America Unemployed : Planet Money A record number of Americans filed for unemployment this week. The system isn't designed for this. What's next? | Subscribe to our weekly newsletter here.

America Unemployed

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Here at PLANET MONEY, we've been hearing from a lot of our listeners about how their lives have been turned upside down.

CHELSEA SPRING: My name is Chelsea Spring (ph). I live in Long Island City, N.Y.

LORI WINSLOW: My name's Lori Winslow (ph), and I live in Louisville, Colo.

KATY SCOGGIN: My name is Katy Scoggin (ph). I've lived in New York City for the last 13 years.

DAVID ROOT: My name is David Root (ph), and I live in Cincinnati.

WINSLOW: I am a gourmet ice cream producer.

ROOT: Basically, I'm a symphony musician.

SPRING: Managing director of a skin care facility.

SCOGGIN: I am a documentary filmmaker.


They were like all of us a few weeks ago, watching the country slowly shut down. And then, all at once, they were no longer just spectators.

ROOT: In a period of about 24 to 48 hours, literally every gig that I had on my calendar was wiped out.

WINSLOW: Wednesday, we were told our distributor is not picking up their last order and that they're not placing any more orders until further notice.

SCOGGIN: It became very clear that there was no other job that I could go out there to get.

SPRING: And then Wednesday, I was informed that Thursday would be my last day on payroll.

DUFFIN: All of them suddenly without work, along with more than 3 million other people in America.

SMITH: On Thursday morning, the Department of Labor released its weekly unemployment claims. Now, this never makes the news. Usually, just a few hundred thousand people sign up, and nobody talks about it. But at 8:30 a.m. on Thursday, they announced 3,283,000 people filed new claims for unemployment in a week - the worst spike in unemployment the country has ever seen.

DUFFIN: More than 3 million people asking, what's next?

SCOGGIN: So I did something the other day that I never thought I would do. I stopped autopay on my rent.

DUFFIN: How long do you think your rainy day fund will take you?

ROOT: I mean, I could probably manage a couple months.

WINSLOW: If it's two months, it's going to be a little more uncomfortable. And if it goes more than that, that's when I feel like I'm playing with fire.

SPRING: So I pulled up the Department of Labor website, and it says, file now.


SPRING: I'm going to just refresh this because - oh, yeah. Now I'm getting an error message. So it says, we're sorry. We are unable to serve you at this time due to technical difficulties or scheduled downtime for internal processing.

WINSLOW: Do I pay my health insurance premium, which is $1,300 with a $20,000 deductible? Do I take that out of my savings to pay the rent when somebody in my house might get sick?

DUFFIN: Is it still giving you the error?

SPRING: Yes. I just reloaded the page. And, yeah - unemployment services are currently unavailable. But what does that even mean? Like, why can't you even select the button?

SMITH: Hello, and welcome to PLANET MONEY. I'm Robert Smith.

DUFFIN: And I'm Karen Duffin.

SMITH: Today on the show, what it means to lose a job right now. In normal times, it is a gut punch. But there are systems like unemployment insurance to help you along, to get you back on your feet and hopefully send you out to apply for new jobs.

DUFFIN: But right now, the mandate for most of us is stay home. Do not go to work. Like, the health of our country depends on people not working right now. And the unemployment insurance system is overwhelmed and unprepared for this record number of people with no job and nowhere to look for one.

SMITH: Today, we will look at the unemployment system - the one that exists, the one we dream of and the one that's being built on the fly right now.


SMITH: All righty. Today, we are going to tell you about how unemployment insurance works. It is a janky system. No one is really sure if it's up to the task. First, though, we go to the story of one woman - one woman who's trying to navigate this system.

DUFFIN: Hey, this is Karen Duffin from NPR.

KRISTIN CLARK: Hi. How are you?

DUFFIN: Good. How are you?

CLARK: All right.

DUFFIN: It just is such a bad question right now. We've got to figure out a different way to greet each other (laughter).

CLARK: I know. I know. It's, how are you? How are things? Well, they all pretty much suck (laughter).

DUFFIN: Kristin Clark (ph) lives in Baltimore. And about seven years ago, a friend of hers said, hey, there's a part-time job opening at my office. Are you interested? She'd been a stay-at-home mom for a while and was looking for some extra income, so she said, sure.

SMITH: The company provides short-term rentals of office equipment. Anywhere there's a pop-up need for a temporary office, Kristin is there.

