seasonal adjustment process is pushing up the March claims and pushing down the April claims a bit, relative to the unadjusted number of claims. Stripping out the BLS seasonal adjustments we nonetheless see a staggering 15.1 million adults filing for unemployment in the past three weeks. The back-of-the-envelope math for the April jobs report would suggest the U.S. unemployment rate surging to 13.7% instead of 14.7% using the not-seasonally-adjusted volume of initial claims. Still horrific and higher than anything since the Depression.

These past three UI reports have been painful and depressing to read. And the April jobs report is going to be worse. Our woefully threadbare social safety net and haphazard unemployment insurance system is really not equipped for the U.S. labor market falling off of a cliff like this, CARES Act notwithstanding. As we shutter large swathes of the economy to keep our fellow citizens alive and our hospitals from imploding it is imperative that Congress extend a better lifeline to all workers who lose their job and income through no fault of their own, in the name of fighting a pandemic.

Where are the checks?

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