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Joint Economic Committee Democrats Chairman - Senator Martin Heinrich (D-NM)

Publications

May 20 2020

Getting an Accurate Picture of New Unemployment Claims

On Thursday morning at 8:30, the Department of Labor (DOL) will release its report on first-time unemployment insurance (UI) claims for the week ending May 16. It will be the ninth report in the period since parts of the nation went into lockdown, during which well over 30 million Americans have been recorded as filing a new claim. News coverage and analysis likely will cite a firm number – it probably will be wrong, or at least incomplete.

This is a result both of who is or is not counted and how the data are interpreted. For example, the topline number does not include those self-employed and gig workers who filed claims under the new Pandemic Unemployment Assistance (PUA) program recently passed by Congress. More than 840,000 workers filed PUA claims during the week of May 9. These claims were included in a paragraph and tables in the most recent DOL report, but not combined with regular claims to get an overall number of new filings.

On the other hand, the topline number of new claims includes a “seasonal adjustment,” which dampens fluctuations due to seasonal variations. This makes it easier to see trends and is very helpful in most cases—except during extremely fast and large job losses due to cataclysmic events like the coronavirus pandemic. The upward adjustment applied in the spring substantially inflated the already extremely high number of new claims in recent weeks. The cumulative seasonally adjusted (SA) number of new claims over the past eight weeks is 3 million higher than the not seasonally adjusted number (NSA).

Some of the best reporting on new unemployment claims has captured these nuances, although they largely remain buried due to the long-standing and in most cases preferred tradition of presenting seasonally adjusted numbers.

Apr 28 2020

Automatic Support for Americans During the Coronavirus Crisis

Leading economists have long advocated for using “automatic stabilizers” to help counteract the destructive impact of recessions and to hasten recovery. Such mechanisms, like unemployment insurance, automatically expand when the economy worsens and shrink when it recovers. This prevents consumer demand—and the economy—from falling into a downward spiral.

Congress has acted forcefully to counteract the economic fallout of coronavirus with a dramatic expansion of unemployment insurance, aid to state and local governments and more. But that aid is temporary and, unlike enhanced automatic stabilizers, will begin to expire this summer while we likely remain in the middle of dual public health and economic emergencies.

Providing economic support to Americans during the public health emergency is critical to beating the virus. The goal in every other economic downturn has been to get people back to work quickly, but the current objective is to allow them to stay home or practice social distancing for as long as it takes to get the virus under control. Public health experts predict that

Americans will not cooperate with these measures if they can’t support their families.

Economic assistance should continue even after the end of the public health emergency, given how deep the current economic downturn is and how long it may last. We already have seen more than 24 million Americans lose their jobs in just five weeks and images of food lines have proliferated across the country, evoking the depths of the Great Depression. This will likely not end quickly: the Congressional Budget Office notes that its forecast is highly uncertain, but estimates that, without additional economic support by Congress, unemployment at the end of 2021 will be 9.5%, only slightly better than the very worst (10%) of the Great Recession.

The most sensible way for Congress to guarantee that economic assistance will continue as long as it is needed is by directly linking it to the state of the economy instead of picking arbitrary expiration dates. This would mimic the automatic stabilizer approach that economists have long urged, provide certainty to families that they will get the aid they need, ensure that support does not depend on politics and automatically turn off support when it is no longer needed. Neither economists nor epidemiologists can predict the length of this recession—some believe the economy will begin to rebound quickly while others say it will remain depressed for years. Linking aid to economic conditions accounts for either possibility.  

A discretionary approach to economic support risks cutting off aid to families as they comply with public health guidelines that essentially require unemployment or wait for the economy to recover. These consequences would be especially grave for low-income Americans and people of color. This risk—in an election year with divided partisan control of Congress—is too grave.

Linking support to economic conditions, on the other hand, avoids that unnecessary risk.