Are you wondering how high will unemployment go due to the coronavirus pandemic? The coronavirus pandemic is crushing industries left and right in the United States. After 6.6 million jobless claims on April 9, 2020, the total number of jobless claims in 2020 stands at roughly 17 million or 11% of the once working population of 159 million.
Take a look at the unemployment claims below for 2020 and going back since 2006. As you can see from the chart, the coronavirus pandemic has caused unemployment to skyrocket more than 10X more than during the global financial crisis in 2008 – 2009!
The unemployment figures in 2020 have so far been truly staggering. Unfortunately, as the lockdown continues in April at the very least, it is likely that the United States will see another 24 million people file for unemployed on top of the 17 million people who are unemployed as of April 10, 2020.
The unemployment claims assumption is based on an average unemployment claim amount of 6 million per week. Whether the unemployment claims begin to accelerate or decelerate in April is unknown. Hopefully, unemployment claims will decelerate due to various items of the CARES Act and the Paycheck Protection Program, which start funneling money to Americans in April.
How High Unemployment Will Go Due To The Coronavirus
With 17 million filing for unemployment as of April 10, we can estimate the following total unemployment claims by week:
April 16: 23 million unemployment claims
April 23: 29 million unemployment claims
April 30: 35 million unemployment claims
May 7: 41 million unemployment claims
May 14: 46 million unemployment claims
May 21: 52 million unemployment claims
May 28: 58 million unemployment claims
July 30: 110 million unemployment claims (70% unemployment rate)!
Below is the official employment figures in the United states between 2010 and 2020. Before the coronavirus pandemic, the United States had roughly 158 million working Americans, or roughly 40% of the entire population.
Similar to Governor Gavin Newsom's bold proclamation on March 18, 2020, that 25.5 million Californians will get coronavirus by May 14, 2020, it is possible to make the assumption that by July 30, 2020, 110 million Americans will find themselves unemployed if lockdowns extend until then.
The lengths of the lockdowns are determined entirely by extremely wealthy politicians who are getting paid either way. It's the same way with Congressional members who keep on earning a healthy six-figure paycheck despite the government shutting down. We're talking a salary of $174,000 a year.
Coronavirus Unemployment Benefits
Despite a potential enormous unemployed population, the unemployment benefits during the times of the coronavirus are quite good. Under the CARES Act, Congress has passed legislation that boosts unemployment benefits by $600 a week up to a maximum of 39 weeks.
For example in California, an unemployed person can now receive a maximum of $1,050 a week, or $4,200 a month. That's not bad, especially if you have two adults in a household making $8,400 a month in unemployment benefits.
As an individual, if you are making up to about $10,000 a month or $120,000 a year in gross income, you'll probably want to rationally take your time before finding another job. Being able to make $4,200 a month to relax, health, spend time with family, and find yourself is excellent.
What's more, the coronavirus relief bill offers an additional 13 weeks of benefits, up to a maximum of 39 weeks. 10 months is surely enough time to find a job if we see a recovery by the end of 2020.
During the 2008 – 2009 financial crisis, the government instituted 99-weeks of unemployment benefits. A new term called “funemployment” emerged where millions of Americans used the 99-weeks to enjoy life more. Some even decided to travel and “look for work” online by checking in every couple of weeks.
Here are more benefits of being unemployed during the coronavirus pandemic:
- Reduce your chances of getting the coronavirus because you're around less people / co-workers
- Leaving a crappy job that sucked your soul every day
- Receiving a severance package on top of unemployment benefits if you negotiate properly
- Time to rest and relax
- Time to go back to school
- Time to travel
- Time to spend more time with family
- Time to finally start something entrepreneurial
- Time to finally start a website
- Time to look for a new line of work
- Time to heal your mind
- Time to get in shape
- Time to live life on your own terms
My expectation is that the more people who leave work, the more people will realize there's a better way to live life. That there's no need to tether yourself to a soul-sucking job you don't love. Only until you experience extended unemployment will you get comfortable making money in different ways.
If, goodness forbid, unemployment claims rise to multiple tens of millions or even 100+ million, the government will surely provide even greater unemployment benefits for Americans.
The PPP paying for 2.5 months of payroll is already excellent, if the funds get distributed. I have no doubt the government will continue to provide more benefits to unemployed workers who are hurting during this crisis.
Best Guess On How Many Will Become Unemployed
I believe partial lockdowns will end by mid-May. I also believe stimulus checks and money from the Paycheck Protection Program will be disseminated by May 1. Therefore, my best guess is that roughly 30 -35 million Americans or 20% – 22% of the working population will file for unemployed due to the coronavirus pandemic.
Let's hope I'm wrong, but based on my unemployment model, I think chances are high we will see a 20%+ unemployment rate in America in 2020.
Stay safe and healthy everyone! I do believe we will have a strong recover in the second half of 2020. We've just got to hang in there until the worst of the coronavirus pandemic is behind us.
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