2020 Brought Longer Unemployment Lines

Adnan Zai

One full year has passed since Covid-19 hit the shores of the United States, and along with the virus, unemployment has swept across the nation. For 52 straight weeks, one million people have been forced to seek unemployment assistance. This oppressive statistic represents a country full of individuals and families just trying to survive. Congress was forced to pass the American Rescue Plan Act of 2021 just to keep the nation afloat.

Who Needs Assistance?

Despite the efforts of the federal government, the fact that so many people are turning to federal assistance is nothing short of overwhelming. CNBC reports that over 19 million Americans were collecting benefits as of early February, according to the Labor Department. This compares with about two million people from the same time last year. The jump in numbers is one thing, but imagining all the individual workers and families who are affected is astounding.

Just this week, however, the claims have decreased. According to the New York Times, there were 657,000 state unemployment claims, which is a decrease of 100,000 from the previous week. These are the lowest numbers since the pandemic began. Additionally, the 242,000 new claims for Pandemic Unemployment assistance (for freelancers, part-timers, and others not qualifying for regular unemployment) represent a decrease of 43,000. Ohio and Illinois led the decrease across the nation.

“The numbers are encouraging, but no one is jumping the gun and hiring up for what looks to be a boom this spring and summer. There is a reluctance to get ahead of activity,” said Diane Swonk, chief economist at the accounting firm Grant Thornton.

So, who needs help? Clearly the number of workers and their dependents who have been filing for unemployment is immense. But according to the Congressional Research Service in a recently published report, certain groups of people have been hit harder than others.

For one, the hospitality industry has been decimated. When the pandemic shut down the country, travel essentially halted, and for those workers who work in the leisure and hospitality industry, their worlds all but crumbled. Americans were not taking vacations, companies were not holding conferences, and hotels were shuttering their doors. Many were forced to leave the industry altogether.

“Workers whose last job was in the leisure and hospitality industry experienced a higher peak in unemployment (39.3% in April 2020) than did workers who were previously employed in any other industry; they also had the highest unemployment rate in December 2020 (16.7%).”

The Congressional Research Service also reported:

  • The December (2020) rates for Black (9.9%), Asian (5.9%), and White (6.0%) workers were all higher than their respective rates in February 2020.
  • For Hispanic workers, unemployment increased by 13.7 percentage points to 18.9% from February to April 2020.
  • Younger workers were more likely to see the unemployment rate increase than older workers and were higher for men than women.

The American Rescue Plan: Act to the Rescue

Many economists are comparing this downturn to the Great Recession, but it is not even close. Between 2007 and 2009, the United States economy experienced the worst recession since the Great Depression of the 1930s. This was due in part to the bursting of the US housing bubble, as well as a financial crisis that circled the globe.

But truly, the comparison pales to the pandemic. Experts said, “For many weeks during the pandemic, initial jobless claims totaled more than twice what they did during the worst week of the Great Recession.” After the Great Recession, Congress used the Workforce Investment Act to help the people and spur the economy.

Because the pandemic wreaked havoc on working Americans and unemployment, the government was forced to pass the stimulus package to instill confidence in the economy, which would lead to more hiring and lower unemployment. On March 10, 2021, the House finalized the plans for the American Rescue Plan Act of 2021, whose aim is to increase the temporary aid benefit until August 29 of this year, rather than having them run out on March 14, as planned. This is a $1.9 trillion-dollar Covid relief bill.

Cautious Optimism

The country is on the brink of a precipice. With only 11 percent of the total population in America vaccinated, and continued unemployment, America is not out of the woods yet. With more people filing for unemployment than ever before for the past 12 months, the recovery will not be swift. Americans have lost seniority, pensions, and job skills, along with the fact that some career fields have all but been eliminated.

“This is evidence of the long-term scarring in the labor sector that, despite what is going to be a booming economy over the next two to three years, will not be repaired anytime soon and requires sustained policy attention,” Joe Brusuelas, chief economist at tax advisory firm RSM, said.

Although the winter weather has broken, the country is not out of the woods yet. The supplemental unemployment package will need to work its magic quickly if the country is going to move toward recovery soon. Time will tell if the stimulus package will stimulate the nation.

Adnan Zai

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