The non-seasonally adjusted unemployment rate, per Local Area Unemployment Statistics (LAUS) data released in May, in the State of Michigan jumped to 23.8 percent for the month of April, an increase of 19.8 percentage points from March 2020.[1] To put another way, nearly a quarter of the state’s labor force is currently out of work. This is the highest unemployment rate on record in the State of Michigan since January 1983, when the unemployment rate was recorded at 17.3 percent. During the Great Recession, Michigan saw its highest unemployment rate during July 2009, at 15.4 percent.
(View WIN’s interactive Michigan Unemployment Claims Dashboard.)
For the week ending May 16, 2020, the State of Michigan saw initial unemployment insurance claims remain steady compared prior week, with 54,460 initial claims filed. This reflects a minor decrease of 706 initial claims from the week prior (May 9, 2020). This is Michigan’s sixth consecutive week of claim decreases, indicating that the greatest number of new job losses and unemployment claims due to the shutdown occurred in late March and early April. We are likely to see these rates continue to slow as stay at home restrictions loosen.
Michigan has the second highest insured unemployment rate (IUR), or the number of individuals receiving unemployment insurance as a percentage of the jobs covered by the unemployment insurance system, reported in the country for the week ending May 2, 2020, at 22.6 percent.[2] As not all workers are covered under unemployment insurance, even after recent benefit expansions, this rate is consistently below the true unemployment rate. In previous weeks, Michigan has had the highest IUR in the nation, however, for week ending May 2, 2020, Nevada (23.5 percent) experienced a greater rate. While much of this continued elevated IUR is related to the nature of employment in Michigan – a larger percentage of our workforce is employed in occupations relating to advanced manufacturing, skilled trades and engineering and design, much of which has been deemed non-essential – streamlined filing in Michigan may have contributed to the early relatively rapid rise in the reported IUR, as a greater proportion of our unemployed individuals were accurately captured in this estimate.
We can continue to use this methodology to predict the IUR for week ending May 9, 2020. Advance continued claims for the week ending May 9, 2020 were estimated at 950,775 and covered employment continues was recorded at 4,305,711 workers for week ending May 2, 2020.[3] As a result, we can predict that the IUR for week ending May 9, 2020 will be around 22.1 percent, a 0.5 percentage point drop from the week ending May 2, 2020. For contextual purposes, the highest previously reported IUR in the State of Michigan was in January 2009, during the height of the Great Recession, at 8.88 percent.
As previously discussed, this IUR can be a useful predictor for the true unemployment rate (though these numbers are calculated differently – the former relies on official numbers of those receiving benefits while the latter is measured through government surveys). As discussed above, the Michigan seasonally adjusted true unemployment rate for April 2020 was reported at 23.8 percent. While the true unemployment rate is only reported monthly, the IUR demonstrates that we can expect it to be hovering around 23 to 28 percent for the month of May. This is an advance prediction that may change over the next few weeks as the crisis continues.
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WIN’s data and research team will be continuously monitoring the impact of the COVID-19 pandemic in southeast Michigan and across the state over the coming weeks and months. Analysis will be posted to www.WINintelligence.org/COVID-19 on a weekly basis. Questions? Contact Melissa Sheldon, Karley Thurston, Deja Torrence or Michelle Wein.
[1] WIN predicted that the April 2020 unemployment rate in Michigan would be between 23 and 28 percent beginning the week of April 25, 2020.
[2] Last week we predicted the IUR to be 22.9 percent for the week ending May 2, 2020. The difference of 0.3 percentage points can be explained through the revision down in the number of continued claims (973,278 counted versus advance numbers of 988,272 reported) enumerated between weeks.
[3] Covered employment rose for week ending April 4, 2020, for the first time since January 11, 2020. We expect that some of this is related to an increase in number of workers, such as gig and self-employed, who are now eligible for benefits.
