Economic Policy Institute: Jobless Rate Is On The Rise

The latest data on nationwide unemployment shows continued impacts from the COVID-19 pandemic in the third quarter of 2020, as Butte County continues to see a rise in general unemployment.

The Economic Policy Institute's latest report released Monday reflected that in the third quarter of 2020, amid an ongoing public health and economic crisis, unemployment rates remained above 10% for all ethnic groups except among white Americans. There were still marked improvements in unemployment rates compared with the second quarter, now recognized as the unemployment peak for this pandemic-induced recession.

The institute's report on the third quarter of 2020 parsed unemployment data based on ethnicity.

In the third quarter of 2020, the white unemployment rate was 7.3%. Unemployment remained at or above 10% in six states for white workers.

Black workers "continued to face a disproportionate share of the pandemic's economic and public health burden" according to the report, with an unemployment rate 5.6 percentage points greater than the pre-pandemic economic peak. Black workers faced unemployment rates of over 10% in 16 of the 22 states for which unemployment data was available.

The overall unemployment rate for Hispanic workers was high compared with white workers' yet fell below that of Black workers' to 11.3% in the third quarter of 2020, 6.5 percentage points above the pre-pandemic economic peak. Hispanic workers faced unemployment greater than 10% in eight out of the 18 states with available data.

Asian-American workers have seen "uncharacteristically high" unemployment rates throughout the pandemic recession with an overall rate still just above 10% in the third quarter. This represents a reversal of trends in which unemployment rates fell below those of white workers although the group's unemployment in the quarter still represented the highest percentage change from the previous economic peak in the first quarter. Workers saw unemployment rates above 10% in four of the eight states for which there was available unemployment data.

Butte County unemployment

Butte County Labor Force and Industry found in January, the unemployment rate for the county hit 8.3%, which is above the estimate of 5.6% from one year ago and an increase from 8.1% in December.

The statewide rate was 9.2%, and nationwide it is 6.8% for the same period, according to a March 12 report from Luis Alejo, northern area labor market consultant at California's Employment Development Department.

The local government plus the leisure and hospitality sectors saw the largest increases in unemployment since December, by 24% and 42% respectively.

Unemployment claims

In California, a new analysis by nonpartisan California Policy Lab found nearly one in five California workers received unemployment insurance in February, nearly a year after the COVID-19 unemployment crisis began.

About half of all recipients in California have now claimed more than half of a year's worth of benefits, raising concerns about the well-documented financial, career and poverty consequences associated with periods of long-term unemployment.

In a news release, Till von Wachter, a co-author of the analysis and faculty director at the California Policy Lab, said "We've seen in previous recessions that long-term unemployment is linked to increased risk of lasting income reductions, poverty and challenges with ever returning to work. The American Rescue Package, the Golden State Stimulus, and increased vaccinations (and loosened restrictions on businesses) will undoubtedly help, but policymakers will want to keep a close eye on the durations of these periods of unemployment for California workers."

The report includes an analysis focused on 3.7 million Californians who have claimed benefits for more than six months, and are considered long-term unemployed, including breakdowns by unemployment program, demographics of the workers and industries they worked in previously.

As of mid-February, close to 1 in 5 workers in California - about half who claimed unemployment during the crisis - have claimed over 26 weeks of benefits. Long-term unemployment or claiming benefits for more than 26 weeks is known to cause long-lasting effects to workers and the economy, and is particularly high among Black workers, older workers, women and "less-educated workers."

Total initial claims declined in February, but were still 50% larger than the peak seen in the Great Recession. Average initial claims were 173,000 in February, 40,000 fewer than in January. Additional claims, which include the re-opening of a claim after a claimant has returned to work, continue to make up the majority (75%) of initial claims.

Female workers, less-educated workers and millennials have disproportionately benefited from the December extensions of programs. Over half of all workers receiving benefits under the extension programs reported having no more than a high school degree, despite making up 33% of the labor force.

Since the start of the crisis, over 45% of workers in the labor force in February 2020 have claimed benefits. Since mid-March 2020, 9.2 million California claimants filed for some type of benefits. The fraction of the pre-pandemic labor force having claimed benefits is close to 90% among Black workers, 73% among Asian workers with no more than a high-school degree, close to 70% among Generation Z (the oldest of whom are 25 years old) and 50% among female workers.

Over 10% of unemployment claimants exited the system in December 2020. This spike was likely driven by claims suspected of fraud at the end of 2020, and workers who exhausted benefits prior to Dec. 26th were unable to certify for benefits corresponding to weeks of unemployment during 2021.

The food services sector was hit hard during the December surge of COVID-19 cases, but the share of initial claims from the industry have trended downwards in 2021 as case counts improve. This has coincided with a decrease in the share of regular claims being filed by millennials and Gen Z workers - both of whom are more likely to work in customer-facing service industries.

Contact reporter Natalie Hanson at 530-896-7763.