Half a year into the pandemic and millions of people are unemployed: Congress must provide relief
Another 1.5 million people applied for unemployment insurance (UI) benefits last week. That includes 860,000 people who applied for regular state UI and 659,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year.
Last week was the 26th week in a row total initial claims were far greater than the worst week of the Great Recession. If you restrict to regular state claims (because we didn’t have PUA in the Great Recession), claims are still greater than the third-worst week of the Great Recession.
Most states provide 26 weeks of regular state benefits. After an individual exhausts those benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of benefits that is available only to people who were on regular state UI. (A reminder: PEUC is different from Pandemic Unemployment Compensation, or PUC, the now-expired $600 additional weekly benefit, which anyone on any UI program had been eligible for.)
Given that continuing claims for regular state benefits have been elevated since the third week in March, we should begin to see PEUC spike up dramatically soon (starting with the week ending September 19). However, because of reporting delays for PEUC, we won’t actually get PEUC data from this week (the week ending September 19) until October 8.
Department of Labor (DOL) data suggest that right now, 31.5 million workers are either on unemployment benefits or have applied recently and are waiting to get approved (see Figure A). But importantly, that number is a substantial overestimate for at least two reasons: (1) initial claims for regular state UI and PUA should be nonoverlapping—that is how DOL has directed state agencies to report them—but some individuals are erroneously being counted as being in both programs; and (2) some states are including retroactive payments in their continuing PUA claims, which would also lead to double-counting (this story does a great job of explaining this). The bottom line is that we truly don’t know exactly how many people are receiving unemployment insurance benefits right now. That is both bonkers and a harsh reminder that we need to invest heavily in our data infrastructure.
DOL numbers indicate that 31.5 million workers are either receiving unemployment benefits or have applied and are waiting to see if they will get benefits (as of September 12, 2020): *But caution, this is an overestimate due to reporting issues (see below)*
|Regular state UI: Continued claims||Regular state UI: Initial claims||PUA: Continued claims||PUA: Initial claims||Other programs (mostly PEUC, STC, and EB)||Total|
Click here for notes.
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This is a substantial overestimate for at least two reasons: (1) initial claims for regular state UI and PUA should be nonoverlapping—that is how DOL has directed agencies to report them—but some individuals are erroneously being counted as being in both programs; and (2) some states are including retroactive payments in their continuing PUA claims, which would also lead to double-counting. Seasonally adjusted data are not available for the other components of the chart. Regular state UI continued claims are for the week ending September 5; regular state UI initial claims are for the week ending September 12. PUA continued claims are for the week ending August 29; PUA initial claims are for the weeks ending September 5 and September 12. “Other programs” are continued claims in other programs for the week ending August 29. Pandemic Unemployment Assistance (PUA) is the federal program for workers who are out of work because of the virus but who are not eligible for regular state unemployment insurance (UI) benefits (e.g., the self-employed). “Other programs” includes PEUC, STC, EB, and others; a full list can be found in the bottom panel of the table on page 4 at this link: https://www.dol.gov/ui/data.pdf.
Source: Department of Labor (DOL) Unemployment Insurance Weekly Claims (News Release), retrieved from DOL, https://www.dol.gov/ui/data.pdf, September 17, 2020.
Figure B shows continuing claims in all programs over time (the latest data are for August 29). Continuing claims are more than 28 million above where they were a year ago. However, the above caveat about continuing PUA claims applies here too, which means the trends over time in PUA claims may be distorted because when an individual is owed retroactive payments, some states report all retroactive PUA claims during the week the individual received their payment.
Continuing unemployment claims in all programs, March 23, 2019–August 29, 2020: *Use caution interpreting trends over time because of reporting issues (see below)*
|Date||Regular state UI||PUA||Other programs (mostly PEUC, STC, and EB)|
Click here for notes.
Click here for notes.
Trends over time in PUA claims may be distorted because when an individual is owed retroactive payments, some states report all retroactive PUA claims during the week the individual received their payment. Data are not seasonally adjusted. Pandemic Unemployment Assistance (PUA) is the federal program for workers who are out of work because of the virus but who are not eligible for regular state unemployment insurance benefits (e.g., the self-employed). “Other programs” includes PEUC, STC, EB, and others; a full list can be found in the bottom panel of the table on page 4 at this link: https://www.dol.gov/ui/data.pdf.
Republicans in the Senate allowed the across-the-board $600 increase in weekly UI benefits to expire at the end of July. Last week was the seventh week of unemployment in this pandemic for which recipients did not get the extra $600. That means most people on UI are now are forced to get by on the meager benefits that are in place without the extra payment, benefits that are typically around 40% of their pre-virus earnings. It goes without saying that most folks can’t exist on 40% of prior earnings without experiencing a sharp drop in living standards and enormous pain. This piece shows that there is nowhere in the country a worker can afford to live on unemployment insurance alone.
In early August, President Trump issued a mockery of an executive memorandum. It was supposed to give recipients an additional $300 or $400 in benefits per week. But in reality, even this drastically reduced benefit will be extremely delayed for most workers, is only available for a few weeks, and is not available at all for many. This chart shows how much less in benefits people are getting under Trump’s executive memorandum than they did under the CARES Act. The executive memorandum’s main impact was to divert attention from the only thing that can provide the needed relief—increasing benefits through legislation. Congress must act, but Republicans in the Senate are blocking progress.
Blocking the extra $600 is terrible not just on humanitarian grounds, but also on economic grounds. The extra $600 was supporting a huge amount of spending by people who now have to make drastic cuts. The spending made possible by the $600 was supporting 5.1 million jobs. Cutting that $600 means cutting those jobs—it means the workers who were providing the goods and services that UI recipients were spending that $600 on lose their jobs. The map in Figure B of this blog post shows how many jobs will be lost by state now that the $600 unemployment benefit has been allowed to expire. The labor market is still 11.5 million jobs below where we were before the coronavirus recession. Now is not the time to cut benefits that support jobs.
But what about the supposed work disincentive effect of the extra $600? Rigorous empirical studies show that any theoretical work disincentive effect of the $600 was so minor that it cannot even be detected. For example, a study by Yale economists found no evidence that recipients of more generous benefits were less likely to return to work, which is what we would expect to see if the extra payments really were a disincentive to work. And a case in point: In May/June/July—with the $600 in place—9.2 million people went back to work, and a large share of likely UI recipients who returned to work were making more on UI than their prior wage. The extra benefits did not stop them from going back. A job offer is too important at a time like this to be traded for a temporary increase in benefits, and when commentators ignore that, they are ignoring the realities of the lives of working people. Further, there are 8.5 million more unemployed workers than job openings, meaning millions will remain jobless no matter what they do. Dropping the $600 cannot incentivize people to get jobs that are not there.
Dropping the extra $600 is also exacerbating racial inequality. Due to the impact of historic and current systemic racism, Black and brown communities have seen more job loss in this recession and have less wealth to fall back on. They are taking a much bigger hit with the expiration of the $600. This is particularly true for Black and brown women and their families, because in this recession, these women have seen the largest job losses of all. It is also important to remember that people haven’t just lost their jobs. An estimated 12 million workers and their family members have lost employer-provided health insurance due to COVID-19. The Senate must extend the UI provisions of the CARES Act, both to provide relief to the jobless and to the bolster the broader economy.