As social distancing efforts and restrictions have caused businesses to close or reduce hours, Missourians filed more than 42,000 unemployment claims last week, about a quarter of the total claims made in Missouri in all of 2019.
“We expect these numbers to continue to grow,” said Anna Hui, director of the Missouri Department of Labor and Industrial Relations, at a news conference with Gov. Mike Parson and other departments Wednesday.
More people are out of work and seeking assistance across the country, with about 3.2 million people filing initial unemployment claims nationwide last week. That’s the most ever recorded in a week and is nearly five times the previous high of 695,000 claims filed in one week in October 1982, according to the U.S. Department of Labor.
The surge in weekly applications was a reflection of the damage the coronavirus outbreak is inflicting on the economy. Filings for unemployment aid generally reflect the pace of layoffs.
Revenue has collapsed at restaurants, hotels, movie theaters, gyms and airlines. Auto sales are plummeting, and carmakers have closed factories. Most such employers face loan payments and other fixed costs, so they're cutting jobs to save money.
As job losses mount, some economists say the nation's unemployment rate could approach 13% by May. By comparison, the highest jobless rate during the Great Recession, which ended in 2009, was 10%.
“What seemed impossible just two weeks ago is now reality,” said Nancy Vanden Houten, an economist at Oxford Economics, a consulting firm. “The U.S. economy will experience the largest economic contraction on record with the most severe surge in unemployment ever.”
The economic deterioration has been swift. As recently as February, the unemployment rate was at a 50-year low of 3.5%, and the economy was growing steadily if modestly. Yet by the April-June quarter of the year, some economists think the economy will shrink at its steepest annual pace ever — a contraction that could reach 30%.
In a report Thursday, the U.S. Department of Labor said 3.283 million people applied for unemployment benefits last week, up from 282,000 during the previous week. Many people who have lost jobs in recent weeks, though, have been unable to file for unemployment aid because state websites and phone systems have been overwhelmed by a crush of applicants and have frozen up.
That logjam suggests that the report actually understates the magnitude of job cuts last week. So does the fact that workers who are not on company payrolls — gig workers, freelancers, the self-employed — aren't currently eligible for unemployment benefits even though in many cases they're no longer able to earn money.
Changes in Missouri
Nearly every state cited impacts from COVID-19 on their unemployment report, a news release from the Missouri labor department stated. Many layoffs continued in the service industry, including hospitality and food service, but the department also highlighted health care and social assistance, arts, entertainment and recreation, transportation and warehousing and manufacturing as industries where many people are now seeking unemployment assistance.
Hui also announced two changes to unemployment insurance rules, including temporarily waiving the one-week waiting period before people who lose their jobs can file an unemployment claim. She urged anyone who loses their job to file their claim as soon as possible so they can receive benefits sooner.
The department will also temporarily stop charging coronavirus-related unemployment claims against employers, which Hui said would help them “avoid the negative impact” of those claims.
Unemployment insurance is paid by a tax on employers, each of which has its own account in the state trust fund that pays out unemployment claims. When there are many claims on an employer’s account, its tax rate can be adjusted to make sure its account covers all of its employees. Under the waiver, what the state would take for each unemployment claim will stay in the employer's account, so it won’t have a steep tax increase.
The department previously lifted a requirement that people collecting unemployment insurance because they lost their job due to COVID-19 do three job search activities each week, like applying or interviewing for a job.
People who lost their jobs due to COVID-19 should check the “COVID-19” box on the unemployment claim form to make sure the requirement is waived for them. The job search requirements still apply for people who lost their jobs for other reasons.
Hui said 95% of claims are being filed online. The department previously said it has shifted employees from across the department to help manage the huge spike in claims, and Hui said the department is constantly monitoring the website.
Unemployment insurance is available to those who lost their job through no fault of their own, including those laid off because of a slowdown in business caused by COVID-19. People who cannot work because they are ill from the coronavirus may not be eligible because people must be able to work to claim benefits. People who are required to be quarantined but are not ill will be eligible in most cases, according to the department.
The Associated Press contributed to this report.