Second Week of Historic Unemployment Claims

April 2, 2020
Author: Jay Denton

Another wave of unemployment claims gripped the U.S. economy in the past week as additional shelter-in-place restrictions clamped down on the country and the retail industry made a sweeping round of furloughs.

U.S. Unemployment Claims Surge for Second Week

Second Week of Historic Initial Claims

This week marks a new high for seasonally adjusted initial claims in the history of the seasonally adjusted series. With this volume of claims, as well as adjustments from the past several weeks alongside the existing 5 million previously unemployed in February, the U.S. unemployment rate is likely to reach 11.9 percent.

March 2020 Unemployment Rate Monthly Change

Nested within these claims are businesses and employees impacted by large rounds of recent retail furloughs. Businesses announcing furloughs with a major impact include:

  • Macy’s, which furloughed 125,000 employees
  • Gap, which furloughed nearly 80,000 employees
  • Kohl’s, which furloughed 85,000 employees
  • Ann Taylor, which furloughed approximately 38,000 employees

6.648 Million Unemployment Claims in One Week

The U. S. Department of Labor reported that initial jobless claims for the week ending March 28 soared again to 6.648 million, as a record number of Americans filed for unemployment benefits in the wake of the COVID-19 pandemic. The seasonally adjusted initial claims for the week ending March 21 were revised upward to 3.307 million, for a total of 9.955 million initial claims filed over two weeks. For perspective, this would equate to the entire population of Michigan filing for unemployment insurance over the course of two weeks.

Initial Unemployment Insurance Claims for Week Ending March 28

It’s important to note that weekly state-level claims are likely a more appropriate picture of near-term unemployment compared to data released April 2 from the Bureau of Labor Statistics. According to technical notes provided by the BLS, unemployment for the month ending March 31 is calculated using any increment of employment that occurred before March 12.

States like California and New York did not put shelter-in-place orders in place until March 19 and 20, respectively, and some states put rules into place as recently as the past 48 hours. This will undoubtedly impact claim numbers in the coming week as more employers are forced to shift their employees to remote work or close, based on each state’s rules.

By state, the largest non-seasonally adjusted initial claims for the week ending March 28 were:

  • Pennsylvania (+405,880)
  • Michigan (+311,086)
  • Texas (+275,597)
  • Florida (+227,000)
  • Massachusetts (+181,062)

The states most impacted by COVID-19 cases saw initial claims of:

  • +878,727 (California)
  • +366,403 (New York)
  • +272,129 (Ohio)
  • +205,515 (New Jersey)
  • +187,501 (Washington)
  • +178,133 (Illinois)
  • +97,830 (Louisiana)

Based on sentiment across news outlets and reports from those affected, these reported claims could be significantly lower than the actual numbers, as state websites are not equipped to handle the volume of claims flooding in on a daily basis.

How Several States are Handling the Surge in Claims

Florida – No Prepared Fix

State auditors warned Gov. Ron DeSantis last year that Florida’s unemployment website was still suffering major problems, including glitches, error messages and other problems that thousands of Floridians are now experiencing. State auditors found the site still had more than 600 system errors waiting to be fixed, but state officials had no process in place to evaluate and fix them.

Colorado and Michigan – Name Game

To limit the surge to the system in Colorado and Michigan, people there are being asked to visit the website based on the spelling of their last name. Those whose last name begins with the letters A through M are asked to file online only on Sundays, Tuesdays, Thursdays or after noon on Saturdays. People whose last names start with N through Z are asked to file Mondays, Wednesdays, Fridays or before noon on Saturdays.

On Tuesday, Michigan’s unemployment site went dark. In an attempt to meet the demand, the Michigan site was overwhelmed and crashed for several hours. Michigan is also instituting both a web-based and phone-based last name system similar to Colorado’s to reduce filing surges.

Pennsylvania – In a Queue

Pennsylvania is attempting to institute a “call back form” where requests are put into a queue. This queue can take up to three days for a reply, but it’s an attempt to limit strain on the state’s unemployment website and call centers.

It is also important to note that 7.31 million people, or 4.6 percent of the total U.S. employment figure, are not covered by unemployment insurance and therefore are not calculated in state filing numbers. These include independent contractors and gig employees as well as seasonal and part-time employees who, although not included in weekly unemployment calculations, will still receive aid under the recently passed aid package. If these groups file for aid through state websites, additional strain on the digital infrastructure will be seen.

Possibility for Additional Aid Packages

Prior to businesses and workers seeing the influx of aid from the $2 trillion safety-net package, an additional round of measures providing for business and worker protections are being discussed in Washington, D.C. Conversations are being conducted surrounding infrastructure, family medical leave, worker protections and pensions, health care industry support and additional aid for state and local governments.

ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs and businesses across the country. Stay current with us. We are here to support organizations and provide insights during the economic downturn as well as the recovery phase.