In the last four weeks, a staggering 20.1 million initial unemployment insurance (UI) claims have been filed. Ignoring seasonal adjustments to the data, the Bureau of Labor Statistics (BLS) reported this morning that another 5.0 million Americans lost their job and filed for UI in the week ending April 11, the fourth straight week of unprecedented job losses. This follows 6.2 million initial claims filed the week ending April 4, 6.0 million claims filed the week ending March 28, and 2.9 million claims filed the week ending March 21. The full BLS report can be found here.
With seasonal adjustments, today’s report showed another 5.2 million initial claims, bringing the total to 22.1 million in the past four weeks. It took a full year for cumulative jobless claims to hit that mark during the Great Recession. In a truly unprecedented fashion the U.S. labor market is unraveling in the blink of an eye.
As the Economic Policy Institute pointed out, nearly 750,000 initial UI claims have been filed on average every day for the past month:
In the last 4 weeks, 20.1 million people —more than 1/8 workers—applied for unemployment insurance benefits. This is more than a 2,200% increase over the pre-virus period and averages out to almost 750,000 new jobless claims every day for nearly a month. https://t.co/kuEZRi1Vr3 pic.twitter.com/lxePqKAtYP
— Economic Policy Institute (@EconomicPolicy) April 16, 2020
Put in perspective, the March jobs report showed 701,000 job losses for the month—based on survey data collected before these four weekly claims reports. During the Great Recession, job losses averaged 743,000 per month during the worst six months for the labor market. And now we’re seeing a comparable number of UI claims filed daily, on average, over the past four week: 719,000 on an unadjusted basis or 787,000 on a seasonally-adjusted basis.
Before the coronavirus started catching up with the U.S. economy, 152.5 million people were employed in February. Just subtracting the 20.1 million workers who have filed for UI in the past four weeks from March employment levels suggests that employment has fallen 13.7% in just two months. Put in perspective, employment cumulatively fell 6.3% during the Great Recession, over a span of 25 months. So we’ve seen more than twice as much job loss as during the Great Recession, in less than a twelfth of the time.
Big numbers and percentages have a tendency to dehumanize our lived experience in the economy: More than one in eight workers who were employed in February have since lost their job and filed for unemployment, and others have involuntarily lost hours or lost their jobs without qualifying for unemployment benefits. Terrifying.
If the 20.1 million workers who filed for unemployment in the past four weeks, since the March jobs report, were counted as transitioning from employment to unemployment, we’d be looking at an unemployment rate in the ballpark of 16.7% come the April jobs report. That would be roughly in line with the 16.2% unemployment rate the U.S. averaged in the decade following the Great Crash of 1929, and the highest rate since May 1939. The unemployment rate may register somewhat lower, because workers who have lost their jobs but are not actively looking will be counted as leaving the labor force, as we saw early evidence of in the March jobs report. For this reason, the cumulative percentage change in employment or the share of the adult population that is employed will be better gauges of labor market distress (as they were during the Great Recession).
On the other hand, economists Alexander Bick and Adam Blandin have been conducting timely online labor market surveys, and recently estimated that U.S. unemployment had already hit 20% by the first week of April. Recommended reading: “Real Time Labor Market Estimates During the 2020 Coronavirus Outbreak”
Big Picture: Recovery in the U.S. labor market is not going to happen until the pandemic is under control and nonessential economic activity can be safely and sustainably resumed—essentially meaning either the rollout of widespread testing or a vaccine or other form of treatment. The ongoing collapse of the U.S. labor market has been greatly exacerbated by the federal government’s continued failure to ramp up testing; and the longer the public health responses languishes, the deeper the hole we will find ourselves digging out of and the slower the pace of recovery (more to follow on that latter point).
It’s also worth pointing out that no country in Europe—where the policy focus has been government wage-sharing agreements to keep workers on payrolls, as opposed to providing emergency unemployment benefits to separated or furloughed workers—has seen job losses well exceeding 10% of their workforce. Minimizing the destruction of employee-employer matches and keeping more businesses afloat will make for a faster labor market recovery, whenever it’s safe to reopen. It’s a safe bet that, one year from today, Germany’s labor market is going to look far healthier than that of the United States, largely because of differences in both labor market and public health policies.