By Lecia Parks Langston, Senior Economist; Michael
Jeanfreau, Regional Economist
“You have power over your mind — not outside events. Realize
this, and you will find strength.” Marcus Aurelius
In the wake of the COVID-19 pandemic, businesses lost
revenues and workers lost jobs. But because of the time it takes to collect and
collate data, economists have been left without much information to quantify
the economic impacts at the local level.
But there is one ray of data illumination. Claims for unemployment
benefits are promptly available and provide information about a large cross
section of the economy. This post will outline what light unemployment claims data
sheds on the state of Utah’s Bear River economy.
While not all workers are protected by unemployment
insurance laws, roughly 95% of jobs are covered. This makes claims data an
exceptional source of information about the economy. Not included under
unemployment insurance laws are most self-employed workers, about half of
agricultural employment, unpaid family workers, railroad personnel (covered
separately) and many nonprofit organizations (such as churches). Also, some out-of-work
employees may not have worked a sufficient work history to qualify for
unemployment insurance benefits, but may file anyway. Fortunately, in this time
of economic distress, the social safety nets of the unemployment insurance
program, special national COVID-19 funding and social programs are working
together to keep workers’ income and well-being stable.
Unemployment claimants and the unemployed; they aren’t the
same
Also, keep in mind that, in addition to individuals drawing
unemployment benefits, the unemployment rate includes those entering and
re-entering the workforce and noncovered groups without current employment.
This means the number of “unemployed” will be greater than the number of
claimants. In “normal” times, only about 40% of the “unemployed” are claiming
benefits. The generally reported unemployment rate also has a work-search
requirement. If you haven’t made any minimal attempts to find work, you aren’t
counted as “unemployed.”
Watch this Space
While this analysis won’t be updated on a regular basis, new
data will be added to the data visualization on a weekly basis allowing readers
to check back for the latest information.
An Unprecedented Event
Not surprisingly, first-time claims for unemployment benefits
have soared in Utah and across the nation as the pandemic swept across the
country. This increase is unprecedented since the creation of unemployment
insurance coverage during the Great Depression. Week 12 (beginning March 16)
marks the start of this unparalleled surge in claims. On a positive note, while
new claims for unemployment benefits have skyrocketed in Utah, the state
currently shows one of the lowest claims rates in the nation.
In Bear River, total claims peaked at week 15 (starting
April 6), slightly after the state average of at or before week 14 (starting
March 23). During the peak week 15, initial claims filed totaled 1,183 in Bear
River. By week 19, claims measured considerably lower but continued to run substantially
greater than in previous years — even during the “Great Recession.”
Here’s another example of the tremendous flood of new claims.
Prior to the COVID-19 pandemic, counties in Bear River averaged a total of 49 first-time
claims per week. This time period included seasonally high claims weeks in
January. In the weeks after, an average of 738 claims were filed for an almost
unbelievable increase of 1,506%.
Who took the hardest hit?
Across the state, there was an initial spike in food service,
retail and healthcare/social assistance filing initial claims in the weeks
immediately following the start of the pandemic in Utah. The Bear River region
was affected similarly until week 15, which saw a sharp increase in the number of
claims from the manufacturing industry. For weeks 12 through 14, about 8% of
initial claims were from manufacturing. On week 15, that percentage increased
to roughly 45% of initial claims as companies reacted to the national and
international effects of COVID-19 on consumer demand and supply chain
management and has remained high in comparison to other industries in the weeks
following.
Manufacturing and COVID-19
Rich County and Cache County were both hit less heavily in
comparison to the state — receiving first-time claims from 5% of covered
employment in their areas compared to the state total of 10%. Box Elder County
is recorded as having first-time claims from 12% of their covered employment.
The unemployment insurance system was first put in place in
1935 with the Social Security Act during the Great Depression and was designed largely
around production and manufacturing jobs. In the 85 years since, the labor
force has changed significantly and the prevalence of the service industry
(food/retail) has increased. The early effects of COVID-19 largely impacted
these service sectors while in the most recent weeks, the region has seen the
large numbers of claims coming from the manufacturing industry. The numbers
were enough to make manufacturing the regions overall largest contributor to
unemployment benefit claims. This is indicative of both Bear River’s heavy
concentration in the manufacturing industry as well as the expanding effects of
pandemic slowdown across more industries over time.
