10 million unemployment claims: just the tip of the iceberg

Because we fundamentally track the work of small businesses and their employees, we were able to see in real-time the world shifting in just a few weeks. We’ve been tracking the impacts of coronavirus on small businesses and have noted the sharp declines in businesses open and employees working. 

As the first wave of forced closures and social distancing mandates went into effect, we also surveyed 3500 hourly workers across the US to get a more detailed picture of how the spread of the virus, business closures, and social distancing mandates were impacting workers. 

We can say with confidence that the 3.3 million unemployment claims filed two weeks ago and the 6.6 million claims files last week are just the tip of the iceberg. Our hourly workers and small businesses are on the front lines of this economic disaster, and we should expect their experiences to echo throughout the economy before this is over. 

Help is needed now and is going to be needed even more in the coming weeks as we fully see the effects of COVID-19 unfold. 


Hourly employees—and their small business employers—took the first hit

We saw steady increases in business closures the week of March 15th and then a leveling off the week of March 22rd with roughly 45-50% of Main Street small businesses not operating or operating on a very limited basis.

This maps to what employees reported: 44% of businesses were forced to close the week of March 16th. But we also heard in our survey that of businesses that didn’t close, two-thirds were hit with declining sales, revenue, or traffic. In fact, only 3% of businesses had not been impacted in some way—and this was just one week in.



We are seeing employees’ experiences mirror their employers’. 

At businesses that were forced to close, 83% of employees were not working. At businesses where revenue was down, they were equally as likely to be working reduced hours as they were to be out of work completely. 

The situation has been worse in cities and states with stricter social distancing mandates, but even places with relatively light restrictions are still seeing catastrophic effects. In total, 81% of the employees we surveyed are now making less money than they did three weeks ago.



What makes this situation especially hard for hourly employees is that they can’t work from home. Remote work isn’t an option for 94% of the workers we surveyed. 



The paid leave laws in the Families First Coronavirus Response Act were intended to help employees at small businesses, but the impact will likely be limited. These benefits are only available to those who get sick, need to take care of a family member who is sick, or need to take care of a child whose school or daycare is closed. 

Only 4% of people we surveyed were not working because they were in this situation. 

And more importantly, if you are out of work because your business has closed or eliminated your job, you don’t get any benefits from the new paid leave laws. 

The loans, grants, tax credits, and other incentives for small businesses provided in the CARES Act are intended to stop the bleeding. These efforts may keep businesses on life support during forced closures and may aid in ramping up operations when closures end, but it is unclear what impact it will have on unemployment in the near term. 

Many of the grant and loan programs have strong incentives to keep payroll in place but the burden of applying, complex calculations to turn the loans into grants, and uncertainty about how long social distancing will last may dissuade businesses from going down this route.

Even businesses that do stay open, may not do so with a full staff. Many restaurants that initially closed for social distancing were reopened to run delivery and takeout services, but they are often operating with skeleton crews. It is uncertain when social distancing restrictions will end, so it is logical that businesses would want to run lean operations now to ensure their survival.

This all means that everything hinges on unemployment assistance.


Why the 10 million unemployment claims are just the tip of the iceberg

These record-breaking unemployment numbers are still likely under-reporting the severity of the situation in the US. 

In our survey, 33% of workers said they would file for unemployment if and when they lost their jobs. These people are likely represented in those 3.3 million claims. But what about the other 67%? The next most popular alternatives for workers are to live off savings or look for other work. 



These plans may have made sense before COVID-19, but today, it may not be feasible. The majority of workers can’t last more than 4 weeks without a new source of income (and for many, it is much less). Finding another job will also be a lot more difficult with rising unemployment overall. This is one reason why unemployment jumped from 3.3 million to 10 million in one week. If social distancing lasts another month or even longer, more workers will need help and that 10 million will continue to grow. 

We should also expect unemployment claims to grow as the impacts of COVID-19 spread throughout the economy. Many businesses that are trying to stay afloat could close permanently between now and then. People who are relying on friends and family for support may also see their support systems lose their jobs. Other businesses impacted by the overall economic downturn and lack of consumer spending will layoff employees in the coming weeks and months.

No one will be immune. This is why economists are predicting a harsh recession—at a minimum. 10 million is just the tip of the iceberg.


Help needs to come fast—and furiously 

Of the workers we surveyed, 44% said they couldn’t last more than 2 weeks without income, and an additional 16% aren’t even sure how long they can last. This is why 64% are reporting high to extremely high levels of anxiety around their financial situation and ability to pay their bills in the next 1 to 2 months.

The CARES Act seeks to help these workers, with increases in unemployment payments and durations, as well as expanding coverage to contractors, part-timers, and those who are self-employed. 

But the question is, how quickly can it get in the hand of workers? Many people have now been out of work for 2 to 3 weeks and may have already depleted the savings and safety nets they had in place.



Workers’ experiences will also vary from state to state. The CARES Act extends unemployment benefits for an additional 13 weeks, which kicks in when the standard state unemployment eligibility periods end. Most states provide unemployment assistance for 26 weeks, however several provide it for much shorter periods

The amount of unemployment assistance workers receive also varies by state, ranging from a weekly max of $235 in Mississippi to $1495 in Illinois. The additional $600 per week provided in the CARES Act helps level the playing field, but the differences are still severe. Each state also has different application processes which may make it harder or easier for its workers to access these funds.

The CARES Act also provides funding for state-run, short-term compensation or work-share programs, which provide prorated unemployment benefits for workers who have had their hours reduced (instead of being terminated). This should be helpful for the 27% of workers who told us they were working fewer hours, but only if they live in one of the 26 states that have these programs. 

As I’ve said, 10 million people out of work is just the tip of the iceberg. Our hourly workers and small businesses are on the front lines, and we should expect their experiences to echo throughout the economy before this is over. 

Help is needed now and is going to be needed even more in the coming weeks as we fully see the effects of COVID-19 unfold. Small businesses and their employees did not create this disaster, yet they are making sacrifices to help contain the spread of this virus. We need to make sure that they aren’t falling into financial ruin as a result of that sacrifice. The speed with which government aid reaches the front lines is now critical.


Homebase data on COVID-19 impact 

In the interest of transparency, we’re sharing our real-time data publicly here and the full results of our survey here.

The data set is prepared by Homebase, a free scheduling and time tracking tool used by 100,000+ local businesses and their hourly employees. Our analysis is based on internal data from more than 60,000 small business customers in the US and is updated daily. Our employee survey reached 3,500 workers at small businesses in the US and was fielded from March 18-20, 2020. We’re committed to understanding the impact of these events on our customers, local business, and hourly workers at large.

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