Kate Andrews Kate Andrews

Surge in US welfare claims shows the devastating impact of Covid-19

No one has modelled an economic lockdown before: no one knows what to expect. But the daily data is shocking, and points to a huge economic effect. In Britain, nearly 500,000 people applied for welfare (Universal Credit) over the last nine days. In America, the number of people applying for unemployment benefits surged to an unprecedented three million last week. 

What has yet to be calculated (but urgently needs to be) is the human cost of all this

We simply have not seen anything like this before, not even during the financial crash: the Covid crash has led to 3,283,000 claims – quadruple the previous record-high of around 700,000 in 1982. This surge in applications is one of the biggest indicators so far of Covid-19’s quick and devastating impact on the world economy, and will give policymakers food for thought as they decide how long to continue with the lockdown.

What’s telling about the applications surge is not just the number, but the speed at which they’ve risen: three weeks ago, fewer than 200,000 people submitted for jobless benefits. America has gone from a historically low number of applications to exceeding its record-high – all in less than a month. 

Just last month, the President used his State of the Union address to boast about record-low unemployment rates and rising wages. Now all of that good work – achieved painstakingly over many years – has been undone.

All 50 states have seen their applications go up. According to Bloomberg, Pennsylvania is reporting the highest number of claims, reaching 378,900, while New York State – which has a particularly high number of confirmed Covid-19 cases – saw applications rise by over 14,000. These figures from America’s Bureau of Labour Statistics foreshadow their estimates for unemployment figures in March, which will be published next Friday.

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