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Unemployment Claims Skyrocket by 3 Million to New Record High

Unemployment Claims Skyrocket by 3 Million to New Record High

The number of unemployment claims rose to 3.28 million last week after states around the country went on lockdown to prevent the spread of the coronavirus, CNBC reports.

The number is far higher than the peak of 665,000 during the Great Recession and the all-time high of 695,000 in 1982. Last week, the number of unemployment claims was at just 282,000.

“This is a unique situation. People need to understand, this is not a typical downturn,” Federal Reserve Chairman Jerome Powell told NBC News. “At a certain point, we will get the spread of the virus under control. At that time, confidence will return, businesses will open again, people will come back to work. So you may well see a significant rise in unemployment, a significant decline in economic activity. But there can also be a good rebound on the other side of that.”

Number of unemployed likely far higher:

The number of people who have lost their jobs in recent weeks is likely far higher than the number of jobless claims. Many laid-off workers are not eligible to apply for unemployment yet and contractors, gig-workers, full-time students, and undocumented workers are not eligible for the benefits.

"196 million people have been urged to stay home. Not all employers can keep paying them," said Betsey Stevenson, a University of Michigan economics professor. "Many are not permanently unemployed, but temporarily furloughed. Initial claims of 3.28 million is such a small fraction of 196 that I think we have a lot more to come next week."

Senate approves “unemployment on steroids”:

On Wednesday, the Senate approved a $2.2 trillion coronavirus relief bill that provides $260 billion for what Senate Minority Leader Chuck Schumer called “unemployment on steroids.”

The bill will provide $600 per work on top of the benefits already provided by individual states for four months.

The provision drew complaints from Republicans like Lindsey Graham, who argued that the "bill pays you more to not work than if you were working" in certain cases.

"If this is not a drafting error, then this is the worst idea I've seen," Graham said.

"This was the only way we could assure that the states could get money out quickly and in a fair way. So we used $600 across the board," Treasury Secretary Steven Mnuchin replied. "I don't think it'll create incentives. Most Americans.... they want to keep their jobs."