Economic News

Week 3 of the Collapse of the US Labor Market

US unemployment claims 2020 04 09 detail

Gut-wrenching. The hope is that most people will be rehired as the health crisis becomes more manageable and lockdowns are loosened.

By Wolf Richter for WOLF STREET.

More – and previously unimaginable – gut-wrenching data about the lockdown-economy: 6.606 million people filed initial unemployment claims in the week ended April 4, seasonally adjusted, about ten times the prior peaks during the prior crises in 1982 and 2009, according to the US Department of Labor this morning. This is in addition to the 6.87 million claims a week ago (upwardly revised by 219,000 claims) and 3.3 million claims two weeks ago. Combined, this makes for nearly 16.78 million unemployment claims processed in three weeks.

State unemployment offices have ramped up staffing in their claims processing departments to catch up with the tsunami of claims, and they have beefed up their websites that have crashed periodically under the onslaught, and they’re still behind processing the claims. What we’re seeing today is the only portion that they were able to process.

And there are still uncertainties about the implementation of the expansion of eligibility for unemployment insurance that was part of the stimulus package signed into law on March 27. So these are mostly people who are eligible to file for unemployment insurance under the old rules. And the tsunami of initial claims will continue for a while longer.

This chart, going back over four decades, puts the suddenness and magnitude of the current collapse of the job market into long-term perspective:

The 11 states with the most initial claims this week.

The table below shows the 11 states that had the most initial claims for unemployment insurance in the week ended April 4. I extended the list to 11 because I wanted to get Florida into it because in its comments (listed further below) it joined Texas as the only two states that mentioned “agriculture” among the industries with large unemployment claims:

The 11 States with the most Initial Claims in week ended Apr 4
1 California 925,450
2 Georgia 388,175
3 Michigan 384,844
4 New York 345,246
5 Texas 313,832
6 Pennsylvania 283,718
7 Ohio 224,182
8 New Jersey 213,897
9 Illinois 200,940
10 Washington 176,827
11 Florida 169,885

Industries and states:

Some of the states provided comments about the industries that the layoffs were concentrated in. Here are the comments from the states with the largest number of unemployment claims. Note the breadth of those industries:

California: Services industries.

Michigan: Manufacturing, construction, retail trade, administrative, support, waste management, and remediation services, and health care and social assistance industries.

New York: Accommodation and food services, retail trade, and health care and social assistance industries.

Texas: Accommodation and food services, manufacturing, other services, health care and social assistance, administrative, support, waste management, and remediation services, professional, scientific, and technical services, arts, entertainment, and recreation, information, mining, agriculture, forestry, fishing, and hunting, retail trade, real estate rental and leasing, construction, transportation and warehousing, and management of companies and enterprises industries.

Pennsylvania: Construction, administrative, support, waste management, and remediation services, and accommodation and food services industries.

Illinois: Other services, accommodation and food services, and retail trade industries.

Florida: Agriculture, forestry, fishing, and hunting, construction, manufacturing, wholesale trade, retail trade, and other services industries.

Washington: Accommodation and food services industry.

North Carolina: Layoffs in the health care and social assistance, administrative, support, waste management, and remediation services, accommodation and food services, and other services industries.

Alabama: Layoffs in the accommodation and food services, health care and social assistance, manufacturing, administrative, support, waste management, and remediation services, professional, scientific, and technical services, arts, entertainment, and recreation, educational services, and construction industries.

Number of “insured unemployed” soar to record

The above numbers are the “initial claims” of Unemployment Insurance (UI). A week after they filed, and if the people are still unemployed, they are added to “insured unemployment.”

The number of “insured unemployed” soared to 7.45 million. The report added: “This marks the highest level of seasonally adjusted insured unemployment in the history of the seasonally adjusted series. The previous high was 6,635,000 in May of 2009.

As more people will file for unemployment in the coming weeks, and as the unemployment offices catch up with the surge, these gut-wrenching numbers are going to balloon further.

The hope is that most of these people will be rehired by their old employers as the health crisis becomes more manageable and as lockdowns are gradually loosened. That’s the hope, and we’ll cling to it.

When the unemployment crisis exploded onto the scene three weeks ago, sales totally collapsed. What’s in store for the industry? Read... How Lockdowns Hit U.S. New & Used Vehicle Sales: Beyond Ugly

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Source: wolfstreet.com

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