Research
Initial UI Claims Hover Near Record Levels as Layoffs Persist
Daniel Zhao
Chief Economist at Glassdoor | Apr 9, 2020
As the coronavirus outbreak escalates, millions more Americans are filing unemployment insurance claims as layoffs continue unabated. In the Department of Labor's report this morning, initial claims for unemployment insurance (UI) fell from record levels to 6.61 million, and initial claims for the week ending March 28 were revised up slightly from 6.6 million to 6.9 million. New claims actually set a new record on a non-seasonally adjusted basis rising from 6 million to 6.2 million. Overall, claims remain elevated at levels unlike any other point in American economic history. The unrelenting weekly deluge of UI claims shows how abruptly the coronavirus outbreak has plunged the labor market into crisis.
In its first month alone, the coronavirus crisis is poised to exceed any comparison to the Great Recession. In the last 3 weeks, 14.9 million Americans have filed for unemployment insurance, several times greater than the 3.27 million Americans laid off or discharged in the worst month of the Great Recession. Additionally, not all laid off workers file for UI or are officially counted in the unemployment rate, understating the severity of the current downturn. Claims over the last 3 weeks are likely enough to raise the present unemployment rate over 10 percent, higher than any point in the Great Recession.
At this point, most states have shut down non-essential businesses, meaning claims driven initially by shutdown orders will start to diminish in coming weeks. However, other factors like employer insolvencies, reduced consumer demand, permanent layoffs and drawing down the claim backlog will keep claims elevated. Additionally, eligibility for unemployment insurance is set to expand under the CARES Act, which may boost UI claims in coming weeks as states fully implement the new guidelines. It’s still uncertain where weekly UI claims will settle after the initial surge, but prolonged and elevated levels of claims may signal that layoffs are shifting from temporary furloughs to permanent job losses. The new normal for UI claims will be the canary in the coal mine for how long effects of the crisis will linger for the millions of newly unemployed Americans.
To speak with Daniel Zhao about today’s report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.
In its first month alone, the coronavirus crisis is poised to exceed any comparison to the Great Recession. In the last 3 weeks, 14.9 million Americans have filed for unemployment insurance, several times greater than the 3.27 million Americans laid off or discharged in the worst month of the Great Recession. Additionally, not all laid off workers file for UI or are officially counted in the unemployment rate, understating the severity of the current downturn. Claims over the last 3 weeks are likely enough to raise the present unemployment rate over 10 percent, higher than any point in the Great Recession.
At this point, most states have shut down non-essential businesses, meaning claims driven initially by shutdown orders will start to diminish in coming weeks. However, other factors like employer insolvencies, reduced consumer demand, permanent layoffs and drawing down the claim backlog will keep claims elevated. Additionally, eligibility for unemployment insurance is set to expand under the CARES Act, which may boost UI claims in coming weeks as states fully implement the new guidelines. It’s still uncertain where weekly UI claims will settle after the initial surge, but prolonged and elevated levels of claims may signal that layoffs are shifting from temporary furloughs to permanent job losses. The new normal for UI claims will be the canary in the coal mine for how long effects of the crisis will linger for the millions of newly unemployed Americans.
To speak with Daniel Zhao about today’s report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.
Daniel Zhao
Daniel Zhao is Chief Economist at Glassdoor. On Glassdoor's Economic Research team, he has conducted research using Glassdoor's unique data on a variety of topics affecting job seekers and employers ranging from the health of the job market to pay transparency to employee engagement & retention. His work has been cited in publications like the New York Times, the Harvard Business Review and more. Prior to joining the Economic Research team, he also worked on improving the user experience for Glassdoor’s consumer jobs product and mobile app. He holds a bachelor's degree in applied mathematics and economics from Harvard College.
Tags:BenefitsUnemployment
