The jobless rate today is almost certainly higher than at any point since the Great Depression. We think it’s around 13 percent and rising at a speed unmatched in American history.
The labor market is changing so fast that our official statistics — intended to measure changes over months and years rather than days or weeks — can’t really keep up. But a few simple calculations can help piece together a reasonable approximation.
Be warned, these numbers yield an imprecise estimate of today’s unemployment rate, and the truth could easily be quite a lot higher or lower. This is not an estimate of the official unemployment rate for March, which reports the state of the economy a few weeks ago when the labor market was in better shape, nor is it a forecast for the official rate in April.
The Labor Department reported on Thursday that around nine million people had filed for unemployment insurance over the past two weeks. (That number is not seasonally adjusted.) By contrast, in a healthy economy, fewer than half a million people would have done so. This suggests there are around 8.5 million more people on unemployment benefits today than there were two weeks ago.
There are important differences between who receives unemployment benefits and whom the official statistics measure as unemployed. (The former is based on eligibility for unemployment insurance, while the latter is based on who responds to government surveys that they are actively looking for work.) But it is likely that nearly all of these people will show up in the official statistics. After all, you qualify for unemployment benefits only if you’re actively looking for work.
In addition, independent contractors, including many gig economy workers, most likely lost their jobs but did not qualify for benefits. (The recent fiscal package passed by Congress will change this in coming weeks.) It is hard to be precise about how many people fall into this category, but a round, conservative guess might raise my estimate of the number of job losers to 10 million from 8.5 million.
State unemployment offices have also been overwhelmed, and it’s likely that some people have tried to claim benefits but are not yet counted officially because of processing delays. This might add a further million to our estimate, bringing it to 11 million.
The unemployment rate is calculated as the ratio of those who are unemployed to those in the labor force. The labor force is around 165 million, so if 11 million extra people have lost their jobs, the unemployment rate will rise from around 3.5 percent in February to around 10 percent.
But that’s not the whole story.
The latest initial claims data report the total number of claims only through March 28. Since then, it’s likely that an additional four million people have lost their jobs. We’re now up to an extra 15 million people unemployed, which would bump the unemployment rate for today up to around 12.5 percent.
So far, these calculations reflect only the rise in unemployment caused by job loss, but it’s likely that there has been a steep drop in hiring as well.
In the 2008 recession, the rate of separations — that’s the technical term for when workers and their jobs part ways, both voluntarily and involuntarily — actually fell. In that recession, the decrease in employment was entirely due to a very sharp decline in hiring.
The Bureau of Labor Statistics reports that in a typical month, nearly six million workers are hired, a rate of 1.5 million per week. Again, it’s hard to know how much that has fallen, but if the hiring rate fell by a fifth over the past three weeks, that would mean that roughly one million fewer people found work than might otherwise be expected to.
At this point, our calculations show 16 million more people without work, for an unemployment rate of 13 percent.
These are obviously rough estimates. One important limitation is that these calculations do not account for the possibility that some number of people who lose their jobs will leave the labor force rather than continue to search for work. To the extent that happens, these numbers overstate the rise in unemployment.
Given the many uncertainties involved, perhaps it’s better to say that unemployment has risen by 10 million to 20 million, which means that the unemployment rate is probably between 10 percent and 15 percent.
That might sound like an unsatisfyingly unclear conclusion, but it’s a product of how poorly our official statistics track labor market changes from day to day, and how rapidly the economy is shutting down.
Even with these caveats, it’s already clear that the rise in unemployment over the past few weeks has exceeded the rise during the entire year and a half of the last recession.
Looking ahead, if job losses continue at the same rate as in recent weeks, the unemployment rate will rise by nearly half a percentage point per day. To give some context, over our recent decade-long recovery, the unemployment rate has fallen roughly that much per year.
Justin Wolfers is a professor of economics and public policy at the University of Michigan. Follow him on Twitter at @justinwolfers.