A record 3.3 million Americans filed for unemployment benefits in a single week. Here's why that number is likely much higher.

Unemployment, job fair

  • Around 3.3 million Americans filed for unemployment benefits in a single week, setting a new record as coronavirus triggers massive layoffs across the economy.
  • But it's likely the number of unemployed is much higher given current rules that often leave out gig workers and contractors.
  • Safety nets for tipped workers also vary from state to state.
  • The coronavirus economic aid bill that just passed the Senate widens unemployment eligibility substantially.
  • Visit Business Insider's homepage for more stories.

Around 3.3 million Americans filed for unemployment benefits in the week ending March 21, according to new Labor Department data released Thursday. The figure shatters the previous record of 625,000 people set in 1982.

"I have been a labor economist for a very long time and I have never seen anything like this," Heidi Shierholz, a policy expert at the Economic Policy Institute, said in a tweet.

The chart below provides an illustration of the unprecedented spike in initial claims, which dwarfs anything seen during the Great Recession over a decade ago.

initial unemployment claims 3 26 20

But it's likely that the figure is much higher, experts say, given current rules governing who is eligible to receive benefits. Many laid-off workers still aren't eligible or may not have been able to apply yet.

The federal government and states jointly administer unemployment programs, and eligibility rules differ across the country.

But contractors, gig-workers, full-time students, and the undocumented often don't qualify for benefits, according to The Washington Post.

Tipped workers like waiters and hotel staff are also vulnerable, as safety nets for them differ from state to state.

The number of layoffs also overwhelmed state unemployment offices across the country, The New York Times reported. That sent websites crashing due to the surge of people seeking to file for jobless insurance all at once, suggesting many still haven't been able to successfully process their claims.

There are efforts underway to address those gaps. Lawmakers - mainly Democrats - pushed to expand unemployment eligibility to benefit far more self-employed and part-time workers in the $2 trillion coronavirus stimulus bill that passed the Senate late Wednesday.

The bill would also add $600 per week onto a jobless person's state-provided benefits for up to four months.

And the Labor Department issued guidance to states to provide them more flexibility to adjust their programs in the coming months and widen their benefits as needed.

Economists, though, expect the tidal wave of layoffs to continue as coronavirus shuts down businesses and hammers the economy.

"196 million people have been urged to stay home. Not all employers can keep paying them," said Betsey Stevenson, a professor of public policy and economics at the University of Michigan, in a tweet. "Many are not permanently unemployed, but temporarily furloughed. Initial claims of 3.28 million is such a small fraction of 196 that I think we have a lot more to come next week."

Get the latest coronavirus analysis and research from Business Insider Intelligence on how COVID-19 is impacting businesses.

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