CLARK: We did a lot of stuff for the fires in California. We'd do stuff at the Kennedy Center, conventions, law board (ph) rooms...

DUFFIN: The Macy's Thanksgiving Day Parade, political conventions...

CLARK: Sporting events.

SMITH: It's a pretty small company, tight-knit. But they've been growing really quickly.

CLARK: We were busy - crazy busy, insanely busy. The first Friday in March, we were, like, high-fiving each other because we had record-setting sales for February.

DUFFIN: This was just about the time that news about the virus was starting to get more urgent. But then at the beginning of March...

CLARK: My day started to consist of email after email saying, you know, this order canceled, this order canceled. It was only, like, a week and a half, two weeks, everything that was on the schedule to go out completely canceled. And it happened so fast, it was almost - it was like I was in shock. It was unbelievable. I could just see my boss was getting just a little more distraught. We - our business operates - like, it's on - like, we have to have cash flow.

DUFFIN: On Thursday, March 12, about six of them were still in the office. It was late afternoon, early evening...

CLARK: And we were all kind of leaving staggered, and he just stopped us all individually and, you know, asked us to come into his office and said we're going to have to, you know, furlough you. This is the only way that he could foresee saving the company.

DUFFIN: Furloughed usually means that you're sent home without pay, but you still have a job. But it soon became clear that, no, it was more like she was getting actually fired.

CLARK: I don't - I'm not getting anything. Like, no, you can - here's the rest of your vacation pay. Like, you're going to have to take two weeks off. It was like I have no idea how this is going to shake out. It's - I don't even know how to describe it. I mean, it was - like, I was on a fast track for success and then went straight to poverty in a split second. I don't think anything could have prepared anybody for this.

DUFFIN: She did file for unemployment, which will help but just barely.

CLARK: We might be able to cover our rent with unemployment, and that's probably about it.

DUFFIN: So Kristin is in this weird situation. She's in an unemployment system that was created for a very different scenario, a system to just tide you over or incentivize you to get back on your feet.

CLARK: I mean, because unemployment, their whole thing is about trying to find you another job.


CLARK: Well, how can you find another job if you can't leave your house...


CLARK: ...And if nothing is open to go apply for a job?

SMITH: And she's right. The unemployment system was never created to handle something like this crisis. And, in fact, in some ways, you cannot imagine a worse system for dealing with a simultaneous nationwide shutdown.

DUFFIN: Which is what has not just Kristin but the economists freaking out. The crisis is moving so fast that, just last week, labor economist Heidi Shierholz with the Economic Policy Institute sent out a tweet in all caps with this prediction - the coronavirus shock will likely claim - all caps - 3 million jobs by summer. It was so shocking that she repeated it three times.

SMITH: That was last week's worst-case scenario, 3 million by June, which of course we've already passed this week in March.

HEIDI SHIERHOLZ: We've never seen anything like what's happening now. There's no - there's not capital letters big enough to sort of underscore what is going on now. The conditions have deteriorated so dramatically, we would be lucky if we saw only 3 million jobs lost by summer. It would be more like 14 or 15 million jobs lost by summer.

SMITH: Fourteen or 15 million jobs lost by summer, by June - that's worse than during the financial crisis a decade ago. And everybody just take a deep breath because that is the conservative mainstream estimate. It does get worse. The head of the St. Louis Fed said this week that unemployment could be worse than in the Great Depression. He was predicting up to 30% of American workers out of a job.

DUFFIN: And to handle all of that, we need an unemployment support system that is fast, comprehensive and has almost unlimited amounts of money, which I don't think is the system we have right now.

SMITH: True, but we're going to try and fix it after the break.


SMITH: Unemployment insurance as we know it was conceived in the early 1900s in Britain, not to save the economy or even really as a gift to workers. It was put in place to stop the growing threat of British communists. It was a way of saying, oh, workers, workers, capitalists are still going to fire you and replace you with machines, but the government will take care of you just a little bit. So please do not start a revolution.

DUFFIN: Unemployment insurance then caught on in the United States in the 1920s and 1930s. It was eventually mandated nationwide during the New Deal, but it was never supposed to replace your lost income - just provide a fraction of your paycheck while you looked for a new job.

SMITH: And if you've ever filed for unemployment, you know it still feels as slow and bureaucratic as something that was designed in the 1930s to fight communism. There are 50 separate unemployment systems for the 50 different states, and each and every state provides a different amount of money for different amounts of time and under different rules. Some states are clearly on top of it; some states suck. It is not exactly what you want during a nationwide crisis where unemployment is all happening at the same time.

