Last week saw record-high unemployment numbers — an astronomical 3.3 million Americans filed initial claims between March 15 and March 21. But today’s data from the Department of Labor painted a much, much bleaker picture for the job market. During the week ending on March 28, 6.6 million more people filed for unemployment insurance, double the number from last week and nearly 6 million more than the all-time high from before a week ago.
Many of those claims were left over from a backlog of people unable to file during the initial wave of coronavirus-related layoffs. As we noted last week, state unemployment agencies have never needed to process anywhere near this many claims at once, and the strain was apparent in widespread reports that out-of-work Americans were struggling to file through computer glitches.
But this week’s initial claims also reflect the ongoing vulnerability of American workers amid shelter-in-place orders and other social-distancing measures designed to slow the coronavirus’s spread. According to research by economist Miguel Faria-e-Castro of the St. Louis Federal Reserve, about 50 million jobs could eventually be lost due to the virus and the economic challenges it presents. These include jobs in sales, food preparation and other services, plus “high contact-intensive” positions such as flight attendants and hairdressers.
So as the crisis wears on, initial unemployment claim numbers that once seemed unthinkable could become the norm.
“These are very large numbers by historical standards,” Faria-e-Castro wrote, “but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years.”
Faria-e-Castro did point out that the duration of this unemployment crisis also matters. And to that point, other economists have noted that a large number of these job losses could be erased once the virus clears and returning to work is feasible again — particularly since many of the unemployment claims are from workers who have been furloughed or only temporarily left unpaid.1
In an interview with CNBC last week, St. Louis Fed President James Bullard predicted a boom in the overall economy once the pandemic subsides because of what he termed “pent-up demand” during the inactivity of social distancing. That would include, he said, a return to relatively normal unemployment numbers after the big spikes of this quarter.
But the simple truth is that experts — whether in economics or epidemiology — don’t really know the ultimate trajectory of the coronavirus pandemic, particularly with regard to when cases will peak and tail off, a crucial factor for reopening the economy. It’s an exceptionally difficult problem to model, as my colleagues Maggie Koerth, Laura Bronner and Jasmine Mithani wrote this week. And even if large numbers of the jobs lost this month are eventually restored, there’s a good chance that this economic shock will still affect Americans’ earnings for years to come, especially for recent graduates.
For now, that means economists will keep watching the unemployment figures as a way of gauging where we are in the crisis — and they’ll keep readjusting their benchmarks to this new, never-seen-before normal.