Unemployment May Already Be At Great Depression Levels

The United States unemployment rate is likely as much as or higher than it was at the height of the Great Depression nearly a century ago.

Roughly 4.4 million Americans filed for unemployment insurance last week, according to Department of Labor data released Friday. The latest report brought the total number of U.S. workers that have been laid off or furloughed since the outbreak of the coronavirus to over 26 million.

The hard data obscures the real unemployment rate though, because only people who successfully apply for unemployment benefits are counted. The number misses many who have tried to file and could not because of clogged phone lines or crashed websites as well as potentially millions more who have not tried to file.

Prior to the coronavirus pandemic, about seven million people were already receiving unemployment benefits, bringing the total number of reported claims to more than 33 million, which equals about a 20% unemployment rate, according to Fortune.

The real level of unemployment is potentially much higher. The number of jobless Americans is likely somewhere between 32 million and 70 million, representing a 20% to 45% unemployment rate, respectively, DRW Trading rates strategist Lou Brien told Axios.

Over the past decade, unemployment claims have represented on average 27.5% of the real unemployment figure. If the statistic holds for the past five weeks of record unemployment claims, then more than 60 million workers are now unemployed, largely because of the coronavirus and state lockdowns. The unemployment rate would be over 30%, far higher than the quarter of Americans estimated to be jobless at the height of the Great Depression.

All but eight states have issued stay-at-home orders over the coronavirus, shutting down massive parts of the U.S. economy and barring many businesses from operating. Of those still running, many are severely restricted.

The House passed a $480 billion spending package on Thursday that President Trump is expected to sign refilling the Paycheck Protection Program, a federal loan program designed to float small businesses forgivable loans as they struggle under the coronavirus. The program ran out of its initial $350 billion in funding last week, and bankers responsible for doling out the loans have warned lawmakers that the fresh infusion of cash is likely to run dry in as little as two days.

“This is going to go within, at most, 72 hours,” Consumer Bankers Association President Richard Hunt said on Monday. “But the odds are more like 48 hours.”

Small businesses that receive aid are running into problems, as well. Along with the emergency small business loan program, Congress increased the amount people on unemployment receive can receive by $600 over the length of the pandemic. The additional benefits now make many jobs less attractive as workers can make more than their standard paycheck on unemployment.