According to the Department of Labor, 3.3 million Americans—roughly the population of Utah—have filed for unemployment insurance since last week. Huge doesn’t even begin to capture the scale of mass job loss, and yet there’s every reason to believe the reality is even worse.
For starters, whole sectors of the economy rely heavily on contracted labor. That speaks to almost everyone wrapped up in the gig economy, from Airbnb hosts staring down months without bookings to underemployed Uber drivers struggling to find fares, but also to huge portions of the trucking and entertainment spaces, to name a few. As Heidi Shierholz, the Economic Policy Institute’s director of policy, told Gizmodo, the DoL’s eye-popping number—the largest single-week claims figure it has ever recorded—“doesn’t include contractors because they aren’t eligible” to receive unemployment.
For whatever it’s worth, Secretary of Labor Eugene Scalia wrote in a statement that “this large increase in unemployment claims was not unexpected, and results from the recognition by Americans across the country that we have had to temporarily halt certain activities in order to defeat the coronavirus.” But understanding why the numbers are skyrocketing is little defense against the damage to the economy.
It’s possible other extenuating circumstances are artificially deflating the unemployment claims. The decision by companies like Marriott, Hyatt, and Hilton to furlough tens of thousands of workers, rather than lay them off, comes to mind. “Furloughed workers are technically eligible, but there is confusion,” Shierholz wrote.
If $2 trillion spending bill currently making its way through Congresses passes, furloughed employees and contractors will both become eligible for unemployment. (And the number of claims will rise to more accurately represent how many Americans are currently out of work.) Shierholz wrote, “I think the numbers today are the tip of the iceberg,” alluding to the 14 million jobs estimated to be lost by summer.
There’s also the matter of the demands a 1,000-percent increase in claims puts on existing systems, with workers in New York—the state most drastically impacted by covid-19 so far—reporting that online systems continue to crash, leaving some people unable to file unemployment claims they otherwise would. “I don’t know how many are having trouble because of system overload. But I would encourage people to keep trying!” Shierholz wrote. “This is an unprecedented increase in people needing [unemployment insurance], so there will be glitches, sometimes long ones.”
Even with the current aid package being debated, Politico reports that that money “may not be sufficient to keep afloat state unemployment reserves that never recovered from the 2007-2009 recession.” While the chair of the Federal Reserve refused to put it in such stark terms, Matthew Luzzetti, Deutsche Bank’s chief U.S. economist, was widely quoted today as saying, “This morning’s data leaves no doubt that the economy is currently in a recession.”