That is just the start. Joblessness is expected to keep soaring. Yet many were still stunned when the Department of Labour released its data. On March 26th government statisticians reported that 3.3m Americans had filed unemployment claims in the week ending on March 21st, by far the highest total since the series started in 1967. The previous record was 695,000, for the week ending on October 2nd, 1982, near the end of the recession in the early 1980s.
Alarming as they are, these data are likely to underestimate how dire the situation is for American workers, for two reasons. First, they are already out of date. The covid-19 pandemic has only intensified. Around a dozen states have announced lockdowns since March 21st. Second, the data only account for those newly laid-off workers who succeeded in filing for benefits. Many workers were stymied in their efforts to do so by clogged phone lines and crashed state employment websites. The latest report shows that only 187,000 people in California filed unemployment claims. Assuming that Californians, whose state went into lockdown on March 19th, were laid off at the same rate as the rest of the country, a rough calculation suggests the figure for the state should be closer to 400,000.
Alarming as they are, these data are likely to underestimate how dire the situation is for American workers, for two reasons. First, they are already out of date. The covid-19 pandemic has only intensified. Around a dozen states have announced lockdowns since March 21st. Second, the data only account for those newly laid-off workers who succeeded in filing for benefits. Many workers were stymied in their efforts to do so by clogged phone lines and crashed state employment websites. The latest report shows that only 187,000 people in California filed unemployment claims. Assuming that Californians, whose state went into lockdown on March 19th, were laid off at the same rate as the rest of the country, a rough calculation suggests the figure for the state should be closer to 400,000.
America’s unemployment-insurance system, which is administered at the state level, covers a portion of workers’ earnings—45% of lost wages, on average, for up to 26 weeks. A $2trn emergency stimulus package, passed by the Senate on March 25th, would extend these benefits by a further 13 weeks and top them up by $600 per week for four months. Once passed by the House of Representatives and signed into law, self-employed and part-time workers would be allowed to claim compensation, which will further increase the unemployment numbers. Those who are ill or quarantined, and those caring for a child or family member, would also be entitled to benefits.
All this marks a dramatic reversal for the longest period of economic expansion in American history. The unemployment rate fell to 3.5% in February, the lowest in five decades. Now bank analysts reckon that America’s GDP could fall by double digits in the second quarter of 2020. The Economic Policy Institute, a left-leaning think-tank, predicts that nearly 14m workers will have lost their jobs by June, representing nearly one-tenth of the country’s labor force. America’s economy is going to sink much further before it starts to recover.
All this marks a dramatic reversal for the longest period of economic expansion in American history. The unemployment rate fell to 3.5% in February, the lowest in five decades. Now bank analysts reckon that America’s GDP could fall by double digits in the second quarter of 2020. The Economic Policy Institute, a left-leaning think-tank, predicts that nearly 14m workers will have lost their jobs by June, representing nearly one-tenth of the country’s labor force. America’s economy is going to sink much further before it starts to recover.
