Unemployment Insurance Claims Data Shed Light on the Local Economic Impacts of COVID-19 Public Health Directives

By Lyndsey Stram, Regional Economist; Lecia Parks Langston, Senior Economist

“You have power over your mind — not outside events. Realize this, and you will find strength.” Marcus Aurelius

In the wake of the COVID-19 pandemic, businesses lost revenues and workers lost jobs. But because of the time it takes to collect and collate data, economists have been left without much information to quantify the economic impacts at the local level.

But there is one ray of data illumination. Claims for unemployment benefits are promptly available and provide information about a large cross section of the economy. This post will outline what light unemployment claims data sheds on the state of the Mountainland Region’s economy.

While not all workers are protected by unemployment insurance laws, roughly 95% of jobs are covered. This makes claims data an exceptional source of information about the economy. Not included under unemployment insurance laws are most self-employed workers, about half of agricultural employment, unpaid family workers, railroad personnel (covered separately) and many nonprofit organizations (such as churches). Also, some out-of-work employees may not have worked a sufficient work history to qualify for unemployment insurance benefits, but may file anyway.

Fortunately, in this time of economic distress, the social safety nets of the unemployment insurance program, special national COVID-19 funding and social programs are working together to keep workers’ income and well-being stable.

Unemployment claimants and the unemployed; they aren’t the same

Also, keep in mind that, in addition to individuals drawing unemployment benefits, the unemployment rate includes those entering and re-entering the workforce and non-covered groups without current employment. This means the number of “unemployed” will be greater than the number of claimants. In “normal” times, only about 40% of the “unemployed” are claiming benefits.

The generally reported unemployment rate also has a work-search requirement. If you haven’t made any minimal attempts to find work, you aren’t counted as “unemployed.”

Watch this Space

While this analysis won’t be updated on a regular basis, new data will be added to the data visualization on a weekly basis allowing readers to check back for the latest information.

An Unprecedented Event

Not surprisingly, first-time claims for unemployment benefits soared in Utah and across the nation as the pandemic swept across the country. Week 12 (beginning March 16) marks the beginning of the unprecedented surge in claims. Claims in the Mountainland region peaked in week 14 and have been decreasing since. On a positive note, while new claims for unemployment insurance have skyrocketed in Utah, the state currently shows one of the lowest claims rates in the nation.

For most Mountainland counties, initial claims peaked in the second week of the pandemic and have since tapered downward. During the peak week 14, initial claims filed totaled 6,474 in the region. As of week 19, the level of claims as decreased significantly. However, for many counties, the level of claims is still well above normal levels and even above levels seen during the Great Recession.

Who took the hardest hit?

Counties that have a large share of their employment dependent on tourism have felt the greatest impact and employment shocks. This is particularly true for Summit County, the site of many of the first cases of COVID-19 in Utah. Summit County’s economy is largely dependent on its world-class ski resorts and the 2019-2020 ski season was suspended early to curtail the outbreak.

Wasatch County is also largely dependent on tourism and this is where the largest share of claims as a percentage of covered employment occurred in the region: 21%. This is the second highest share in the state.

Tourism and COVID-19

Especially in the early stages of the pandemic, this is a story of tourism-dependent industries. Almost 15% of the COVID-19-related initial claims filed in Utah’s Mountainland region represented workers previously employed in accommodations and food services. In addition, the true effect of the pandemic on this industry is masked by a large number of claims classified as industry “unknown” in the early days of the claims flood. Undoubtedly, many of these claims would rightfully be classified in accommodations/food services if the appropriate information were available.

Other high-claims industries included retail trade, healthcare/social assistance (reflecting the cessation of elective procedures and visits) and administrative support/waste management/remediation (the home to temporary employment agencies). Many of these high-claim industries reflect their high share of total employment. In addition, they often serve the public face to face, or face damage due to the decline in demand for travel.

The High and the Low

Although accommodations/food services has generated the largest number of claims in Mountainland, initial claims in the COVID-19 time period, in percentage terms, other industries have suffered comparably. For example, administrative support/waste management/remediation has also seen 16% of its covered workforce file for claims.

Surprisingly, construction, which usually accounts for a larger percentage of claims, has only seen 4% of its workers file since the COVID-19 pandemic hit. The relative ease of social distancing and the nature of the work has allowed construction to hold on to its workforce.

Utilities, public administration and education have also been able to keep a higher portion of their workforce employed.

County by County

Juab County
• Prior to the COVID-19 pandemic, the average number of weekly first-time claims in Juab County was five. This has since increased by 513% to 31 average weekly claims.
• Juab County has seen the smallest rise in claims and the lowest percent of covered workforce filing for claims in the region.
• Three sectors account for nearly 50% of the claims filed in Juab County: accommodation/food service, healthcare/social assistance, and manufacturing.
• Juab County accounted for 2% of Mountainland’s new claims prior to the pandemic, but only 1% since.

