Moneybox

3.3 Million People Filed for Unemployment Last Week

Low-angle shot of the Fearless Girl statue facing the New York Stock Exchange, which has a huge American flag hanging on the facade, on March 19.
Things are getting dark.
Johannes Eisele/AFP via Getty Images

Nearly 3.3 million Americans filed for unemployment benefits last week, according to the new official report from the Bureau of Labor Statistics, as businesses across the country shuttered and let go workers due to the coronavirus crisis. The number obliterates previous records set during past recessions and outstrips the most dire predictions from earlier this month (Goldman Sachs had suggested that that we might see 2.25 million layoffs, which seemed like a nightmare scenario at the time).

Some numbers to put this news in perspective: The week before last, just 282,000 filed for unemployment, which was a one-third jump. The previous all-time seasonally adjusted high for claims was 695,000, set in 1982. What we’re seeing is unprecedented. I mean, the graph looks like some kind of data entry error.

Chart of weekly jobless claims with a huge spike at the end caused by the coronavirus crisis
Federal Reserve Bank of St. Louis

The economic relief bill that the Senate passed Wednesday thankfully includes a major expansion of jobless aid; among other tweaks, it will provide those who’ve lost work an extra $600 a week for four months, on top of their normal benefits. But processing this number of claims has already proven to be an immense challenge. Last week, state unemployment websites crashed and phone lines were swamped as people rushed to file. Our safety net infrastructure really isn’t built for this kind of sudden surge in need.

The one hope I can think of here is that the layoffs during this crisis might be front-loaded. This isn’t a normal recession in which the economy slows down and employers start gradually laying off workers. Instead, we’re seeing a sudden stop, where states and cities are essentially shutting down nonessential businesses and telling people to stay home. So perhaps we’re just seeing several weeks’ worth of claims bunched together, and they’ll quickly trail off.

Or maybe we’re just watching the start of something truly awful.

For more on the impact of the coronavirus, listen to the latest episode of What Next.