The US Department of Labor registered 6.6 million initial unemployment insurance claims for the week ending April 4, according to data newly reported on Thursday morning.
That’s not quite as bad as the record 6.9 million initial claims from the previous week, but it’s still worse than the 3.3 million claims in the week prior to that, which was a record at the time. Before the coronavirus outbreak, the highest number of new unemployment insurance claims in a week was about 700,000 back in 1982, so the economy continues to be in uncharted waters in terms of the pace of the labor market collapse.
Economists offer two caveats to this data. One is that the recently enacted CARES Act to cushion the economic blow of the pandemic expands the scope of UI eligibility to cover more independent contractors and gig economy workers. So claims are surging, at least in part, because more people are eligible, making comparisons to past data slightly invalid. At the same time, state UI systems — which are often built on obsolete code, starved of resources by state governments, and not designed to handle this volume of claims — have become overwhelmed, with people unable to get through on the phone or online. Consequently, the real number of people trying to apply for assistance likely exceeds the numbers the country is seeing.
The official unemployment rate leapt from historic lows to 4.4 percent in March, according to official government data, but the numbers were based on a reference week that ended March 15, before the worst of the unemployment claims surge began.
The real jobless rate is almost certainly much worse than that.
Justin Wolfers, an economist at the University of Michigan, estimates that in light of the job losses in late March, the true figure was likely around 13 percent. Janet Yellen, the former Federal Reserve chair, reached a similar conclusion — an unemployment rate of 12 to 13 percent — in an analysis she presented to congressional Democrats last week. The additional 6.7 million job losses registered in Thursday morning’s report could easily raise those estimates by another point or two.
The upshot is that while the United States was enjoying its healthiest labor market in 20 years just a month ago, the country is likely to see unemployment higher than at any time since the Great Depression. The stimulus measures Congress has already enacted are large and helpful, but the fact that the economy continues to deteriorate quickly underscores the severity of the problem. Depression-scale joblessness is going to require a mobilization effort reminiscent to that of World War II to overcome.