Background: The COVID-19 crisis has led to historically unprecedented increases in the level of initial Unemployment Insurance (UI) claims filed in California since the start of the crisis in mid-March. Through a partnership with the Labor Market Information Division of the California Employment Development Department, the California Policy Lab is analyzing daily initial UI claims to provide an in-depth and near real-time look at how the COVID-19 crisis is impacting various industries, regions, counties, and types of workers throughout California.
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Nearly 40% of the California UI Claimants Who Were Laid off in the 2nd Quarter of 2020 Registered $0 in Earnings During the Rest of the Year
Published June 30, 2021
By Alex Bell, Thomas J. Hedin, Roozbeh Moghadam, Geoffrey Schnorr and Till von Wachter
Key Research Findings
1. Of the two million claimants who entered the UI system during the second quarter of 2020 and were “fully separated” from their employer (i.e., not just working reduced hours), only 62% had received any wages from working by the end of 2020. Of those who had found employment, the majority (73%) had been called back to their prior employers. Reemployment and recall from July to December 2020 was unevenly distributed among UI claimants. Black workers, younger workers, lower-educated workers, and males were less likely to be reemployed and recalled, as were workers in the Administrative & Support and Food Service industries.
2. Initial claims dramatically overstate the number of individuals entering the UI system each week. Between the start of March 2021 to mid-May, there were 1.1 million initial claims for regular UI— but during that same time period, there were only 662,630 individuals who entered the regular UI system. This shows that the typical interpretation of the initial claims measure would overstate the number of individuals entering regular UI by 66%.
3. CPL’s new measure of the number of individuals entering UI also clarifies the total amount of churn in and out of the UI system. In early May 2021, we find that the share of entries into the UI system which were reentries — i.e., claimants who were beginning their second (or higher) spell of unemployment— was over 90%. This is substantially higher than what is implied by initial claims numbers, as less than 70% of weekly initial claims during that time were "additional" (Filed by claimants who were re-opening their old claims after a period of work).
4. The number of Californians receiving regular UI benefits fell substantially this spring, from 2.3 million in early March 2021 to just 1.47 million in May. While some claimants are presumably exiting the UI system as they find new employment, a substantial share of individuals have stopped receiving benefits because their benefit year has ended— at which point claimants must file “transitional claims” in order to continue receiving benefits. We estimate that during the 11 weeks between March 13th 2021 and May 22nd, 2021 (roughly corresponding to the one-year anniversary of the labor market crisis), 51% of the 850,000-person decline in the total number of claimants was due to claimants reaching the end of their benefit year.