U.S. Jobs: Record Unemployment Claims Crush All Prior Peak Values
We often hear about the proverbial rising tide that lifts all boats. A sinking tide has the same effect, only in reverse. Thuirsday brought news in the United States of new filings for unemployment protection. We all knew it was going to be scary, but nobody knew it was going to be this terrifying.
Prior to this period, the biggest unemployment claims number occurred in 1982, and was somewhere just under 700,000 filings. For the week of March 15-21, the number of filings was more than 5 times that amount, at 3.28 million. ("Unemployment claim" refers to a request by an individual worker to receive a government-supplied cash benefit after being laid off from a job.)
Unemployment claims are handled at the state level, and state unemployment offices everywhere are swamped by the sheer magnitude of what they must process. According to Kaitlin Collins, CNN's White House Correspondent, "That's the highest number of initial jobless claims in history — since the Department of Labor started tracking the data in 1967."
Analysts knew that the number reported Thursday was going to be high, especially given the stock market's retreat by a full third by the end of last week, with the Dow down by 10,000 points and other indices likewise affected. I don't think anybody who follows the labor market, however, was expecting the news to be this stark and unambiguous.
All of the big newspapers (The Washington Post, The Wall Street Journal, The New York Times, and so on) and the news networks (CNN, Fox, MSNBC, PBS, and so forth) are unanimous in expressing great surprise and almost equal dismay. Most labor economists agree that this translates into a 2-point jump for the overall unemployment rate, which will be leaving its historic low of near 3.5 percent behind for the foreseeable future.
The aforelinked article by Washington Post reporters Heather Long and Alyssa Fowers observes that, "Many economists say this is the beginning of a massive spike in unemployment that could result in over 40 million Americans losing their jobs by April."
I'm not sure I'm ready to jump that much deeper into the abyss myself, but the number of unemployment claims mirrors the number of unemployed, and both are headed sharply upward. The industries most affected are those that require public contact and service, now severely restricted by the "shelter in place" and "social distancing" requirement in force across half the nation.
Reporting indicates that workers in the food and drinks service sector, hospitality and leisure, personal services (hairdressers, beauticians, etc.) are among the hardest hit by either outright layoffs or drastic reduction in hours (and pay). Likewise, the self-employed are also at high risk of losing work and pay as well.
Ed writes that this NASA photo of the vast and turbulent Jupiter Abyss (the black vortex at the center of the image) felt appropriate to the moment.
It's Going to Take a While to Catch Up with All This
Even though the March employment numbers will be out next Friday (a week from tomorrow) on April 3, that report won't reflect the entire impact that the global coronavirus pandemic is having on the economy. Things didn't start breaking bad until the week of March 15-21, and that means the early part of March will swing the numbers away from their true current resting spot.
We won't really know just how serious things are until the report of May 8 comes out. Count on me to cover both, and to pull no punches. If there's any ray of hope here, it's that IT folks are usually among the last to leave companies during layoffs, because they have to process the pink slips, the payments, and all the other data that must be crunched to make personnel changes legal and permanent.
That's probably cold comfort for you, dear readers, but it's the way things look to me. Stay tuned!