Commentary Directory

Unemployment Insurance During the Pandemic

Jacob Hess
January 12, 2022

US consumers were flush with cash following the pandemic despite record high unemployment thanks to the unprecedented coverage of jobless benefits (also reaching a record). In the 12 months following the trough of the COVID-19 recession in April 2020, the total number of continued claims of unemployment insurance as a percentage of the unemployment level averaged 71%. In previous recessions, this percentage averaged 41% and never topped 50%.


Of course, the recently experienced recession was different than recessions before with public health concerns prompting emergency assistance for workers forced to sit on the sidelines. With the more unemployed individuals receiving checks (larger checks too), the bounce in personal consumption expenditures (PCE) a year after the trough of the pandemic recession was quite spectacular. There is a loose trend of higher UI coverage leading to a stronger PCE recovery in the 6 recessions before 2020 (though 1980 and 2001 are clear outliers), but our sample size is small. However, with all other things equal, it makes sense that giving support to workers who have lost their wages during a recession will help a recovery be stronger.