Policy Analysis | November 2020

Unemployment in the SLC Region Amid the COVID-19 Pandemic

Roger Moore

Last updated: November 20, 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 confirmed positive cases remaining high across much of the United States, the employment picture remains fragile. As of November 14, more than 68 million initial jobless claims have been filed since the pandemic began. It is unclear how quickly the economy will fully recover, as millions of people continue to qualify for and receive unemployment insurance. On November 6, the U.S. Labor Department announced that the national unemployment rate in October stood at 6.9 percent, a significant improvement from earlier in the year, but still historically high. Since May, nearly 12 million jobs have been gained; however, that still leaves approximately 10 million unfilled positions that were lost in March and April.

As many states continue to pursue a balanced and cautious reopening approach – with varying levels of restrictions placed on many businesses – the number of people applying for and receiving unemployment insurance continues to be higher than many policymakers anticipated earlier in the year. 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).

Although the number of initial claims filed in November remains higher in every SLC state compared to the number filed at the beginning of March, the trajectories have been trending downward in most states the past several months. All SLC states, with the exceptions of Alabama, Kentucky, Louisiana and Virginia, had fewer initial claims filed on November 14 than they did at the beginning of October. There was a slight uptick in claims filed in the region between September 26 and October 10; however, the number decreased since then, signaling that the uptick was a temporary anomaly and not a more worrying trend moving forward. At this point, it is highly likely that most, if not all, of the SLC states will be in a worse position at the end of 2020 than they were in March.

Figure 1: Initial unemployment claims in SLC member states (March 7 – November 14, 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, 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 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 November 7 compared to the previous week, from 1.7 million to 1.5 million, or nearly 11 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 since the beginning of July. Between September 5 and November 7, the number of people receiving unemployment insurance declined 54 percent. By comparison, the number of people filing initial claims during the same period declined only 2 percent.

Although every SLC state has reached a peak for insured unemployment, the number of people continuing to receive benefits remains high. From March 7 through November 7, of the 15 states in the region, 11 experienced increases between 123 percent and 913 percent. Meanwhile, insured unemployment during the same period increased between 46 percent and 96 percent in Alabama, Arkansas, Missouri and West Virginia. These figures highlight 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 the year. 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 – November 7, 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. During the week ending October 31, the insured unemployment rate ranged from a low of 1.5 percent in Alabama to a high of 6.5 percent in Georgia. For the entire SLC region, the average state insured unemployment rate was 3.1 percent. 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. However, barring a significant improvement in employment figures, it is highly unlikely that any state will completely recover before 2021.

Figure 3: Insured unemployment rates in SLC member states (March 7 – October 31, 2020)

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