April 2, 2020

Another Record-breaking Week for Unemployment Claims

Dave Shideler and Jonas Crews

New unemployment insurance claims rose again for the U.S. and most states, as the fallout from the coronavirus continues.

The U.S. posted 5.8 million1 unemployment insurance (UI) claims being filed during the week ending March 28, breaking last week’s record for UI initial claims filed in a given week. These unemployment claims reflect the success of social distancing policies prescribed by President Trump and many local and state officials. Given that only 29% of U.S. workers are able to work remotely2, the number of workplaces to temporarily shut down to avoid transmission of the virus and minimize costs while revenues plummet has increased as several states and many municipalities are implementing shelter in place orders. Coronavirus Aid, Relief and Economic Security (CARES) Act, signed into law on March 27, 2020, expands unemployment insurance coverage, both in terms of eligibility and benefits, which is also contributing to the continued rise in claims last week. Additionally, some claims may actually be from the previous week, but the claims could not be processed due to overwhelmed unemployment insurance offices and crashed websites.3

Job losses will likely continue until the CARES Act provisions of personal payments and enhanced UI benefits kick in 2-3 weeks from now.4 Workers who have been furloughed, laid off, or had their hours reduced are being forced to cut back on spending, with the hopes that they can make until receiving these funds. This will further decrease economic activity at the few restaurants and stores that may still be open. Estimates for total jobs lost due to coronavirus (through the end of June) range from 8 million5 to 47 million6, though several economists are projecting between 14 and 20 million jobs will be lost7.

Looking across the states, we continue to see those areas most profoundly impacted by COVID-19 realizing the highest levels of UI claims. Claims in New York, New Jersey, California and Michigan (which represent 58% of COVID-19 confirmed cases in the U.S.8) remain in the top 10 highest states for number of claims. California had the highest number of claims, nearly 880,000, while New York ranked 3rd highest with over 366,000 claims, Michigan reported over 311,000 and ranked 4th, and New Jersey reported over 205,000, making it the 8th highest nationally. Pennsylvania (2nd), Texas (5th), Ohio (6th), Florida (7th), Washington (9th) and Massachussets (10th) complete the top 10. Michigan had the highest number of claims among Heartland states, closely followed by Texas with 276,000 claims filed and Ohio with over 272,000 claims filed. The 20 Heartland states accounted 37% of total claims filed last week.

States realizing the highest growth in UI claims include Georgia, Alabama, Mississippi, Hawaii and California with growth rates of 990%, 636%, 461%, 454%, and 372% respectively. Among Heartland states, Alabama had the highest growth in claims (2nd nationally), followed by Mississippi (3rd nationally), South Dakota (277%, 9th nationally), Arkansas (191%, 13th nationally) and Tennessee (148%, 14th nationally). 4 states saw UI claims decline from last week: Minnesota (a Heartland state), New Hampshire, Rhode Island and Nevada.

For additional perspective, we made year-over-year comparisons across states. All U.S. states realized an increase in UI claims compared to the same week last year. Indiana, Michigan, New Hampshire, North Carolina and Louisiana realized the greatest increases, ranging from 7,093% to 5,772% growth. 3 of these 5 states are in the Heartland. Interesting, Michigan (4th) and Louisiana (8th) are the only states, and both are Heartland states, in the top 10 for most confirmed cases of COVID-19. As a region, the Heartland realized faster growth in unemployment insurance claims filed (3,303%) compared to the U.S. as a whole (3,069%).

The recent stimulus package should help to reduce growth in the unemployment insurance claims, once direct payments are received by households and UI benefits reach workers. However, this is still a week or two away. Next week may be yet another record week as a result.