Almost 3 million more applied for Unemployment Insurance last week
Over the last 8 weeks more than 40 million have lost their livelihood
San José, CA – On Thursday, May 14, the Labor Department reported more bad news, saying that almost 3 million people applied for unemployment insurance in the previous week ending May 9. This means that over the last eight weeks more than 36 million people applied after losing jobs and income. Another 3.5 million are collecting the federal government’s Pandemic Unemployment Assistance, or PUA, which goes to the self-employed. This brings the total number of recently unemployed people to about 40 million.
This report was worse than mainstream economists expected, with a drop of only 200,000 from the week before, when 3.2 million people applied. At the current rate it would take 12 more weeks for Unemployment Insurance claims to drop below to the pre-pandemic record high of 695,000 claims in one week, set back in October 1982. By that time a stunning 60 million people would have lost their jobs, pushing the unemployment rate to 40%, much worse than the Great Depression 1933 high of 25% unemployment.
Of course, two weeks does not make a trend. But this worst-case scenario led Federal Reserve Chair Jerome Powell to tell Congress on Wednesday that more federal government spending could be needed, saying “Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”
The Federal Reserve also released a report showing how lower-income Americans are being hit hardest by the crisis. 40% of households with incomes of $40,000 or less had someone lose their job, as opposed to only 13% of households earning more than $100,000 a year.
This week congressional Democrats unveiled a $3 trillion package of aid for state and local governments, extension of additional unemployment benefits (which now expire July 31), renter and mortgage relief, and additional payments to individuals, among other things. But despite the warning of Fed Chair Powell, Senate Republicans hardened their opposition to more financial aid for the COVID-19 economic disaster. Instead they want to guarantee businesses from any liability for putting workers back into unsafe working conditions. President Trump also threatened to veto the bill, saying that it was not related to the pandemic economic crisis.