In SummaryListen to CalMatters reporters asking state officials about the surge in unemployment claims.
The number of Californians filing for unemployment benefits eclipsed the state’s highest number on record, dating back to the aftermath of the Great Recession.
Experts fear that the worst is yet to come, especially for sectors of the economy still reeling from the state-ordered closure of non-essential businesses to reduce the spread of the coronavirus pandemic
The California Employment Development Department announced Thursday that unemployment claims reached 186,809 for the week ending March 21. The week before, it was more than 58,000 claims. For context, in all of March 2019, there were 40,000 new unemployment claims in the state. The prior weekly record of 115,462 was set in January 2010 at the height of the Great Recession.
“It is all hands on deck to deal with this historic claim load,” EDD deputy director Loree Levy told CalMatters in a live broadcast on Thursday.
On Wednesday, a day before the EDD released the number of claims for California, Gov. Gavin Newsom said 1 million Californians had filed claims since the pandemic.
The EDD counts processed claims, while Levy described Newsom’s number as “an estimate” of all claims submitted, whether they had been processed yet or not.
Levy said her department expects the numbers to continue to break records.
“We can’t make predictions,” Levy said. “We continue to receive historic levels of claims on an ongoing basis. We’re looking at all kinds of strategies [to process claims] on a daily basis.”
The California Bureau of Labor Statistics had to recompose its weekly jobless claims graph because Thursday’s numbers dwarfed previous jobless numbers.
A Washington Post-ABC News nationwide poll found that about a third of people have been laid off or had an immediate family member laid off. Another half reported a cut in work hours or pay for someone in their family.
On March 15, Newsom ordered all bars in the state to close, creating the first ripple in a tidal wave of state-ordered closures of all non-essential businesses. Employees from a variety of industries found themselves out of work or having their hours significantly reduced.
Now unemployed people are worried about making their April rent. Levy said that claims are usually processed within three weeks, but she could not guarantee that the same timeframe will hold true during the pandemic.
“I don’t think any state has ever been prepared for an economy to come to a standstill like it has,” Levy said. “We know these payments got to get out to people as soon as possible.”
The state has taken steps to ease the financial burden on the unemployed, chiefly by waiving the one-week waiting period to collect benefits. For those who qualify, their first payment should be for two weeks instead of the typical one week.
Unemployment insurance is paid by employers, so the pot of money from which recipients collect does not come from the state directly. If the claims exceed the unemployment insurance fund and the state becomes insolvent — as it did during the Great Recession — the state will likely take a loan from the federal government.
“As long as someone is [entitled to benefits], they’ll receive them,” Levy said. “It’s just a matter of what it will cost the state in the long run” to pay back a federal loan.
The Associated Press reports that the number of jobless people in the U.S. has already exceeded the height of the Great Recession, which lasted from 2007 to 2009, although the economic impacts hit California the hardest in 2010.
According to Labor Department records — which date back to 1967 — the largest seasonally-adjusted one-week number of new unemployment claims was 695,000 in October, 1982. Back then, the unemployment rate was about 10 percent.
New unemployment claims in California reached more than 375,000 in January 2010, the highest monthly total on record. Three of the top-five highest months came during the Great Recession. The other two months with the most claims came during the recession of the early 1990s.
Before the onset of the pandemic, the U.S. unemployment rate was 3.5 percent, a 50-year low. The current rate has not been calculated.