Unemployment Insurance Programs Struggle as Jobless Claims Hit 36 Million

The past two months have been a struggle for global economies as a result of the coronavirus pandemic. At the start of the pandemic in the US, the government set up coronavirus support programs for suffering businesses, organizations, states, and the unemployed. However, the unexpected has happened as an additional 3 million Americans filed for unemployment support, early this month, bringing the total number to 38.6 million.

As it stands, the United States has seen the worst unemployment rate yet, since the Great Depression. With a total number of the unemployed now 38.6 million Americans who have filed for jobless claims within the past few months, it is uncertain how much more the unemployment insurance programs that have been set up can withstand. This has caused millions of Americans to be without pay for multiple weeks as the state insurance systems try to meet up the demand.

The huge number of unemployed Americans has caused a disruption to the initial unemployment insurance systems. The federal government had promised to pay all jobless claimants that file for unemployment including independent contractors and other freelance workers, an additional $600 until July 31. The government had not predicted the numbers to rise to 36 million and the unexpected has caused the plan to struggle; thus making it quite impossible to meet demand. As it is, there is no telling how many more Americans would be added to the list by the end of May 2020.

While many jobless claimants are yet to receive any pay and have had a few difficulties contacting their state insurance systems, the Pew Research Center reported that about 29% of unemployed Americans received payments in March. It is said that the numbers are improving, though they differ by state.

As of last week, 92% of unemployment claims in Michigan were either been approved or received benefits. While in Florida, 36% of claimants have been insured.

While a lot of states struggle to keep up with ever-increasing unemployment claims, there is no telling how soon their funds will deplete.

Senior policy analyst at National Employment Law Project Michele Evermore said: “if we don’t pass underlying unemployment insurance reforms soon, states are going to spend all of their trust funds.” Also adding that “once states have to borrow from the federal government, there will be a lot of pressure coming out of this recession to cut benefits further to make up for the shortfall. And I’m just terrified that states are going to completely decimate their unemployment insurance systems after this.”  

There are expectations that the US economy would begin to recover gradually even as some states begin to ease quarantine rules and allowed businesses to reopen. Hopefully, job losses will be reversed and the unemployment claimant list decreases in number.

In a Federal Reserve report, Jerome Powell, the Fed chairman said the already financially vulnerable were the most-hit of the quarantine shutdowns. According to the report, about 40% of households that earn less than $40,000 had experienced more job losses.

“While we are all affected, the burden has fallen most heavily on those least able to bear it.”

Earlier this month, the Department of Labor said only about 20 million people had lost their jobs in April, at 14.7% from a previous 4.4% in March. The figures revealed a sharp rise in unemployment amongst people with no college educations, especially African Americans and Latinos.