Policy Analysis | July 2020

Unemployment in the SLC Region Amid the COVID-19 Pandemic

Roger Moore

Last updated: July 31, 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. On July 30, the U.S. Commerce Department announced that the nation's GDP dropped 32.9 percent during the second quarter of 2020, the worst quarterly plunge ever, due to the virus-induced restrictions and shutdowns.

With the number of positive coronavirus cases continuing to increase in the United States, particularly in several Southern and Western states, the employment picture remains fragile. As of July 25, more than 54 million people have applied for unemployment insurance since the pandemic began. 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, expired on July 31. Without federal authorization to continue the expanded unemployment benefits, either at current or reduced levels, the nation's broader economic recovery may suffer.

As states consider pausing the reopening process due to the recent surge in cases – with varying levels of new restrictions placed on many businesses – the number of people applying for and receiving unemployment insurance likely will not decline and approach pre-pandemic levels as fast as many policymakers originally hoped. 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 July 25 remained significantly higher in every state compared to the number of initial claims filed at the beginning of March, before statewide restrictions were enacted, but the regional trajectory is trending downward.

Figure 1: Initial unemployment claims in SLC member states (March 7 – July 25, 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 decreased during the week ending July 18 compared to the previous week, from 5,000,764 to 4,886,170, or 2.3 percent (see Figure 2). Overall, the number of people continuing to receive benefits remains significantly lower than the May 9 peak, but the general trajectory has flattened, with relatively modest decreases during the past two months. Between May 16 and July 18, the number of people receiving unemployment insurance declined 13.1 percent. By comparison, the number of people filing initial claims during the same period declined 37 percent. In fact, across the region, the number of people receiving benefits was higher on July 18 than it was at the beginning of April.

Although every SLC state has reached a peak for insured unemployment. the number of people continuing to receive benefits remains high. Between March 7 and July 18, seven of the 15 states in the region – Alabama, Arkansas, Kentucky, Missouri, Oklahoma, Texas and West Virginia – experienced increases between 353 percent and 962 percent. Another five states – Florida, North Carolina, South Carolina, Tennessee and Virginia – experienced increases between 1,198 percent and 1,840 percent. The remaining states – Georgia, Louisiana and Mississippi – experienced increases above 2,000 percent.

Insured unemployment will be key in determining which states are returning to normal levels of employment. As the number of people continuing to receive unemployment benefits remains elevated, a prolonged economic recovery, rather than a quick turnaround, becomes increasingly likely.

Figure 2: Insured unemployment in SLC member states (March 7 – July 18, 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 10 of the 15 SLC states, the insured unemployment rate was at or above 8 percent during the week ending July 11, while the five remaining states had rates between 5.5 percent and 7.7 percent. For the entire SLC region, the average state insured unemployment rate was 9.5 percent for the week ending July 11. 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). The regional insured unemployment rate has slowly declined every week since peaking on May 9, with the exception of one weekly increase between June 27 and July 4.

Figure 3: Insured unemployment rates in SLC member states (March 7 – July 11, 2020)

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