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US unemployment is up by 3,000% in just three weeks. Congress must act | Heidi Shierholz


This week the US labor department released data on initial unemployment insurance (UI) claims, showing that UI claims jumped from 211,000 in the week ending 7 March 2020 6.6 million in the week ending 28 March. This is more than a 3,000% increase in three weeks. In fact, every state in the country reported its highest initial claims ever either last week or the week before. Over the last two weeks alone, nearly 10 million workers have filed unemployment insurance claims. And given that health insurance is tied to work for so many, we estimate that 3.5 million workers likely also lost their health insurance in the last two weeks. The grief and suffering behind these numbers is incomprehensible. Though it has not been officially declared, we are certainly already in a deep recession that will get deeper before it gets better.

While these data are shocking – I have been a labor economist for a very long time and have never seen anything like them – they are not quite telling the whole story. These insurance claims data exclude many workers who are not eligible for regular UI, including independent contractors, those who don’t have long enough work histories, those who had to quit work to care for a child whose school closed and more, so the actual number of people out of work due to the coronavirus is even higher.

One of the most effective parts of the Cares Act, the relief and recovery act that Congress recently passed, is a $250bn expansion of unemployment insurance, including an increase in the level of benefits and the creation of a pandemic unemployment assistance (PUA) program that will be available to many workers who are not eligible for regular unemployment insurance. The bill also has some provisions that will preserve jobs. For example, it makes clear that workers who are furloughed because their workplace is closed due to the coronavirus are eligible for unemployment insurance benefits, and provides businesses with a payroll tax credit for keeping workers on health insurance. The bill also includes loans for small businesses which will be forgiven if the money is used to preserve jobs and wages. These measures will incentivize employers to keep workers on payroll. Together, these provisions are very important and will help millions of unemployed workers.

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However, a glaring hole in the bill is the fact that its single biggest tranche of money goes towards industry bailouts which do not include adequate safeguards to ensure that the money is used to preserve jobs, rather than to preserve the wealth of shareholders, creditors and corporate executives. This is a mistake that will cause lasting harm to workers who would have kept their jobs if the conditions on the bailouts had been stronger, and it will prolong the downturn.

Based on new GDP forecasts, we project that nearly 20 million workers will be laid off or furloughed by July, with losses in every state. And importantly, the GDP forecasts these projections are based on include the impact of the Cares Act and they assume that Congress will pass another relief package focused on aid to states. That implies that far more than 20 million workers will be laid off or furloughed if there is not another meaningful relief and recovery bill.

Congress should now turn to crafting another relief package that includes not just state aid but also includes policies to encourage employers to keep workers on payroll or on furlough during the lockdown – rather than laying them off – so as few families as possible face the near- and long-term consequences of job loss, and so workers are ready to jump back in to work as soon as the lockdown is over and get the economy back on track.



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