This morning, the Labor Department announced that another 4.4 million Americans filed for unemployment benefits last week. That brings the official number of jobless people to 26.5 million over the past month, effectively erasing almost all of the new jobs created since the 2008 financial crisis. To make matters worse, many state unemployment processing systems have become overwhelmed after receiving record numbers of requests. As a result, experts predict that the actual number of jobless Americans could be much higher since many people have been unable to obtain benefits.
Economists estimate that the U.S. unemployment rate is currently somewhere between 15 to 20 percent. At the height of the Great Depression, unemployment peaked at a rate of 25 percent. In many ways, though, the circumstances surrounding the current crisis have no historical comparison. After all, nearly 10 percent of the working-age population filed for unemployment insurance in just five weeks. That’s twice the share of the population that lost jobs over the entire course of the Great Recession. “The numbers detailing the shock to the US labor market are so large, and cover such a short time, that your first reaction is that they’re a typo,” said economic researcher Nick Bunker.
With consumer spending all but stopped, many companies will not be hiring new workers for some time. In fact, job postings on Indeed have dropped by 34 percent compared to last year. Although the recently passed stimulus bill increased unemployment benefits, many low income Americans have still not received the $1,200 stimulus checks that rolled out last week. Meanwhile, the Senate passed a new bill that contains more funding for small businesses that is expected to receive approval from the House of Representatives later today.
- Why is the total number of jobless Americans likely larger than the number of people who applied for unemployment benefits?
- Do you think that legislators should provide more relief to struggling American workers? Why or why not?
Source: Rachel Siegel and Andrew Van Dam, “4.4 Million Americans Sought Jobless Benefits Last Week, as Economic Pain Continued Across the United States,” The Washington Post, April 23, 2020. Photo by Bytemarks.