Initial Claims for Unemployment Insurance surged last week across the nation

By Michael Horrigan, Jim Robey, Katie Bolter and Gerrit Anderson

March 26, 2020

The Department of Labor announced today that for the week ending March 21st the number of initial claim filings for Unemployment Insurance (UI) were 2,898,450 (not seasonally adjusted). This compares to an average of 237,077 over the prior ten weeks and marks the highest level of initial claims ever recorded. The data released today are the first indicators of the labor market impacts of the coronavirus as it affected the U.S. and Michigan economies last week. The chart below depicts the magnitude of the increase. Note that this includes only wage and salary workers. The economic impacts of the coronavirus on self-employed workers, including those in the gig economy, are not included in these data.

Historical chart of first-time unemployment insurance claims

Nearly every state experienced a surge in UI initial claims last week. Leading the increases were Pennsylvania (378,908 initial claims), Ohio (187,784), California (186,809), New Jersey (155,454), Massachusetts (147,995), Texas (155,657), Washington (133,478), Michigan (129,298), Minnesota (116,438), and Illinois (114,663). Most of these states had initial claims last week that were more than 15 times the average level of the prior 10 weeks. Pennsylvania and Ohio had the two highest levels of initial claims last week, both of which were 25 times their average levels over the prior ten weeks. The U.S. map below depicts the severity of the surge in claims, with darker shades of green indicating larger increases in initial claims. The darkest shade is reserved for increases at least 20 times the average over the prior ten weeks.

In Michigan, the number of initial filers for UI reported by the U.S. Department of Labor in the week ending March 21 was 129,298 as compared to an average of 7,851 over the prior ten weeks. Based on data provided by the Michigan Unemployment Insurance Agency, the table below provides an estimated breakdown of initial claims by major industries. Not surprisingly, the largest share of the increase came from individuals working in the Food Services and Drinking Places industry, accounting for 33% of the surge in initial claims this week. This industry is dominated by small businesses. In 2017, according to the Census Bureau’s County Business Patterns, 66 percent of Michigan establishments in this industry had fewer than 50 employees. The second largest share of initial claims for Michigan was in Health Care and Social Assistance (13.1%), which includes many small businesses such as dentists, doctor’s offices, and outpatient care facilities. Manufacturing (9.1%) and Retail Trade (6.5%) also experienced large increases.

This massive surge in the number of initial claims for UI reported for both the U.S. and Michigan occurred during a week in which the state one-stop centers that provide in-person services to the unemployed were converting their operations to some type of virtual or appointment-based model. In Michigan, initial claimants were instructed to apply on the web or by phone. As in many parts of the nation, this placed an enormous amount of strain on the UI systems. As the state transitioned to an appointment-based model for continuing UI claims, the work search requirements associated with receiving unemployment benefits for these claimants were suspended. With Governor Whitmer’s Executive Order to stay in place, the service centers have transitioned completely to an appointment-based model for providing continuing services to the unemployed. The Upjohn Institute, which oversees the Michigan Works! Southwest one-stop service centers in a four-county service area covering Kalamazoo, Calhoun, Branch and St. Joseph, Michigan Works! Southwest, is working on a variety of innovative ways to provide virtual services to the unemployed, including preparations that are currently being made to conduct virtual job fairs.