With millions of workers receiving unemployment benefits and no end in sight for the COVID-19 pandemic, Congress must act
Another 1.5 million people applied for unemployment insurance (UI) benefits last week. That includes 837,000 people who applied for regular state UI and 650,000 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. The 1.5 million who applied for UI last week was unchanged from the prior week.
Note: California has shut down all new UI claims while they prepare an updated identity verification system to combat fraud, but the Department of Labor (DOL) adjusted for that in their published numbers. UI fraud is not about individuals filing a one or two fraudulent claims, but sophisticated schemes involving extensive identity theft and the overriding of security systems. That UI systems are vulnerable to these attacks is no great surprise, given that UI agencies are often working on computer systems that are decades old. One take-home message here is that we need to invest heavily in the technology of our UI systems.
Most states provide 26 weeks (six months) of regular benefits—and the coronavirus crisis has now lasted more than six months. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by almost a million, from 12.75 million to 11.77 million.
The good news is that unless there are administrative glitches, total claims should not yet fall as a result of individuals exhausting regular state UI, because unemployed workers can move onto Pandemic Emergency Unemployment Compensation (PEUC), which provides an additional 13 weeks of benefits to people who have exhausted regular state UI.
DOL data suggest that, right now, 28.0 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 one thing, 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. Further, 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). Finally, as mentioned above, creaky UI systems have also been the target of highly sophisticated fraud, which adds to claims numbers. All this means nobody knows exactly how many people are receiving unemployment insurance benefits right now, which is yet another reminder that we need to invest heavily in our data infrastructure and technology.
DOL numbers indicate that 28.0 million workers are either receiving unemployment benefits or have applied and are waiting to see if they will get benefits (as of September 26, 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.
Click here for 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 September 19; regular state UI initial claims are for the week ending September 26. PUA continued claims are for the week ending September 12; PUA initial claims are for the weeks ending September 19 and September 26. “Other programs” are continued claims in other programs for the week ending September 12. 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, October 1, 2020.
Figure B shows continuing claims in all programs over time (the latest data are for September 12). Continuing claims are more than 25 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.
Continuing unemployment claims in all programs, March 23, 2019–September 12, 2020: *Use caution interpreting trends over time because of reporting issues (see below)*
|Date||Regular state UI||PEUC||PUA||Other programs (mostly STC and EB)|
Click here for notes.
Click here for 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 ninth 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 an executive memorandum that was supposed to give recipients an additional $300 or $400 in benefits per week. But in reality, even this drastically reduced benefit has been 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.
Blocking the extra $600 in weekly UI benefits is terrible economics. 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 12.7 million jobs below where we would be if the recession hadn’t happened. 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. And more simply: 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 valuable. 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. Further, workers in this pandemic aren’t just losing 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.