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.
