Another 2.8 million initial unemployment insurance (UI) claims were filed the week ending May 2, bringing the total number of claims filed to 30.7 million in the past seven weeks (ignoring seasonal adjustments). Initial UI claims have now been falling for four straight weeks, again an encouraging trend, and today’s report showed the fewest number of initial claims since they shot up over an order of magnitude in mid-March.
Improvements aside, we’re still seeing a continued flow of workers from employment to unemployment in staggering and, until mid-March, truly unprecedented numbers. The 2.8 million claims filed this last week was 14 times higher than 204,000 claims filed the comparable week of last year. The full Bureau of Labor Statistics (BLS) report can be found here.
Taking the 30.7 million initial UI claims as a very conservative floor for job losses, employment has likely fallen 20% since February, when 152.5 million people were employed. Roughly one in five workers who were employed in February have subsequently lost their job and filed for unemployment (state-level UI, not necessarily the broader Pandemic Unemployment Assistance program). Again, this understates the severity of the labor market fallout from the coronavirus, because other workers have lost hours or lost jobs without qualifying for state-level UI.
The BLS will release the jobs report for April tomorrow morning. Many news reports will focus on the headline unemployment rate, which will surely spike to the highest rate since the Depression. (MarketWatch is reporting a median forecast of unemployment hitting 15.2% and nonfarm payroll employment dropping by 22.1 million.) But the better metric is going to be the relative drop in employment. It’s a safe bet that the employment-to-population ratio—the share of the adult population currently employed—is going to plunge to the lowest rate on record. It dropped by 1.1 percentage pints to 60% in March, based on survey data predating these 30.7 million unemployment claims:
Economist Heidi Shierholz of the Economic Policy Institute points out that 24.4 million UI claims were filed by the survey window for the April jobs report, which, everything else being equal, would translate to an unemployment rate of 18.3% for the month. But many workers who have lost their jobs will not meet the definitional requirement for being counted as unemployed of actively seeking work in the past four weeks, and will instead be reflected as dropping out of the labor force. So the headline unemployment rate is likely to be rather misleading and understate the severity of job loss, hence the value in looking at the percentage change in employment or the share of adults who are employed (as was the case during our sluggish recovery from the Great Recession).
For more in-depth coverage of the UI report, here’s my recommended reading:
- EPI’s Working Economics blog (5/7/20): Nearly one in five workers applied for state unemployment insurance benefits in the last seven weeks by Heidi Shierholz
The 6.3 million initial UI claims filed since the survey window for the April jobs report indicate that the May employment report is also going to look far worse than the ugly numbers for April that are released tomorrow morning.
Despite significantly scaling up our fiscal response in late March and early April, Congress does not appear to grasp the scale of federal lifelines required to ameliorate this economic fallout from the virus. We’re still at an impasse over further fiscal relief for state and local governments, and the Pandemic Unemployment Assistance Program will surely need to be extended past its current cutoff at the end of July. Hurry up…