Millions of Americans have lost their jobs in the past six weeks, the fastest destruction of the labor force in history, effectively wiping out every job created post-GFC. About one in five people have filed for unemployment benefits, suggesting coronavirus lockdowns have severely damaged the economy.
New data released via the Labor Department tells a troubling story of how people who have filed for initial jobless claims aren't receiving their benefits in a timely manner, which has further stressed households. In March, the Labor Department said 14.21% of the 12 million people who filed for jobless claims received their first payments in the same month.
Reuters says the distribution of benefits to folks in some states was not immediate. It said labor departments in some states could not handle the surge in processing new claims:
"They are struggling with the demand and that is very frustrating to people," said Andrew Stettner, a senior fellow at The Century Foundation, which published a report this week on employment trends. "This data gives you a sense of it."
In one instance, Las Vegas residents protested on April 23 over delays in unemployment. One protester told NBC Vegas that some people have tried to file for 4-5 weeks with zero success.
"I have no issue with the stay-at-home" order, Susan Olvera said. "I will gladly respect it, and we have been, but we can't stay at home and be told 'don't go outside' when we have no money coming in to at least keep the lights on."
Stettner said states are bound by a three-week rule to send initial payments from the time the claim is filed. With a high influx of job losses and chaos of lockdowns, many states have become overburden with processing claims.
Indiana, Arizona, Minnesota, and Florida were found to have only 3% of people filing claims in March receive payments that month, "which could cause them to understate the number of jobless people in the state by some estimates," Reuters notes.
On the flip side, 51% of people filing claims in Rhode Island for the month were almost immediately paid out. West Virginia and Virginia were two other states that had payments distributed in the same month.
The volume of claims over the last six weeks has completely overwhelmed some state filing systems and likely resulted in delayed payments. To compensate for the increased volume, state labor departments have hired additional staff.
We noted on April 28 that the left-wing Economic Policy Institute conducted a survey and found for every ten people who have successfully filed unemployment claims, three or four people have been unable to register and another two people have not tried to apply at a time of acute economic crisis. Ben Zipperer, the survey's lead author, found that upwards of 50 million Americans could have lost their jobs since March.
Stettner said before the pandemic, some states slashed unemployment benefits and made it more challenging for people to file. "They've been more throwing up barriers to people getting assistance," he said.
Another factor leading to uneven time distribution of unemployment benefits is population. He found labor departments in certain states catering to smaller communities had a much quicker distribution in benefits.
It was noted that states experiencing process claims difficulties could be underreporting job losses.
"Florida, for example, had an insured unemployment rate of 2% as of mid-April, but it was also severely behind in processing claims as of March - making payments to only 2.4% of people who filed initial claims that month. Rhode Island, which paid benefits to more than half of people filing claims in March, had a higher insured unemployment rate of nearly 17%," Reuters said.
And the result of delayed unemployment benefits and households cracking under the weight of economic depression and pandemic, could be the cracking of the American household.