Wednesday, June 3, 2020

Unemployment Insurance Claims Data Shed Light on the Local Economic Impacts of the COVID-19 Pandemic

Unemployment Insurance Claims Data Shed Light on the Local Economic Impacts of the COVID-19 Pandemic

By Lecia Parks Langston, Senior Economist; Michael Jeanfreau, Regional Economist

“You have power over your mind — not outside events. Realize this, and you will find strength.” Marcus Aurelius

In the wake of the COVID-19 pandemic, businesses lost revenues and workers lost jobs. But because of the time it takes to collect and collate data, economists have been left without much information to quantify the economic impacts at the local level.

But there is one ray of data illumination. Claims for unemployment benefits are promptly available and provide information about a large cross section of the economy. This post will outline what light unemployment claims data sheds on the state of Utah’s Wasatch Front North economy.

While not all workers are protected by unemployment insurance laws, roughly 95% of jobs are covered. This makes claims data an exceptional source of information about the economy. Not included under unemployment insurance laws are most self-employed workers, about half of agricultural employment, unpaid family workers, railroad personnel (covered separately) and many nonprofit organizations (such as churches). Also, some out-of-work employees may not have worked a sufficient work history to qualify for unemployment insurance benefits, but may file anyway. Fortunately, in this time of economic distress, the social safety nets of the unemployment insurance program, special national COVID-19 funding and social programs are working together to keep workers’ income and well-being stable.

Unemployment claimants and the unemployed; they aren’t the same

Also, keep in mind that, in addition to individuals drawing unemployment benefits, the unemployment rate includes those entering and re-entering the workforce and noncovered groups without current employment. This means the number of “unemployed” will be greater than the number of claimants. In “normal” times, only about 40% of the “unemployed” are claiming benefits. The generally reported unemployment rate also has a work-search requirement. If you haven’t made any minimal attempts to find work, you aren’t counted as “unemployed.”

Watch this Space

While this analysis won’t be updated on a regular basis, new data will be added to the data visualization on a weekly basis allowing readers to check back for the latest information.

An Unprecedented Event

Not surprisingly, first-time claims for unemployment benefits have soared in Utah and across the nation as the pandemic swept across the country. This increase is unprecedented since the creation of unemployment insurance coverage during the Great Depression. Week 12 (beginning March 16) marks the start of this unparalleled surge in claims. On a positive note, while new claims for unemployment benefits have skyrocketed in Utah, the state currently shows one of the lowest claims rates in the nation.

For most Wasatch Front North counties, initial claims peaked in week 14 (starting March 30) and have since tapered downward. During the peak, initial claims filed totaled 5,744 in the region. By week 19, claims measured considerably lower but continued to run substantially greater than in previous years — even during the “Great Recession.”

Here’s another example of the tremendous flood of new claims. Prior to the COVID-19 pandemic, counties in Wasatch Front North Utah averaged a total of 240 first-time claims per week. This time period included seasonally high claims weeks in January. In the weeks after, an average of 3,342 claims were filed for a staggering increase of 1,392%.

Who took the hardest hit?

Each county in the Wasatch Front North region has had a different industry leading the total number of claims in the area. Overall, manufacturing lead total initial claims at 13%, followed by both health care/social assistance and retail trade at 12%, with food service/accommodation following at 11%. Additionally, claims from unknown industries are also prevalent, representing 12% of total initial claims. These claims will mostly fall into the food service industry.

The Domino Effect of COVID-19

In the early stages of the pandemic, this was a story of service-dependent industries. However, the domino effect of the COVID-19 pandemic have also begun to have large impacts in other industries. Claims have been distributed fairly evenly among different industries, with manufacturing, health care/social assistance, retail trade, accommodation/foodservice and claims from “unknown” industries as the top five industries impacted within each county in the Wasatch Front North region. Many of these unclassified claims would rightfully be counted among accommodations/food services if the appropriate information were available.

The initial impact of the pandemic led to the closure of face-to-face jobs, but the change in employment and social behavior both locally and abroad has led to subsequent closures in other industries. Industries that didn’t face instructions to alter behavior during this event still had to adapt to the difference in consumer behavior, supply chains and additional safety precautions.