DUFFIN: And more than that, unemployment insurance is, at its core, just a form of insurance like car insurance or home insurance. The assumption is always that only a few people will need it at any one time. That's the only way insurance works, really. So during good economic years, employers pay taxes for each worker that state governments then sock away into trust funds, and during recessions the states can pull money out of those trust funds slowly and bureaucratically.

SMITH: And listen, this works well if the unemployment rate goes up to 5 or 6 or 7%. But at the scale we're looking at today, there is simply not enough money socked away in those state accounts. And even if there were, the system to distribute it can be incredibly slow. Our labor economist Heidi Shierholz says it's too late. You go into the recession with the safety net you have, not the safety net you want.

SHIERHOLZ: In order to get things to people, there has to be some way to do that. There has to be some system in place to actually make that happen. And so we are absolutely going to be depending on the systems that are already there.

DUFFIN: OK. So here's how the unemployment system is set up right now in most states.

SMITH: How it worked pre-coronavirus.

DUFFIN: OK. B.C. - before coronavirus, that's right. So you have to have been working at a regular job within the last year. You also have to wait a week after being fired to apply for benefits, and then you have to prove that you are looking for work. And if you meet all of these requirements, you will then get a weekly check for, on average, $385...

SMITH: Which works out to about half the average paycheck in America, and you get it for six months. Although, again, it is very different depending which state you live in. For instance, in New Jersey, the maximum benefit is $713 a week; in Alabama, it's $275.

DUFFIN: And some of those numbers might seem low to some people, and that's because they're meant to be because unemployment insurance was always meant to be a little bit of help and a little bit of motivation, not, like, just a free ride. But motivation is not the problem when you cannot leave your home.

SMITH: And that brings us to A.C. - after coronavirus. Congress just passed - literally as we are saying these words, they have just passed the rescue package that includes hundreds of billions of dollars extra to support the unemployed. And here's what the system now looks like.

DUFFIN: OK. So take Kristin for example who we just heard from. For the first four months, she will get the normal benefit her state provides plus an extra $600 a week from the federal government. That is thanks to this rescue package. And for a lot of people, that will put them close to their regular paycheck.

SMITH: That is a start. And we should say, once again, that is only the first four months of your unemployment you get this extra $600 in your check. And there is another bonus. Instead of just a half a year of benefits, in most states, insurance will now last for at least nine months, so Kristin, who lives in Maryland, should end up getting 39 weeks of checks.

DUFFIN: All right. So the money is now there. But remember, that new money now has to flow through the old system - that 50-state communist-fighting janky unemployment system.

SMITH: An unemployment system that's a little out of practice. Karen, do you remember the boom times, the golden era, the eternal spring?

DUFFIN: Very, very vaguely, but I seem to remember there were good times, yes.

SMITH: Yes. That was three weeks ago. Three weeks ago, we were at near-record-low unemployment. So the entire system across the nation was getting around 200,000 new claims a week. There was not much to do at your typical state unemployment office. I imagine them playing solitaire all day and waiting for some request to come in. Now there is this tsunami of claims. Again, Heidi Shierholz, the labor economist.

SHIERHOLZ: So it's just this unprecedented shift that these systems are having to deal with. I mean, just think of a business who went from (laughter) doing, you know, 200,000 widgets a week to 2 million widgets a week. It's just the personnel they have to bring on, the systems they would have to get in place to meet that demand.

SMITH: The infrastructure of the system is old. Websites are crashing. I couldn't get through to the Maryland Office of Unemployment to verify what Kristin would be getting. I've been trying all morning. Here in New York, you can now only apply for unemployment insurance on certain days of the week depending on the first letter of your last name.

DUFFIN: And states are starting to jettison all those old rules, like no waiting period before you file. Just go, go, go, if you can get through on the website.

SMITH: And, of course, states are starting to waive that requirement that you go out and look for work. And, frankly, even if you could leave your house, what is out there?

SHIERHOLZ: Like, if you're a restaurant worker, what are you - what kind of job are you going to search for when your whole sector is shut down?

DUFFIN: Also the congressional rescue package, it even has money for people who have traditionally not been able to get unemployment checks at all. It has checks for independent contractors.

SMITH: Although it is not clear right now how the system will determine what their salary is or how much money they will get to replace that. As we said, every state is different with different rules and different laws.

DUFFIN: This process of reworking the unemployment system for this new era is just beginning, so there is a lot of TBD.