The Industry Flow
While most of the high-claim industries felt the pain of the
pandemic early on, other industries surged in later weeks. As the economic
effects of other closures worked their way through the economy, both
manufacturing and transportation/warehousing proved relative latecomers to the
layoffs in the Bear River region.
The High and the Low
Although manufacturing is the dominant industry in the Bear
River region and has generated the largest number of initial claims during the
COVID-19 pandemic, in percentage terms, other industries have actually suffered
more. For example, in the small real estate and rental and leasing industry,
roughly 20% of workers have filed for claims. The Other Industries sector,
which comprises mainly of auto work and personal beauty services, had a first-time
claims rate of 13%. Accommodation and food services also has a higher
first-time claims (11%) rate than manufacturing, despite manufacturing having
more than twice as many claims total.
Because of its job-to-job nature, the construction industry
typically accounts for 20-30% of first-time claims. However, although
construction’s new claims have also increased, they have increased at a much slower-than-average
rate. After the start of the COVID-19 pandemic, construction contributed only
about 4% of first-time claims. Ease of social-distancing and good weather have
helped construction maintain employment levels. New claims measured just 4% of
covered construction employment.
Only a portion of agricultural employment is covered by
unemployment insurance laws. However, as companies work to keep America fed,
agribusiness has laid off few employees. In the Bear River region, covered agriculture
plays a notable role in the economy. However, less than 1% of Bear River’s
covered agricultural workers have filed a claim during the pandemic.
Public administration, educational services (including
public and higher education), finance/insurance, professional and scientific
services, and utilities have also managed to keep a higher percentage of their
workforces employed.
County by County
Box Elder County
- Prior to the pandemic slowdown, Box Elder County averaged 18 unemployment claims per week compared to 330 new claims afterward, an increase of 1,688%.
- Because of its large share of employment in manufacturing, the worst effects of COVID-19 were delayed from the initial effect on food accommodation, retail trade and nonessential healthcare. As a result, the peak of initial claims was on week 15, with 607 initial claims.
- New claims, as a percent of covered employment, measured at 12% — higher than the state average and reflective of the region’s industrial strengths.
- While manufacturing had the highest total initial claims at 1,213, it did not have the highest percent of covered employment submitting initial claims. Real estate and rental services, personal care services, accommodation and food services, and information all had higher initial claims as a percent of covered employment.
- Box Elder County accounted for 40% of the Bear River Region’s new claims prior to the pandemic. For weeks 12 through 14, it dropped to around 35%, and then rose as manufacturing was impacted on week 15 and has rested about 50% since. Overall, manufacturing accounts for 46% of all claims in Box Elder County.
Cache County
- Cache County shares a regional specialization in manufacturing but has not been as affected as sharply in the sector as Box Elder. Cache County saw 14% of total initial claims compared to Box Elder’s 46%. Across all industries, only 5% of total covered employment in Cache County has filed initial claims, half of the state of Utah’s average of 10%.
- Prior to the COVID-19 slowdown, Cache County averaged 30 first-time claims per week, compared to an average of 404 claims per week afterwards. This change represents an increase of 1,243%.
- Although all industries have been affected by COVID-19, no single industry was overwhelmingly represented in initial unemployment benefit claims. Manufacturing and food services were both 14% of total initial claims in the county, followed by retail trade (12%), health care and social assistance (11%) and administrative support (7%).
- 11% of total claims are from unknown industries, which will largely reflect the distribution of known industries.
- The high unemployment claims from manufacturing across the Bear River Region has actually lowered Cache’s share of first-time claims after the COVID-19 slowdown from 61% before quarantine procedures to 55% after.
Rich County
- In the weeks before business reacted to the pandemic, Rich County averaged one initial claim per week. After the pandemic hit, an average of four claims were filed per week, marking an increase of 368%.
- In Rich County, first-time claims in the restricted period measured 5% of covered employment. That places Rich County in the bottom half of a county-by-county ranking. Only 34 claims were filed in total.
- As in many counties, Rich County’s accommodations/food service industry accounted for the highest number of new claims after the COVID-19 slowdown, but was tied with real estate and rental and leasing, both accounting for 21% of claims total.
- Public administration, construction, and health care and social services followed, each have three or less claims.
- First-time claims from Rich County have gone from 2% of the Bear River Regional total before the COVID-19 slowdown down to 1% or less in the weeks following.
