Policy Analysis | January 2021

Unemployment in the SLC Region Amid the COVID-19 Pandemic

Roger Moore

Last updated: January 15, 2021

Disclaimer: On November 30, the Government Accountability Office (GAO) reported that the U.S. Department of Labor has inaccurately reported the number of people filing for unemployment benefits during the pandemic. Due to the historic number of individuals filing for benefits since March, and states' frequent backlogs processing the claims, the traditional method of reporting unemployment has not accurately captured the number of unique individuals claiming benefits, according to the GAO report. For example, if a person files for five weeks of benefits in a given week, the Department of Labor typically counts it as five separate claimants, not one. This method of reporting normally is a reliable proxy for the number of unique individuals claiming benefits, but it cannot account for states' processing delays and claimants retroactively applying for benefits during the pandemic.

This SLC Policy Analysis will continue updating the figures as they are reported weekly by the Department of Labor. While the absolute figures may not be accurate, the trend levels remain helpful for understanding the overall employment outlook.

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. The nation's GDP dropped 31.4 percent during the second quarter of 2020, the worst quarterly plunge ever, due to the virus-induced restrictions and shutdown. Since then, the national economic outlook has improved, with third-quarter growth accelerating 33.4 percent, according to the U.S. Commerce Department.

However, with the number of confirmed positive cases remaining higher than at any point since the beginning of the pandemic, the employment picture remains fragile. It is unclear how quickly the economy will fully recover, as millions of people continue to qualify for and receive unemployment insurance. On January 8, the Labor Department announced that the national unemployment rate in December stood at 6.7 percent, the same rate as November and slightly below the 6.9 percent reported in October. Notably, women accounted for all the job losses in December, losing 156,000 jobs compared to 16,000 jobs gained for men. Although the unemployment rate is far better than the peak of 14.8 percent recorded in April, it remains almost twice its pre-pandemic level. Of the 22 million jobs lost since the onset of the pandemic, approximately half have been regained.

As many states continue to pursue a balanced and cautious reopening approach – and, in many places, new restrictions recently have been enacted in response to a surge in positive cases – the number of people applying for and receiving unemployment insurance remains high. 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 March 2021.


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).

Initial claims filed at the end of December remain higher in every SLC state compared to the number filed at the beginning of March. Although the trajectories generally have trended downward, progress has stalled across the region during the past few months. In 14 of the 15 states, the number of initial claims filed on January 9 was higher than the number filed at the end of October. The one outlier during this period was Georgia. Regionally, there was a significant increase, 31.7 percent, in claims filed on January 9 compared to the previous week; however, additional data is required before determining whether this is a temporary anomaly or a more worrying trend. At this point, it is difficult to predict when states will fully recover, as the trajectory of the virus, the rollout of a vaccine and consistently high unemployment all will impact the job market in the months ahead.

Figure 1: Initial unemployment claims in SLC member states (March 7 – January 9, 2021)

(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, continues to be a critical piece of data for states. 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 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 increased during the week ending January 2 compared to the previous week, from 1.15 million to 1.21 million, or 3.9 percent (see Figure 2). Overall, the number of people continuing to receive benefits is significantly lower than the May 9 peak, with the trajectory steadily decreasing during the second half of 2020. However, progress ceased during the final weeks of 2020 and beginning of 2021. Between November 21 and January 2, insured unemployment increased 2.5 percent, compared to a decrease of 37.7 percent between October 3 and November 14.

Although every SLC state has reached a peak for insured unemployment, the number of people continuing to receive benefits remains high. In 11 SLC states, the number of insured unemployment claims on January 2 was more than 100 percent higher than at the beginning of March; in three states, the increases were between 59 percent and 94 percent. However, for the first time since the beginning of the pandemic, Alabama recorded a decrease in the number of insured unemployment claims compared to the beginning of March. Although the figures may be adjusted, it nevertheless is a promising sign for the state.

These figures underscore the severe impact the pandemic continues to have on states' workforces. Despite positive trends during the past few months, the overall employment picture remains much worse than it was at the beginning of 2020. A full economic recovery cannot be achieved if the number of people continuing to receive unemployment benefits remains elevated.

Figure 2: Insured unemployment in SLC member states (March 7, 2020 – January 2, 2021)

(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, although it is improving. During the week ending December 26, the insured unemployment rate ranged from a low of 1.2 percent in Alabama to a high of 3.9 percent in Georgia. For the entire SLC region, the average state insured unemployment rate was 2.3 percent, an increase from the 2.1 percent recorded on December 19. 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 three weekly increases, one between June 27 and July 4, another between November 21 and November 28 and, most recently, between December 19 and December 26.

Figure 3: Insured unemployment rates in SLC member states (March 7 – December 26, 2020)

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