SMITH: To be determined. Heidi Shierholz says that once we're through this crisis, there will be pressure to change the system, to fix all these weird loopholes and problems with the unemployment system. One of the biggest things she thinks we should change is why even require people to be laid off in order to get benefits? The firing and then rehiring everyone - that just slows down economic recovery. Some European countries are doing this right now. They're essentially paying businesses to keep everyone on the payroll, giving the workers unemployment benefits while they still technically have a job.

SHIERHOLZ: So that when the threat of the virus is over, when the lockdown is over, they can just go right back to their jobs. You can just turn the lights back on, and we can get the economy going again. That's the situation that would make the recovery so, so, so much faster and better for America, better for America's workers.

SMITH: Because remember that layoffs are also devastating to employers, too. Most businesses do not want to let people go, both for emotional reasons but also for business reasons. Imagine trying to restart your business after all this is over and you have to find a new staff.

SHIERHOLZ: It's just really expensive for firms to have to find people, hire them, get them in, get them onboarded, get them trained up. That's not actually producing anything, so it delays the recovery.

DUFFIN: Oh, that makes sense. It'll be even longer to get back on our feet.

SHIERHOLZ: Yes, exactly.

SMITH: Now, there are parts of the rescue package that try to help with this. There are loans to small businesses that are forgiven if these businesses retain their workers. And some states have programs that will pay unemployment insurance to workers who have had their hours reduced but are still employed. But other states don't have this program. There are still a lot of questions right now about who will get what. And frankly, with millions of new claims a week, there isn't anyone at the state offices with time to answer these questions.

DUFFIN: And so right now, more than 3 million people across America, like the listeners we talked to, are left looking for their own answers.

SCOGGIN: Like, the first week of March, I was hardly getting out of bed in the morning. I was not putting clothes on. I was just sitting around in my pajamas and binge-reading news articles about what was going on with COVID. When I made the decision to leave - so I live with my mom and dad now. I hope not to be celebrating my 40th birthday here.


ROOT: I am right now working out some livestream concerts with some of the orchestras that I work with for their patrons to keep audiences engaged.

WINSLOW: I can't really determine my next step until I know what's coming in.

SPRING: Well, I try not to stare at my phone all day.

SMITH: (Laughter).

ROOT: The sort of emotional trauma of it is real. I don't think it really sunk in for - until about a week afterwards.

SCOGGIN: I don't know.

DUFFIN: Yeah. Yeah, there's a lot of questions and not a lot of answers right now.

ROOT: How is this going to change the landscape of symphony orchestras and the arts industry in general so that when this is over, we get people back into the concert halls? We can't have a public that's, like, traumatized of large spaces or afraid to go out to a concert, you know?

WINSLOW: What happens for us if 75% to 85% of the clientele that buys your product close up shop and can't get started again?

CLARK: One of the hardest things is because you always want to think about, like, what did you do wrong so that you could fix it - you know, that flaw. And when you can't figure out how to change anything, it's always like you can't wrap your head around it.

DUFFIN: It's like all of our normal problem-solving skills just don't apply.

CLARK: They don't apply.

DUFFIN: How are you staying sane?

WINSLOW: (Laughter) I'm not. I'm not. No, it's - you know, you - what else - what choice do you have? You can't throw in the towel yet. You just don't know. This is how I look at it. You make a plan that helps you sleep at night.


WINSLOW: And then you wake up in the morning and figure you're probably going to have to deal with it again. I mean, so really, it's just one day at a time for now.


WINSLOW: And I think it's going to be that way for a while.

CLARK: There's got to be a happy ending. It's America.


DUFFIN: I want to believe that with all my heart. I do.

CLARK: That's all we got.


SMITH: So as you could tell from this show, we want to hear your story about what's happening in your life, both in terms of your job, economics, supply chain, whatever it is. We're depending on you to be our eyes and ears on this crisis. You can contact us at or on all the social media. We're @planetmoney.

DUFFIN: Darian Woods, Liza Yeager, Nick Fountain and James Sneed produced the show today. Isaac Rodrigues helped on engineering. Alex Goldmark is our supervising producer. And Bryant Urstadt edits the show.

SMITH: Our sibling podcast, The Indicator from Planet Money, is a daily show that's doing lots of really great coverage on the coronavirus and its economic effects right now. You need to add that to your listening. I'm Robert Smith.

DUFFIN: I'm Karen Duffin. This is NPR. Thanks for listening.


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