Pandemic claims are not going away

When the pandemic started, unemployment claims skyrocketed to numbers never seen before.

Others have focused on the total number of claims being filed. What may be more useful is comparing this increase in claims to what occurred when there was no pandemic — aka last year — and how the claims data has varied over time.

So, what makes sense, then, is a ratio of new claims being filed for the equivalent week last year when there was no pandemic. This ratio would indicate both how these new claims compare to when there was no pandemic AND how the unemployment picture is changing over time.

Unfortunately, this picture is unsettling to say the least.

Ratio of 2020 claims to 2019 claims

Note: Here is the data for this chart:

w/e 2020  Week  Ratio
03/14/20    11  1.02
03/21/20    12  13.29
03/28/20    13  20.51
04/04/20    14  19.95
04/11/20    15  14.21
04/18/20    16  12.12
04/25/20    17  10.64
05/02/20    18  9.47
05/09/20    19  8.73
05/16/20    20  9.21
05/23/20    21  7.28
05/30/20    22  6.16
06/06/20    23  4.90
06/13/20    24  4.51
06/20/20    25  4.31
06/27/20    26  6.00
07/04/20    27  5.35
07/11/20    28  4.93
07/18/20    29  6.14
07/25/20    30  5.94

Source: https://dwd.wisconsin.gov/covid19/public/ui-stats.htm

In week 11 of this year, claims in 2020 were equivalent to the same week of claims in 2019: 1.02 to be exact. Then the pandemic struck the next week, and unemployment claims skyrocketed to 13x what was filed in 2019. For the next two weeks, the number of claims continued to increase to around 20x what was filed in 2019.

Even when the number of new claims began declining, they continued at more than 10x the number of claims filed in 2019 for the next three weeks. Then, for another three weeks, initial claims continued to run at around 9x or 10x the number from 2019.

Only by week 21 did the number of initial claims come down to over 7x the number of 2019 claims. Since then, the number of initial claims has continued to hover around 6x the number of unemployment claims filed for the equivalent week in 2019. And, it seems that this trend will continue at least for the next several months.

So, in the best circumstances this pandemic has led to new unemployment claims continuing to be filed at 6x the rate of unemployment claims in 2019.

Note: This data is only for regular unemployment claims. Independent contractors and those with insufficient earnings to qualify for unemployment in the first place likely have never filed a claim for regular unemployment benefits in the first place and so are excluded from this data. In other words, the unemployment picture is being under-reported with this data.

At this rate, the question will soon be who in Wisconsin has NOT filed an unemployment claim, as the state’s workforce is only around 3 million in toto. I hate to say it, but these numbers are approaching Great Depression levels of joblessness. There is no indication — especially with Covid-19 cases on the rise — of any possible turn around with the economy any time soon. So, new unemployment claims will likely continue to be much higher than last year for months to come.

Note: In a robust economic recovery, we should expect the ratio of 2020 to 2019 claims to go smaller than 1.0. Pent up economic demand would lead companies to increase hiring to meet the accelerating demand for their product. Does anyone even pretend to talk about that kind of economic activity right now?

Second, all of us need to understand that this unemployment problem is not going away anytime soon. With so many initial claims now in the system, it will take months just for the folks currently with claims to find the same work they had before the pandemic. And, with new initial claims continuing to be filed at a record pace, the number of unemployed is now probably equal to the number of workers in this state who are outside the unemployment system. When winter arrives and many seasonal employees are laid off, the state’s economy will take another tremendous hit.

Accordingly, the economic stimulus that unemployment offers is currently an essential component of the economy and is keeping what economic activity that currently exists afloat. The loss of the $600 PUC benefit this week is going to have dire consequences, even in Wisconsin when too few have managed to receive any unemployment benefits at all. The end of 2020 when many if not all of the current CARES Act benefits expire could become a fiscal cliff for Wisconsin and the nation if nothing is done to extend these programs into 2021.

Third, this continued number of initial claims at roughly 6x the rate of last year indicates that the Department’s strategy of simply hiring more people to process these claims is unworkable. The Department’s July 13th news release about having 1884 staffers (1380 more than the 504 the Department had prior to the pandemic) is still wholly inadequate to handle the deluge of initial claims being filed.

Even with new initial claims now settled at 6x what was being filed before the pandemic, the Department’s increase in staff is only 3.75x what existed prior to the pandemic. To properly staff up for the number of initial claims currently being filed, the Department needs to have 3024 staffers on hand. And, that level of staffing would only work if initial claims remain at only 6x and do not rise any further from 2019 levels.

The Department cannot fix this unemployment problem in this state by hiring all of Wisconsin to process all of the unemployment claims. The Governor and the Department need to start talking now about some new policy choices to make the unemployment claim-filing process easier and more manageable. And, a jobs programs like the Civilian Conservation Corps are probably in order as well.

CCC worker at Devil's Lake

Source: https://readtheplaque.com/plaque/the-c-c-c-worker

I know broadband access is a state-wide problem. Getting cheap and effective Internet access to folks in this state would do everyone a world of good, both in the short-term (jobs) and the long-term (more jobs). A British village can do it. Why not Wisconsin?

 

3 thoughts on “Pandemic claims are not going away

  1. Great stuff, Victor. I occasionally look at “same month, different year” as a way of putting the unprecedented amount of unemployment claims in perspective, but the “ratio” idea works very well.

    My only distortion would be for times like deer hunting week in November and New Year’s, when unemployment claims are typically huge anyway, that this ratio will be lower, but it’ll still be a ton of claims.

    Your bottom line is spot on – we have not seen anything like this before, and we certainly did not (and likely do not) have the staff to handle this mass of claims.

  2. Pingback: Delays, part 1 | Wisconsin Unemployment

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