First UI claims of 2021 are still higher than the worst of the Great Recession
There was an armed insurrection at the U.S. Capitol yesterday in which the police were complicit in a way that has everything to do with structural racism. Structural racism has also meant that Black and Latinx working people are experiencing a disproportionate health and economic impact of the COVID-19 pandemic. The UI data released this morning show a labor market in turmoil as COVID-19 surges.
Another 948,000 people applied for Unemployment Insurance (UI) benefits last week, including 787,000 people who applied for regular state UI and 161,000 who applied for Pandemic Unemployment Assistance (PUA). The 948,000 who applied for UI last week was a decrease of 152,000 from the prior week. That drop was driven almost entirely by a drop in PUA claims, undoubtedly due to uncertainty over whether PUA would be extended, as Trump delayed signing the relief bill during that week. Now that the program has been extended (more on that below), I expect PUA claims to rise again in coming weeks.
Last week was the 42nd straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week were greater than the second-worst week of the Great Recession.)
Most states provide 26 weeks (six months) of regular benefits. Given the length of this crisis, many workers have exhausted their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by 126,000. After an individual exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 24 weeks of regular state UI (the December COVID-19 relief bill increased the number of weeks of PEUC eligibility by 11, from 13 to 24).
However, in the most recent data available for PEUC, the week ending Dec 19, PEUC claims dropped by 293,000. That was undoubtedly due to exhaustions. Well over 2 million people had exhausted the original 13 weeks of PEUC before Congress passed the extensions (see column C43 in form ETA 5159 for PEUC here). These workers are eligible for the additional 11 weeks, but they will need to recertify. We can expect PEUC numbers to swell dramatically as this occurs.
Continuing claims for PUA also dropped, by 71,000, in the latest data. The latest data for this series is also for the week ending December 19—so before the relief bill, meaning some of that drop would have been exhaustions, i.e. temporary. The COVID-19 relief bill also extended the total weeks of eligibility for PUA by 11, from 39 to 50 weeks. As with PEUC, those who had exhausted the original 39 weeks of PUA before Congress passed the extensions are eligible for the additional 11 weeks, but they will need to recertify. Workers who were still on PUA (or PEUC) when Congress passed the bill will not need to recertify.
The 11-week extensions of PEUC and PUA just kick the can down the road—they are not long enough. Without additional action by Congress, millions will exhaust benefits in mid-March, when the virus is still surging and job opportunities are still scarce.
Figure A shows continuing claims in all programs over time (the latest data are for December 19). Continuing claims are still more than 17 million above where they were a year ago, even with the exhaustions occurring during the time period covered by this chart.
Continuing unemployment claims in all programs, March 23, 2019–December 19, 2020: *Use caution interpreting trends over time because of reporting issues (see below)*
|Date||Regular state UI||PEUC||PUA||Other programs (mostly EB and STC)|
Click here for notes.
Click here for notes.
Data are not seasonally adjusted. A full list of programs can be found in the bottom panel of the table on page 4 at this link: https://www.dol.gov/ui/data.pdf.
Source: U.S. Employment and Training Administration, Initial Claims [ICSA], retrieved from Department of Labor (DOL), https://oui.doleta.gov/unemploy/docs/persons.xls and https://www.dol.gov/ui/data.pdf, January 7, 2021.
Senate Republicans allowed Federal Pandemic Unemployment Compensation (FPUC), the across-the-board $600 increase in weekly UI benefits, to expire at the end of July. Fortunately, in the December COVID-19 relief bill, FPUC was reinstated—but at just $300. And, the $300 is not retroactive, so unemployed workers will get no additional payments for the five months the FPUC was not in place.
This blog post by Michele Evermore at the National Employment Law Project (NELP) is an excellent summary of the UI provisions in the December COVID-19 relief bill. One new UI program is Mixed Earner Unemployment Compensation (MEUC). MEUC solves a glitch that meant unemployed workers who had W-2 earnings and self-employment earnings were, in many cases, losing a significant amount of UI benefits under the CARES Act. In particular, because these “mixed earners” had W-2 earnings, they got regular benefits and therefore, under CARES, couldn’t get anything from PUA. This was a serious issue for workers who had a little W-2 earnings and a lot of self-employment earnings. What MEUC does is give workers on regular benefits an extra $100 per week if they also had at least $5,000 in self-employment income in 2019. MEUC is, regrettably, optional for states to implement.
One reason it’s unfortunate that, as mentioned above, FPUC was reduced to $300—and that it is not retroactive—is that UI is extremely effective economic stimulus. Reinstating the full $600 FPUC would have created or saved millions more jobs than adding just $300 for only 11 weeks. There are now 26.1 million workers who are either unemployed, otherwise out of work because of the virus, or have seen a drop in hours and pay because of the pandemic. Further, job growth is slowing, and the virus is surging. More relief is desperately needed.
A key reason more relief is so important is that this crisis is greatly exacerbating racial inequality. Due to the impact of historic and current systemic racism, Black and Latinx workers have seen more job loss in this pandemic, and have less wealth to fall back on. To get the economy back on track in a reasonable timeframe, we need policymakers to pass an additional $2.1 trillion in fiscal support (the $2.1 trillion is calculated by subtracting the $900 billion December COVID-19 relief bill from the total $3 trillion in fiscal support that is actually needed). In particular, it is crucial that Congress provide substantial aid to state and local governments. Without this aid, austerity by state and local governments will result in cuts to essential public services and the loss of millions of jobs in both the public and private sector.
Senate Republicans forced the December bill to be far too small. Fortunately, with the new Democratic majority in the Senate given the results of the Georgia runoffs, Democrats will now be able to get more relief measures through reconciliation. Top priorities are aid to state and local governments and further extensions of UI. There is no time to lose.
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