Research
Unemployment Claims Shatter Records as Coronavirus Outbreak Freezes Economy
Daniel Zhao
Chief Economist at Glassdoor | Mar 26, 2020
Initial claims for unemployment insurance shattered records last week, climbing to 3.283 million from 282,000 the previous week and 4.7 times higher than the previous record. The coronavirus outbreak is a truly unprecedented event in American economic history. Unlike past economic slowdowns, the outbreak's sudden onset is flash freezing the economy by forcing businesses to shut down and putting millions of American workers out of jobs.
The closest historical comparison would be natural disasters like major hurricanes, which lead to sudden spikes in unemployment claims, but even those comparisons are inadequate. The effects of hurricanes tend to be concentrated, affecting specific geographic regions and snapping back in the weeks after as communities recover. The coronavirus outbreak is akin to a major hurricane occurring in every state around the country for weeks on end.
The closest historical comparison would be natural disasters like major hurricanes, which lead to sudden spikes in unemployment claims, but even those comparisons are inadequate. The effects of hurricanes tend to be concentrated, affecting specific geographic regions and snapping back in the weeks after as communities recover. The coronavirus outbreak is akin to a major hurricane occurring in every state around the country for weeks on end.
Table: Coronavirus Outbreak Compared to Previous Natural Disasters
| Week Ending | Description | Claims Week Prior (000s) | Claims Week Of (000s) | WoW # Increase (000s) | WoW % Increase |
| 9/10/05 | Hurricane Katrina | 326 | 422 | 96 | 29% |
| 11/10/12 | Hurricane Sandy | 365 | 446 | 81 | 22% |
| 9/2/17 | Hurricane Harvey | 239 | 299 | 60 | 25% |
| 3/14/20 | 2 Weeks Ago | 211 | 282 | 71 | 34% |
| 3/21/20 | Last Week | 282 | 3,283 | 3,001 | 1,064% |
Source: Department of Labor, Unemployment Insurance Weekly Claims Report
On a technical note, last week's newly unemployed workers won't show up in the March Jobs Report unemployment rate from the Bureau of Labor Statistics because the household survey reference period has already passed. We'll have to wait until the April Jobs Report, scheduled for May 8, to see the full impact of this surge in unemployment claims. A very simple back-of-the-envelope estimate suggests that an additional 3.283 million unemployed workers could increase the unemployment rate from 3.5 percent—a 50-year low—to 5.5 percent—the highest rate since May 2015. Next week's UI claims report is likely to continue to show elevated claims as more cities and states require business to shut down and more workers are furloughed or laid off. A prolonged coronavirus-induced shutdown could hit businesses particularly hard and lead to a sustained increase in unemployment rates as businesses are slow to recover and rehire workers. To speak with Daniel Zhao about today’s report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.Daniel Zhao
Daniel Zhao is Chief Economist at Glassdoor. On Glassdoor's Economic Research team, he has conducted research using Glassdoor's unique data on a variety of topics affecting job seekers and employers ranging from the health of the job market to pay transparency to employee engagement & retention. His work has been cited in publications like the New York Times, the Harvard Business Review and more. Prior to joining the Economic Research team, he also worked on improving the user experience for Glassdoor’s consumer jobs product and mobile app. He holds a bachelor's degree in applied mathematics and economics from Harvard College.
Tags:Labor MarketUnemployment
