The number of Americans filing for unemployment last month skyrocketed to record levels. Coronavirus-induced layoffs shut down parts of the U.S. economy in unprecedented fashion in an effort to reduce the spread of COVID-19. For the period starting March 14th and ending April 4th, 16.78 million people have filed unemployment.
Approaching Historic Unemployment
With the current volume of claims and adjustments from the prior week, alongside the existing five million previously unemployed in February, the unemployment rate is now estimated to be 15.9 percent.
Another Six Million Unemployment Claims in One Week
The Department of Labor reported that for the week ending April 4, initial unemployment claims soared once again, with an additional 6.606 million claims filed. The seasonally adjusted initial claims for the week ending March 28 were revised up to 6.867 million. Coupled with early claims and continued claims, the estimated number of unemployed people in the U.S. is 25.903 million.
By state, the largest non-seasonally adjusted increases in initial claims for the week ending April 4 were in:
- California (+925,450)
- Michigan (+384,844)
- New York (+345,246)
- Texas (+313,832)
- Pennsylvania (+283,718)
- Ohio (+224,182)
- New Jersey (+213,897)
- Illinois (+200,940)
- Washington (+176,827)
- Florida (+169,885)
Reported claims could be significantly lower than actual numbers, however, as some state websites are not equipped to handle the volume of claims pouring in on a daily basis.
Some of the most challenging instances of filing problems have occurred in New York and Florida. Florida, for example, began issuing paper applications, as so few were able to access the state’s unemployment site or print the applications successfully. According to many local media reports, Florida residents throughout the state are having to break social distancing rules and join long lines to obtain forms. In addition, FedEx locations across Florida have begun supplying the paper applications and shipping them free of charge overnight to the Department of Economic Opportunity in Tallahassee. Depending on the success of this new strategy, this may increase the accuracy of Florida’s unemployment claims in the coming weeks.
While much of the focus is on the raw unemployment numbers and the state figures, many large metros will see a substantial impact from the new claims. Based on having a larger-than-normal concentration of impacted occupations like food serving and sports-related activities, these major metros are likely to see a heavy impact.
Paycheck Protection Program
As part of the $2-trillion safety net to keep employees on company payrolls in the U.S, the Payroll Protection Program began taking applications from small businesses on April 3. While the Treasury Department announced that the program would start taking applications on that date, the department didn’t give lenders the necessary technical information until just hours before the program was scheduled to start. This has now caused many applicants running businesses to face similar hurdles confronting individuals applying for assistance. The next phase of applications for the program is scheduled to open on April 10 for those business owners who are considered sole proprietors. This includes freelance workers and independent contractors.
Businesses are reaching out to accountants and banks for support and data to process their Paycheck Protection applications. But, with 47 percent of U.S. businesses in the small business category, more financial help is likely needed. On April 9, the Federal Reserve said it would aim to provide an additional $2.3 trillion in emergency loans for businesses of all sizes as well as state and city governments. Also, Congress will reportedly look soon to bolster the Paycheck Protection Program with an additional $250 billion in funding.
The U.S. labor market continues to be rocked by the novel coronavirus. While initial unemployment claims for the week ending April 4 were down slightly from the previous week, fallout from the COVID-19 shutdown is sure to continue. Weekly predictions for coming UI reports in April vary widely, from 2.5 million to 7.5 million. While it’s expected that claims will taper off as the weeks go by, look for initial unemployment claims to reach more than 16 million for the full month.
ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs and businesses across the country. Stay current with us. We are here to support organizations and provide insights during the economic downturn, as well as the recovery phase.