The impact of unemployment


Economic Studies

Figure 1 shows that the total initial claims of unemployment insurance fired during the weeks ending March 21, March 28, and April 4 for the selected states as a share in the labor force. As can be seen, in the hardest-hit areas, the number of initial claims as a share of the labor force was double or triple compared to the states that are hit the least.

Holley Law, staff writer

Many states have seen a large number of former workers apply for unemployment in recent weeks. When the states shut down many businesses were also closed leaving people needing to apply for unemployment to make ends meet with payments and bills. Roughly 30 million Americans, who had a job in February, have filed for unemployment. Many Americans are either unwilling or unable to claim benefits, and the rapid influx of requests has at times created backlogs at state unemployment offices. It is not surprising that the highest number of jobless claims come from states that have a higher and more dense population. For example, states like California, Texas, and Florida. States with the least claims are less populated, which include states like Alaska, Vermont, North and South Dakota.

Efforts to stop the spread of the coronavirus, particularly the closure of nonessential businesses, are having an unprecedented impact on the U.S. economy, causing unemployment rates to be higher than 15 percent. This percent is even higher than the rate at the peak of the Great Recession.

However, these aggregate statistics show variation across the country. Some cities, like New York, are already experiencing full-on pandemics and non-essential business activity has been substantially halted. In other areas, economic activity has been slowed down, but not as much.  The variation represents the degree of the spread of the virus, the timing and extent of that state and local response. 

The longer unemployment goes on, the more severe the health consequences, with increased depression and other health issues worsening over time. In addition to the obvious loss of income, unemployed workers were found to have lost friends and self-respect. Unemployment affects the individuals and their families, not only with respect to the income but also with respect to health and reality. While some are ensured that they will get their jobs back when all this is over, not all of them are guaranteed a job when states open back up. The longer one goes through unemployment, the harder it is to get a new job. Employers are wary of the long-time unemployed and also because over-time unemployed will lose job skills.

There are also social consequences of unemployment. Though people are already having limited social connections, unemployment does not help the consequences. One consequence is that one may be more inclined to commit a robbery, a study in 2008 showed.