Many workers have exhausted their state’s regular unemployment benefits: The CARES Act provided important UI benefits and Congress must act to extend them
Another 1.5 million people applied for unemployment insurance (UI) benefits last week. That includes 870,000 people who applied for regular state UI and 630,000 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 27th week in a row—more than six months—that 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 3rd-worst week of the Great Recession.
We’ve hit a grim milestone. Most states provide 26 weeks of regular benefits. That means last week was the first week many workers had exhausted their regular state UI. However, data on continuing claims for regular state UI is delayed a week, so we can’t see the drop yet. The good news is that unless there are administrative glitches, total claims should not fall as a result of individuals exhausting regular state UI, because unemployed workers can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of regular state UI (and is only available to people who were on regular state UI). Note: PEUC was part of the CARES Act. It 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. With people moving from regular state benefits onto PEUC, I expect PEUC began to spike up dramatically last week. However, because of reporting delays for PEUC, we won’t get PEUC data from last week until October 8th.
Department of Labor (DOL) data suggest that right now, 28.4 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 non-overlapping—that is how DOL has directed state agencies to report them—but some individuals are erroneously being counted as being in both programs; (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, astoundingly, nobody knows exactly how many people are receiving unemployment insurance benefits right now. This is a grim reminder that we need to invest heavily in our data infrastructure and technology.
DOL numbers indicate that 28.4 million workers are either receiving unemployment benefits or have applied and are waiting to see if they will get benefits: But caution, this is an overestimate due to reporting issues (see below), September 19, 2020
|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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Notes: Seasonally adjusted data are used for regular state UI claims; seasonally adjusted data are not available for the other components of the chart. Regular state UI continued claims are for the week ending Sept 12; regular state UI initial claims are for the week ending Sept 19. PUA continued claims are for the week ending Sept 5; PUA initial claims are for the weeks ending Sept 12 and Sept 19. "Other programs" are continued claims in other programs for the week ending Sept 5. 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 24, 2020.
Figure B shows continuing claims in all programs over time (the latest data are for September 5). Continuing claims are more than 24 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. Two weeks from today, when we get complete data from last week for Figure B, I expect to see the regular state benefits line drop, and the PEUC line jump up, reflecting people exhausting regular state UI and moving on to PEUC.
Continuing unemployment claims in all programs. (Use caution interpreting trends over time because of reporting issues, see below): March 23, 2019–September 5, 2020
|Date||Regular state UI||PEUC||PUA||Other programs (mostly STC and EB)|
Click here for notes.
Click here for notes.
Notes: 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). 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.
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 eighth 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 which 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 joke 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 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 8.3 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.
Failing to renew 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.