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More than 6.6 million Americans filed for unemployment last week, the Department of Labor announced Thursday, doubling the all-time record set just one week before, as vast swaths of the economy continued to shut down amid the coronavirus crisis.
That is a catastrophic number. Here are some points to put it in context.
• Until this month, no more than 695,000 people had ever filed for unemployment in a week since the U.S. started measuring this in 1967. We’ve thoroughly shattered that mark.
• During the entire Great Recession, spanning from December 2007 to June 2009, there were about 39.5 million unemployment claims. Over just the past two weeks, we’ve seen 10 million, a quarter of the amount in less than 1/40th the time.
• On net, the United States lost 8.7 million jobs during the Great Recession and its immediate aftermath, because while some companies were letting people go, others were hiring. If businesses are not hiring right now, it’s possible that we have packed an entire was-supposed-to-be-a-once-in-a-generation recession’s worth of total job losses into a period of less than a month.
• As Ben Casselman of the New York Times notes, jobless claims may not be capturing all the people who are losing work right now. Many people may not have filed for unemployment because they don’t qualify for it, or don’t know that they do, among other reasons.
While the scale of these layoffs is unprecedented, the actual suffering they cause should be mitigated by expanded unemployment benefits that Congress passed last week, which are designed to pay many of the lower-wage workers who’ve been most severely affected by the shutdowns more than they actually earned on their jobs. People are being kept whole, at least for the next four months.
But the speed of these layoffs is also threatening to overwhelm the creaky, underfunded state bureaucracies that are responsible for administering unemployment benefits. Crashing websites and long phone waits have made it difficult for people to apply for benefits, which means some people may have to wait longer than they should for financial support. Those delays could snowball through the economy as people miss rent and cut back on their spending.
How much worse could this get? Based on some “back of the envelope” math, researchers at the Federal Reserve Bank of St. Louis estimated that 47 million Americans could be laid off or furloughed in the coming months, leading to a 32 percent unemployment rate (a rate that peaked at 10 percent in 2009). However, those numbers were based on a scenario where the government didn’t intervene to keep people on their employers’ payrolls. If Congress’ rescue package works as intended, the numbers might not rise that high. But the St. Louis Fed’s estimate should give you a sense of the stakes.
One thing to keep in mind as you read the next wave of economic news is that these past two weeks of layoffs are not going to be captured in the unemployment report the government is set to release Friday, which will be based on a survey conducted the week of March 12. That was right before the job losses really began to mount.
And, of course, nobody really has any idea what’s coming in the long term. The United States has never experienced a sudden economic freeze like this. It’s possible that, once this coronavirus outbreak slows down enough, and businesses are able to reopen, we’ll recover quickly. But whether and when that happens depends in large part on how well we contain the virus. If it lingers, and large chunks of the economy are forced to remain on ice, the recovery is going to be slower. And the more businesses that fail during this period, the harder it’s going to be to rebuild in the aftermath.
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