🚨(~Bonus Thread~) on the new @CAPolicyLab report
As the economy continues to reopen, many have wondered:
Why are initial claims for #UI for still so much higher than before the pandemic?
Are workers really entering the UI system at ~2x the rate of pre-pandemic times?
🧵 —>
As the economy continues to reopen, many have wondered:
Why are initial claims for #UI for still so much higher than before the pandemic?
Are workers really entering the UI system at ~2x the rate of pre-pandemic times?
🧵 —>
In order to understand what's going on, you need to understand that there are actually 2 types of initial claims for UI:
"New Initial Claims" and "Additional Claims".
Together, these two make up total initial claims. (Focusing just on Regular UI here, not PUA)
"New Initial Claims" and "Additional Claims".
Together, these two make up total initial claims. (Focusing just on Regular UI here, not PUA)
Initial Claims are claimants applying to establish a benefit year & begin receiving payments.
Additional Claims are claims that are reopened "after there has been a break in certification of one or more weeks during which the claimant worked"
(Read that definition carefully)
Additional Claims are claims that are reopened "after there has been a break in certification of one or more weeks during which the claimant worked"
(Read that definition carefully)
It may seem that new ICs and ACs correspond to people entering the UI system for the 1st time, OR beginning their 2nd/3rd spell of unemployment.
But that isn't the case.
Initial claims dramatically overstate the # of people entering (or reentering) the UI system each week.
But that isn't the case.
Initial claims dramatically overstate the # of people entering (or reentering) the UI system each week.
This is b/c some individuals are filing a (very) large number of addit'l claims, which can be triggered in situations where a claimant has continually received UI payments.
How can this happen? Recall an AC needs 2 things: a break in certifications, and work during that time.
How can this happen? Recall an AC needs 2 things: a break in certifications, and work during that time.
If a claimant is working reduced hours, receiving partial UI payments each week, but is often late to certify, (causing a break in certifications) and does so retroactively
-->
Multiple additional claims without a reentry.
-->
Multiple additional claims without a reentry.
If a claimant is denied payment for multiple weeks in a row b/c of excess earnings, each denial is an attempt to reopen the claim after a break in the claim series with intervening (part-time) work
-->
Multiple additional claims without a reentry.
-->
Multiple additional claims without a reentry.
So how bad is the problem?
We created a new measure, analogous to ICs, which measures the # of people entering (or re-entering) into the UI system each week.
We created a new measure, analogous to ICs, which measures the # of people entering (or re-entering) into the UI system each week.
A claimant's 1st paid week of unemployment corresponds to a single new entry.
If a claimant experiences a gap of 1+ weeks between 2 payments (based on weeks of unemployment, not the week they certify for benefits), the latter payment begins a new spell of unemployment —> reentry.
If a claimant experiences a gap of 1+ weeks between 2 payments (based on weeks of unemployment, not the week they certify for benefits), the latter payment begins a new spell of unemployment —> reentry.
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 the typical interpretation of the initial claims measure would overstate the number of individuals entering regular UI by 66%.
Importantly, there is a direct link between the total stock of continuing claims (which has remained elevated during the pandemic) and initial claims, since only continuing claimants can file additional claims
(or, more importantly, *multiple* additional claims)
(or, more importantly, *multiple* additional claims)
Furthermore, this means that if the stock of continuing claimants falls due to non-economic reasons
(i.e., exhaustions, claimants reaching the end of a benefit year, or other admin/eligibility issues)
*Then the number of weekly initial claims going forward will drop as well.*
(i.e., exhaustions, claimants reaching the end of a benefit year, or other admin/eligibility issues)
*Then the number of weekly initial claims going forward will drop as well.*
Read more details in our report here:
capolicylab.org/wp-content/upl…
capolicylab.org/wp-content/upl…
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