According to the Department of Labor, 3.3 million Americans – roughly the people of Utah – have applied for unemployment insurance since last week. Huge is not even beginning to capture the magnitude of massive job losses, yet there is every reason to believe that the reality is even worse.
To begin with, entire sectors of the economy are highly dependent on salaried employment. That speaks to almost everyone involved in the gig economy, from Airbnb hosts staring at months without bookings to understaffed Uber drivers struggling to find fares, as well as large areas of the truck and entertainment spaces, to just to name a few. As Heidi Shierholz, the director of the Economic Policy Institute, told Gizmodo, the dazzling number of the DoL – the greatest single week claims it was ever recorded – “does not include contractors because they are not eligible” to receive unemployment.
For what it’s worth, Labor Minister Eugene Scalia wrote in a statement that “this large increase in unemployment claims was not unexpected, and is the result of the recognition by Americans across the country that we had to temporarily stop certain activities in order to defeat the corona virus.” But understanding why the numbers skyrocket is little defense against the damage done to the economy.
It is possible that other mitigating circumstances artificially lift unemployment claims. The decision of companies such as Marriott, Hyatt and Hilton I think of tens of thousands of workers instead of firing them. “Workers hired are technically eligible, but there is confusion,” Shierholz wrote.
If a $ 2 trillion expense account currently flowing through conventions passes, layoffs and contractors will be eligible for unemployment. (And the number of claims will more accurately reflect how many Americans are currently out of work.) Shierholz wrote, “I think the numbers are the tip of the iceberg today,” referring to the 14 million jobs estimated to be lost in the summer.
There is also the question of the claims that a 1000 percent increase in claims will impose on existing systems, with workers in New York – the state most affected so far by covid-19 – to report that online systems keep crashing, which prevents some people from submitting unemployment claims that they would otherwise do. “I don’t know how many are having problems due to system overload. But I would encourage people to keep trying!” Shierholz wrote. “This is an unprecedented increase in people’s need [unemployment insurance]so there will be failures, sometimes long. ‘
Even as the current aid package is being discussed, Politically reports that that money “may not be enough to sustain the unemployment reserves of the state, which never recovered from the 2007-2009 recession”. While the President of the Federal Reserve refused to put it bluntly: Matthew Luzzetti, Deutsche Bank’s chief American economist, was widely quoted today as saying, “This morning’s data leaves no doubt that the economy is currently in recession.”