What California's unemployment numbers tell us about the COVID depression
Since the coronavirus economic crisis struck in March, tens of millions of American workers have filed for unemployment. But we haven't been able to tell how many of those filings were repeats — until now.
The California Policy Lab recently published a fine-grained analysis of their state's unemployment figures. The initial surge of unemployment claims were new, of course, but since then a larger and larger share have come from repeat filings. New claims have been stable since May at roughly the same level as the worst week of the Great Recession in 2008:
The recent growth in Initial Claims has largely been driven by an increasing number of additional claims —claims which are reopened after a claimant’s temporary return to work.
The number of truly *new* initial claimants has been flat since May — but at historically high levels pic.twitter.com/z4BYkNXPF9— TJ Hedin (@TJ_Hedin) August 6, 2020
Accounting for multiple filings, fully 32 percent (or 6.23 million people) of the California workforce has applied for unemployment since March. As of the week ending July 11, the most recent one for which data is available, about 17 percent of California workers were actually paid some unemployment benefits.
Now, unemployment claims have declined considerably from their peak in May, but absent action from Congress, improvement is likely to stall, or even go into reverse. Because Republicans in Congress allowed the expansion of unemployment benefits to lapse, the average payment has declined by nearly two-thirds, from $914 to $314. That will suck billions of dollars of spending out of the state, destroying jobs dependent on the consumption of people on unemployment.
California is the largest state and surely roughly representative of what is happening elsewhere. We see that the United States is mired in a full-blown depression, and unless President Trump and Senate Republicans do something, it will get much worse.
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