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The US economy saw another ~3 million initial claims for unemployment benefits in the week ending May 9. Though the "running total" of initial jobless claims since shelter-in-place orders took effect is north of 36 million, this number *probably* overstates actual job losses /1
If you lose your job, you can *try* to file for unemployment benefits. There is no guarantee you will be able to apply successfully, ESPECIALLY given the massive wave of unemployment that hit the economy. So you can keep applying until you get approved. /2
That's how the initial claims number could overstate job losses. Another metric to look at is "continuing claims for unemployment" (also called "insured unemployment"). This week we saw the smallest increase (450k) since this whole thing started /3
which may be a sign that the labor market is close to bottoming out. That is not to say that anything is improving, but it's possible (and even likely) that we have seen the worst of the job losses already, despite initial claims still running in the millions. /4
However, the fact that the initial claims running total likely overstates actual job losses is not a "good" thing in that job losses are lower than we think. It's a bad thing, as it reflects how many friction points between an out-of-work person and unemployment benefits. /5
A worker loses their job. They log onto their state's unemployment website (if it hasn't crashed already) or call a phone number. They try to speak to someone and might be put on hold for hours. Or, they could face something like the FL unemployment system: /6
"designed to fail." FL had to resort to paper applications because its system was designed to be difficult to navigate to keep people off unemployment. That's friction point #1 - can you even get an application into the system? /7 https://www.wftv.com/news/local/designed-fail-how-systematic-failures-led-floridas-jobless-benefits-filing-woes/HXZVY4XMWRFRPPWVQWHGSQKHQI/
If you aren't able to apply, you come back next week to apply. If you do get an application into the system, now you wait. Who knows when (or god forbid, if) your application will be approved? KY was still reviewing March unemployment applications *in the last week of April.* /8
So that's pain point #2: will your application get approved in a timely manner? Or will your state take months to process the massive backlog? Every day counts when 40% of Americans don't have cash or cash equivalent to cover a $400 emergency expense. /9 https://www.wkyt.com/content/news/Beshear-promises-to-resolve-March-unemployment-claims-this-week-569978141.html
The third friction point is the one that really matters — when do you actually get your money? Even after approving an application, states often take weeks or months to disburse benefits. You can google "[State] delayed unemployment" and you're guaranteed to find something /10
Florida (and, because Rick Scott left such an epic dumpster fire of an unemployment system, the state has only processed 28% of the 2 million claims it has received):
https://www.cnbc.com/2020/05/12/florida-unemployment-benefits-delayed-as-residents-face-eviction.html
/13
https://www.cnbc.com/2020/05/12/florida-unemployment-benefits-delayed-as-residents-face-eviction.html
/13
Though red states are some of the worst offenders, blue states have faced the same problem. California: https://abc7.com/finance/ca-unemployment-benefits-delayed-for-many/6112197/
/14
/14
The takeaway here is that there are far too many friction points in the process. It worked miserably (but maybe well enough?) in good times, but the pandemic has laid bare all of the system's failings, especially in states that have gutted unemployment systems in recent years /15
1. Can you even get online to apply? No? Try again.
2. Was your application approved? No? Try again.
3. Did you get your money? No? Tough shit.
This is going to come back to bite the US economy in terrible ways after stimulus $ runs out. /end.
2. Was your application approved? No? Try again.
3. Did you get your money? No? Tough shit.
This is going to come back to bite the US economy in terrible ways after stimulus $ runs out. /end.