The Industry Flow

Initial claims in the region have come in waves, with food service/accommodation and unknown claims peaking in week 12, followed by an uptick in claims from nonessential health care services and retail trade through weeks 13 and 14, and lastly a marked increase in manufacturing by week 15.

The High and the Low

Although the largest numbers of claims in Wasatch Front North have come from manufacturing, health care/social assistance, retail trade and food services, in percentage terms, other industries have actually suffered more. For example, in the smaller industries of mining, real estate/rental and leasing, information and personal care services have all seen similar losses of between 16-19% of total covered employment.

Because of its job-to-job nature, the construction industry typically accounts for 15-25% of first-time claims. However, although construction’s new claims have also increased, they have increased at a much slower-than-average rate. After the COVID-19 pandemic hit, construction contributed less than 4% of all first-time claims. Ease of social-distancing and good weather have helped construction maintain employment levels. New claims measured just 5% of covered construction employment.

Only a portion of agricultural employment is covered by unemployment insurance laws. However, as companies work to keep America fed, agribusiness has laid off few employees. Only 2% of Wasatch Front North’s covered agricultural workers have filed a claim during the COVID-19 pandemic.

Public administration, educational services (including public and higher education), finance/insurance and utilities have also managed to keep a higher percentage of their workforces employed.

County by County

Davis County
  • Davis County matched the state average for new claims as a share of covered employment (10%). While the whole region suffered similar initial losses, Davis County was largely spared the increase in manufacturing claims that Weber County experienced in the weeks following the arrival of the COVID-19 pandemic.
  • While the percent of covered employment is lower in Davis County, it had the largest total initial claims in the region (13,951), narrowly beating out Weber County (12,451).
  • Prior to the COVID-19 pandemic, Davis County averaged 104 first-time claims per week compared with 1,744 claims after the pandemic. This increase of 1,581% ranked as the largest in the region.
  • Retail trade, health care/social services and accommodation/food services generated the highest number of initial claims during the pandemic.
  • Davis County’s initial claims peaked on week 14, totaling 3,081. This was the only week that claims rose over 3,000.
  • The regional share of new claims that Davis County had rose from before 43% of claims to 52% during the pandemic.

Morgan County
  • Prior to the COVID-19 slowdown, Morgan County averaged three unemployment insurance claims per week compared to 42 new claims afterward, an increase of 1,071%.
  • Because of its relatively large share of service industry employment, Morgan County has shown a higher-than-average increase in claims due to the COVID-19 pandemic.
  • New claims as a percent of covered employment measured at 13% — above the state average of 10%.
  • Morgan was slightly unusual compared to other areas, with health care/social assistance receiving more initial claims than food service/accommodation industry.
  • In counties with small workforces, the lack of data accuracy can make an impact to volatility. In Morgan County, the initial claims data show claims from an overwhelming percentage of covered employment in both entertainment and management of companies.
  • Morgan County remained a meager 1% of total first-time claims for the region during the COVID-19 pandemic.

Weber County
  • While Weber County and Davis County are the two large contributors to employment numbers in the region, Weber County has had 12,451 total first-time claims filed during the COVID-19 pandemic. While this is only slightly less than Davis County (13,951), Weber County’s share of first-time claims within the entire region dropped before and during the COVID-19 slowdown from 55% of all claims before to 47% of all claims during. This means that, while Weber County’s claims increased proportionately less than other counties in the region.
  • Before the slowdown, an average of 133 initial claims were being filed in Weber County compared to an average of 994 claims in the following weeks. The pre-to-post-pandemic increase registered at 1,339%
  •  Initial claims for unemployment insurance filed during the pandemic as a percent of covered employment measured at 11%, near the middle of a ranking of all Utah counties.
  • Weber County had more first-time claims filed during the pandemic from the manufacturing (2,376) and health care/social assistance (1,470) industries than the more common accommodation/food services.
  • While the total claims are higher in other industries, several industries suffered larger portions of claims as a percent of covered employment. Real estate/rental and leasing saw claims from 19% of covered employment, while industries designated as “other services” received the same. In this case, these claims will largely be coming from personal beauty services, a subset of “other services.” Information (18%), mining (16%) and accommodation/food service (16%) all similarly saw claims from a high percent of covered employment.
  • Claims originating from manufacturing and transportation surged towards the latter weeks of the pandemic time period.