First-time jobless claims for the week ending May 16 increased by 2.438 million to bring the total number of Americans who have filed for unemployment benefits to 38.9 million during the past nine weeks.
To put that in perspective, it is parallel to the entire population of California, which is the fifth-largest economy in the world, losing their jobs since the onset of the coronavirus.
Continuing claims for the week ending May 9, which will inform the official estimate of the May unemployment report, increased to 25 million, resulting in an insured unemployment rate of 17.2%.
Mass unemployment is not a normal condition that is supportive of estimating the true unemployment rate. This data implies that 26% of those who were employed in February have lost their jobs.
Once one accounts for the initial claims data and those who have lost their jobs but have not qualified for unemployment, are marginally attached or are working part time for economic reasons, the near real-time unemployment rate has reached roughly 29.4%.
While the pace of those filing first-time claims has declined for the past seven weeks, the number of individuals filing for unemployment benefits will continue to rise. It is difficult to make a case why that number will now not drive toward 50 million before the economy begins its long and winding road to recovery and expansion.
One of the policy challenges that lies before the political authority is what to do about mass unemployment. Given that an election is less than six months away, one should not anticipate any major breakthrough in a forward-looking set of policies that promote, support and provide incentives for firms to hire.
Rather, the question in front of us is: Can the political authority put together a set of policies that bridge the gap between today and the point at which workers are convinced it is safe to return to work? One would think that outside of a testing, tracing and treatment regime that leads to a vaccine, those policies would be the primary pre-occupation of policymakers. We are not holding our breath.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.