During the week ending 24 April, 4.4 million more American workers filed for unemployment benefits, bringing the total out of work to about 30 million and pinning the actual jobless rate above 20 percent.
The number of U.S. workers idled is now double that of the 15.3 million in 2008’s Great Recession.
States’ unemployment insurance systems have been overwhelmed, with many unable to process, or even accept, the flood of applications in a timely way.
States often delay investment in information technology and many are trying to handle the tsunami of unemployment clients with outdated computers and software.
“We literally have [IT] systems that are 40-plus years old,” said New Jersey governor Phil Murphy. His state and others are pleading for programmers who know COBOL, a computer language that became antiquated in the previous century.
As a result, out-of-workers in many states have had to make dozens or, in some cases, hundreds of attempts to complete online applications or complete phone calls to states’ agencies.
Also, despite federal aid, a number of states have not yet fully replenished their unemployment insurance funds since depleting them during the Great Recession. As a result, several states will have to borrow to pay the mounting heap of unemployment claims
Half of U.S. Workers Earn More Off the Job
About half of U.S. workers idled by the economic shutdown are earning more by combining state and federal unemployment benefits than they did when working.
In addition to state unemployment insurance, unemployed persons are collecting $600 a week in federal benefits through July.
The combined payments average $978 a week, according to the U.S. labor department. The typical U.S. full-time worker earned $957 a week during the first quarter of this year, department figures show.
The average pay for restaurant workers spending 40 hours a week on the job in 2019 was $466, meaning those employees are collecting more than twice as much staying at home.
Employers seeking to reopen their businesses during the year’s second quarter may find workers asking to remain on furlough to collect the larger pay. That would slow the economy’s recovery.
To solve the problem, states or Congress might decide to end benefits to workers if their employer reopens. That would effectively force employees back to work even if they felt their health will be unsafe on the job.
TREND FORECAST: The money being sent to the out-of-work will temporarily mitigate financial disasters. However, with businesses closed down and reopening laws sharply reducing the levels of customer flow, hours to be open, etc., it will do nothing to prevent sharp downturns of personal income and levels of distress.
