Apr. 20--A recent report from the the U.S. Department of Labor shows that roughly 22 million people across the country have applied for unemployment in the last month.
For perspective, about 8.8 million jobs were lost during the global financial crisis a decade ago, according to Mark Wright, senior vice president and director of research at the Federal Reserve Bank of Minneapolis.
How high will the unemployment rate get? That depends on a couple of things.
"If we compare it to the unemployment rate, the highest unemployment rate we've ever observed in America was about 25 percent back in the Great Depression," Wright said. "It's not clear that we'll get to that level now."
That's because it depends on how people respond to the unemployment survey.
While many believe the unemployment rate is measured by calculating the number of people collecting unemployment insurance, according to Investopedia, the number is determined by following a process that more closely resembles the U.S. Census.
It's a monthly survey conducted by the U.S. Department of Labor involving 60,000 households. They are selected using random sampling methods designed to generate as close an approximation as possible to the larger population.
From there, they determine how many people in the household are in the labor force, meaning they have jobs or are actively looking for jobs. If someone is not actively looking for a job, they are not considered to be in the labor force and are not counted in the unemployment rate.
"I doubt very many people are actively looking for work right now," Wright said. "We have seen evidence so far that suggests that the unemployment is about 15 percent and possibly even as high as 20 percent. It's getting up there to the Great Depression level. But it's not quite there yet."
While the number is an estimate on a national scale, generally speaking, Minnesota very closely mimics the national economy in the grand scheme of things.
More than 500,000 have applied for unemployment in Minnesota since March 16 when Gov. Tim Walz ordered the closure of a wide variety of businesses to slow the spread of COVID-19.
"If we're looking at the unemployment rate locally, we think it might be slightly better off," Wright said. "It's still definitely into double figures, though, and will continue to climb."
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