Heartland Forward is tracking three key metrics on a weekly basis to understand how the current crisis is impacting the economies across different states: insured unemployment rate, initial unemployment insurance (UI) claims, and unemployment insurance cumulative claims. After two consecutive weeks of increases in initial unemployment claims, claims fell by 249,000 to 1,186,000, the lowest level since the start of the pandemic. The decline is at least partially due to the end of the $600 enhance unemployment benefit provided in the Cares Act, the loss of which reducing the incentive to file a claim.
Insured Unemployment Rate (IUR)
• After increases the previous week, both the Heartland region 1 and the non-Heartland region saw their UIR decline for the week ending July 25. Thirty-eight states had declining IUR, while 12 states had increasing IUR. Decreasing trends are consistent with the reopening of economies across the country.
• The states with more than 1 in 7 participants in the workforce on UI are: Nevada (23.5 percent), Hawaii (21.3 percent), New York (16.6 percent), Louisiana (16.5 percent), California (16.2 percent), Connecticut (15.2 percent) and Georgia (14.3 percent).
• The five states with the lowest IUR are: Idaho (3.2 percent), South Dakota (3.7 percent), Alabama (3.9 percent), Utah (4.3 percent) and Nebraska (4.4 percent).
UI Cumulative Claims
• States with the largest shares of their workforce seeking UI benefits have large manufacturing, retail trade, and accommodations and food service (largely driven by tourism activities) industries.
• Georgia continues to lead the U.S. with the highest share of its workforce applying for UI benefits at 67.6 percent.
• Seventeen states have larger shares of their workforce applying for UI benefits than the U.S. (32.2 percent).
• Seven states in the Heartland have larger shares of their workforce applying for UI benefits than the region (29.0 percent).
UI Initial Claims
• Nationally, 1.19 million persons (seasonally adjusted)2 or .98 million persons (not seasonally adjusted) applied for UI for the week ended August 1, 2020.
• The national numbers indicate a sizable decrease from the previous week and a change in trend after two consecutive weeks of increases in the seasonally adjusted number. The decrease is at least partially the result of the $600-per-week enhanced unemployment benefits, a component of the Cares Act, ending last week. The loss of the enhanced benefits means unemployed workers are only eligible for state-offered benefits, which are generally a small portion of workers’ weekly earnings from prior employment. Thus, the incentive to file an unemployment claim has been significantly reduced.
• These states had the highest number of initial claims for the week ending August 1, 2020: California (228,530), Florida (73,955), New York (73,740), Georgia (72,695) and Texas (61,940).
• Only one state, Rhode Island, saw an increase in initial claims from the previous week, and Rhode Island’s claim number was only up 7 claims.
• These states realized the greatest decline in initial claims between last week and the week before: New Jersey (44 percent decline), Tennessee (42 percent decline), Virginia (40 percent decline), Wyoming (39 percent decline) and Indiana (38 percent decline).
• Of the Heartland states, Texas, Ohio, Illinois, Kentucky, and Wisconsin had the highest levels of initial claims. All Heartland states saw claims fall from the previous week, with Tennessee, Indiana, and Alabama seeing the greatest percentage decreases.
More On Key Terms And Our Methodology
Unemployment Insurance And Initial Unemployment Insurance Claims
Unemployment insurance (UI) is a state administered program that provides a fraction of an individual’s prior wages when they are separated from an employer for reasons beyond the individual’s control. The fraction of wages paid, as well as the length of time an individual can receive benefits, vary by state, however, the Coronavirus Aid, Relief and Economic Security (CARES) Act provided expanded eligibility and enhanced benefits across all 50 states.3 The enhanced benefits expired the week ending July 25.
Weekly unemployment insurance claims data4 provides the most up-to-date data on employment trends that is available. Economists watch these data as indicators of the economy’s health, as movements in unemployment insurance foreshadow periods of economic contraction or expansion.
Unemployment Insurance Cumulative Claims
Initial claims are filed when an individual is separated from his/her employer. Administratively, it is a request for benefit eligibility determination. That is, no benefits are issued based upon this claim; rather, an individual is deemed eligible to receive benefits, and the level of those benefits is determined by this claim. Initial claims are considered a leading indicator of economic activity, as initial claims rapidly rise when the economy is contracting and many people are furloughed and/or laid off.
The map allows you to observe how the levels of UI initial claims by state and week since March 7, 2020. Shades of red reflect rising claims, while shades of green reflect declining claims. If you hover over a given state, you will be given the level claims for the current data, as well as the level and percent change over the previous week.
To put the initial claims data into perspective, we calculate the share of February 2020 private employment that have filed initial claims to date. This measure compares the sum of weekly initial claims since March 7, 2020, to “pre-COVID-19” pandemic employment levels (total private employment for February 2020). Intuitively, this calculation represents the share of a state’s workforce requesting UI benefits.
The bars in the chart are arranged alphabetically, because you can compare week to week changes by adjusting the slider above the chart. Hovering over a particular bar will reveal the share of pre-outbreak employment that has filed for UI, as well as the level of initial claims since March 7, 2020 and the level of employment in February 2020.
Insured Unemployment Rate
The insured unemployment rate (IUR) is the ratio of the number of continuing claims in a given week divided by the number of employees covered by UI during that quarter. Continuing claims are filed to receive benefits for a week of unemployment, so these represent individuals receiving UI benefits. Covered employees is a proxy for the local workforce, as it represents all employees (working and unemployed) that are eligible to receive UI benefits. Data for the IUR represents benefits received for the week before last, or July 25, 2020.
The IUR is proxy for economic activity. An increasing trend indicates economic contraction, since more individuals are receiving UI benefits from week to week. A decreasing trend indicates economic expansion, indicating that people are finding jobs (or returning to their previous jobs) and no longer needing UI benefits.
The user can customize the chart by selecting any or all of the states, including aggregate values for the Heartland and U.S. Hovering over a state’s line will provide the continuing claims, covered employment and IUR corresponding to the week and region nearest the cursor.
The Heartland region consists of these states: Alabama, Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas and Wisconsin.
Seasonal adjustment is a technique used to remove labor market changes that correspond to changes in seasons, providing consistent data for comparison throughout the year. For example, one can anticipate a rise in summer employment as amusement parks or tourism venues increase employment between Memorial Day and Labor Day to accommodate the demand associated with the summer vacation travel season. This increase happens annually, so it would be inappropriate to interpret it as an increase in employment without accounting for the seasonality.
Eligibility was expanded to cover individuals who are quarantined, caring for a family member with COVID-19, or who are voluntarily quarantining arising from health concerns. Additionally, independent contractors and sole proprietors are eligible for unemployment insurance benefits under the Pandemic Unemployment Assistance. Enhanced benefits included a $600 per week supplement to state’s regular payments through July 31, 2020, and an extension of every state’s benefits duration by 13 weeks.
Unemployment insurance claims is reported weekly, 8:30 am Eastern Time on Thursdays, by the U.S. Department of Labor, Employment and Training Administration here: https://www.dol.gov/ui/data.pdf. Historical data is available for download here: https://oui.doleta.gov/unemploy/claims.asp.