Policy Analysis | July 2020

Unemployment in the SLC Region Amid the COVID-19 Pandemic

Roger Moore

Last updated: July 2, 2020

Disclaimer: The research presented draws upon statistics used by the U.S. Department of Labor to monitor weekly unemployment data. Many concerns have been raised regarding states' difficulties processing the large and sudden influx of unemployment insurance claims following restrictions that were enacted beginning in mid-March to stop the spread of COVID-19. This SLC Policy Analysis does not address these concerns and utilizes only the data compiled by the U.S. Department of Labor. For more information about what actions state unemployment agencies are taking in response to the coronavirus, see the SLC Policy Analysis "Coronavirus Response at State Unemployment Agencies."

Introduction

As the nation continues to confront the public health challenges posed by the COVID-19 pandemic, the economic fallout has been unlike anything experienced since the Great Depression. Mandated statewide closures and stay-at-home orders – implemented in the middle of March and continuing through most of April to mitigate the spread of the novel coronavirus – had a sudden and significant impact on states' economies. Businesses were required to curtail their operations and, in many cases, shutdown completely, leading to widespread layoffs in every state. Meanwhile, consumer spending dropped precipitously, causing additional hardships for companies that cannot sustain prolonged periods without stable sources of revenue. As a result of these disruptions, nearly 50 million people have applied for unemployment insurance since the pandemic began.

With the number of cases continuing to increase in the United States, particularly in several Southern and Western states, the employment picture remains fragile. It is unclear how quickly the economy will recover, as millions of people continue to qualify for and receive unemployment insurance. Moreover, an additional $600 in weekly unemployment benefits, authorized by Congress as part of the CARES Act that was enacted at the end of March to mitigate the economic fallout, expire at the end of July. If employment figures do not improve by then, the elimination of expanded unemployment benefits could have further ramifications for the broader economic recovery.

With states currently in the reopening process – allowing businesses and other venues to resume operations with restrictions in place – data suggests the number of people applying for and receiving unemployment insurance may decline and approach pre-pandemic levels faster than would be expected during a typical economic recovery. This SLC Policy Analysis tracks the ongoing economic impact of the COVID-19 pandemic by highlighting unemployment insurance claims reported weekly by the U.S. Department of Labor. This analysis includes data related to:

  1. Initial Claims Filed: the number of new claims filed by unemployed individuals following separation from an employer;
  2. Insured Unemployment: the number of people continuing to receive unemployment insurance after filing an initial claim; and
  3. Insured Unemployment Rate: the number of people, as a percentage of a state's workforce, continuing to receive unemployment insurance after filing an initial claim.

This SLC Policy Analysis is updated weekly to include the latest figures from the U.S. Department of Labor. The data demonstrates the relatively strong employment figures prior to the restrictions and shutdowns that were enacted beginning in mid-March, as well as the sudden spike in unemployment that followed. However, it primarily is intended to track how quickly states' economies are recovering by highlighting the trajectory of employment and to what extent the workforce is returning to pre-pandemic levels. An important caveat to note is that employment figures prior to the passage of the CARES Act at the end of March do not include independent contractors and other self-employed workers who historically have not qualified for unemployment insurance. As a result, data following the enactment of the CARES Act will include previously ineligible unemployed individuals who now qualify for benefits, effective until the end of 2020.


Initial Claims

The number of initial unemployment claims, or the number of people filing first-time claims for unemployment insurance, spiked in the SLC region during the week ending April 4, when first-time claims reached nearly 2,000,000. By comparison, the number of initial claims filed across the region during the week ending March 7 was 47,414 and 55,223 for the week ending March 14. Nine of the 15 SLC states experienced peaks at the beginning of April, while six – Florida, Missouri, North Carolina, Oklahoma, South Carolina and West Virginia – reached their peaks at various points between the end of March and beginning of May (see Figure 1).

Every state in the region has seen significant reductions in the number of initial claims filed since reaching their peaks, an expected development due to the softening of most restrictions that were in place in March and April. However, the number of initial claims filed for the week ending June 27 remained significantly higher in every state compared to the number of initial claims filed at the beginning of March, before statewide restrictions were enacted.

Figure 1: Initial unemployment claims in SLC member states (March 7 – June 27, 2020)

(Data for individual states can be toggled by clicking on them in the legend)


Insured Unemployment

Insured unemployment, or the number of people continuing to receive unemployment benefits after initially filing, will be a critical piece of data for states in the weeks and months ahead. Insured unemployment demonstrates how many people continue to receive benefits and, hence, have not returned to work, either with their previous employer or a new employer.

The number of people receiving insured unemployment benefits remains historically high. At the beginning of March, insured unemployment for the entire SLC region was at 382,868, before increasing significantly during the week ending March 28. The number of people receiving benefits peaked during the week of May 9, when nearly 7.5 million people were receiving benefits, and then declined to approximately 5.6 million the following week. However, the regional drop was attributed almost exclusively to Florida, where insured unemployment reached 2,151,108 during the week ending May 9, before declining significantly to 529,384 the following week. Regionally, insured unemployment remained consistent during the week ending June 20 compared to the previous week, increasing from 5,568,573 to 5,621,505 (see Figure 2). The number of people continuing to receive benefits remains significantly lower than the May 9 peak, but there has not been a sharp reduction comparable to the number of initial claims filed. In fact, across the region, the number of people receiving benefits remained consistent from the middle of May through the middle of June, despite the loosening of restrictions in every state.

Every SLC state appears to have reached a peak for insured unemployment. Despite the positive trajectory, the number of people continuing to receive benefits remains unusually high in every state. Insured unemployment will be key in determining which states are returning to normal levels of employment. If the number of people continuing to receive unemployment benefits remains elevated, it indicates there may be a prolonged economic recovery rather than a quick turnaround.

Figure 2: Insured unemployment in SLC member states (March 7 – June 20, 2020)

(Data for individual states can be toggled by clicking on them in the legend)


Insured Unemployment Rate

Reflecting the insured unemployment data in Figure 2, the insured unemployment rate remains exceedingly high. In 11 of the 15 SLC states, the insured unemployment rate was at or above 9 percent during the week ending June 13, while the four remaining states had rates between 7.8 percent and 8.8 percent. For the entire SLC region, the average state insured unemployment rate was 10.5 percent for the week ending June 13. By comparison, that figure was less than 1 percent for the week ending on March 7, prior to the enactment of pandemic restrictions (see Figure 3).

Figure 3: Insured unemployment rates in SLC member states (March 7 – June 13, 2020)

(Data for individual states can be toggled by clicking on them in the legend)