Summit County
• Prior to the COVID-19 pandemic, the average number of weekly first-time claims in Summit County was 15. This has since increased by 3,716% to 562, the largest increase in the region.
• Summit County suffered from the start as the site for some of the earliest cases of COVID-19 in Utah and with its high dependence on tourism, especially during the early spring and summer months.
• Unsurprisingly, a huge share of claims came from the accommodations/food services sector. This accounts for at least 32% of the total claims in Summit County (and likely many of the unknown industry claims).
• Other hard-hit industries in Summit County include arts/entertainment/recreation and retail trade.
• Summit County accounted for 6% of Mountainland’s new claims prior to the pandemic and 16% during.

Utah County
• Prior to the COVID-19 pandemic, the average number of weekly first-time claims in Utah County was 197. This has since increased to 562 claims, an increase of 1,281%.
• Utah County accounts for the largest employment share in the Mountainland region and also has the most diverse economy compared to the other counties. This diversity helps the economy weather employment shocks being experienced now.
• Healthcare/social assistance, retail trade and administrative support/waste management/remediation account for the majority of claims filed in Utah County.
• Utah County accounted for 87% of the new claims in the region prior to the pandemic, and only 76% during.

Wasatch County
• Prior to the COVID-19 pandemic, the average number of weekly first-time claims in Wasatch County was 11. This has increased by 2,543% to 279 average first-time weekly claims.
• A significant 21% of the covered workforce in Wasatch County has filed a claim for unemployment. This is the second highest share in the state.
• Wasatch County’s economy is largely dependent on tourism, making it a hard-hit area. Roughly 59% of the arts/entertainment/recreation workforce has filed claims, as well as 46% of the accommodation/food service sector.
• Wasatch County accounted for 5% of the new claims in the region prior to the pandemid, and 8% during.

Utah's Seasonally Adjusted Unemployment Rates

Seasonally adjusted unemployment rates for all Utah counties have been posted online here.

Each month, these rates are posted the Monday following the Unemployment Rate Update for Utah.

For more information about seasonally adjusted rates, read a DWS analysis here.

Next update scheduled for March 26th.

Utah's Employment Situation for January 2018

Utah's Employment Situation for January 2018 has been released on the web.

Find the Current Economic Situation in its entirety here.

For charts and tables, including County Employment, go to the Employment and Unemployment page.

Next update scheduled for March 23rd, 2018.

Ten Years After the Great Recession...

By Mark Knold, Supervising Economist and Cory Stahle, Senior Economist

December 2017 marked 10 years since the Great Recession first cast its long shadow across the American economy. The recession officially lasted 18 months, but its consequences can still be seen across the country without having to look very hard. We have not had another recession since.

Utah was hit hard at the time, losing a larger share of jobs than the national average; but, we were fortunate to be one of the most resilient states in terms of economic rebound. There are plenty of states where the Great Recession continues to weigh upon them. Employment levels in 14 states are still not back to their pre-recession peak, and another 29 states have only grown 5.0 percent or less. As the working-age population has grown by more than 5.0 percent, the job gains nationally have not been enough to fully employ working-age labor.

Utah lost 7.0 percent employment during the recession. Since that low, employment has recovered by 18 percent. That is the second best rebound in the nation. From Utah’s pre-recession employment peak to now, Utah’s employment has increased by 9.5 percent, third best in the nation. Yet, Utah’s job growth has not been enough to absorb all of the labor force growth during that time. Utah’s unemployment rate is low, but the percent of the working-age population in the labor force is several percentage points below the pre-recession norm — telling us that potential labor is still not as fully engaged with the job market as before the recession.

As a whole, Utah has had a notable recession rebound, but those gains have not been shared equally across all regions. Just like the national profile, some areas have bounced back strong while others are still lagging behind. The state’s metropolitan areas have grown well, but many of Utah’s rural areas cannot say the same. Nine counties have employment levels below their pre-recession peaks.

In this issue of Local Insights, we profile Utah’s regional and county economies in light of the 10-year span since the Great Recession.

MOUNTAINLAND REGION

Employment: Then and Now

As the Great Recession began in December of 2007, employment in the Mountainland Region measured just over 218,000. In the months that followed, the job growth rate slowed. By June 2008, the year-to-year job change turned negative and jobs began to be lost. In total, more than 15,000 net jobs vanished in the four counties during the recession.

While job losses occurred in nearly every industry, the largest loss was in construction. In 2007, the region’s construction employment averaged nearly 23,000 jobs. By 2009, construction annual average employment fell to 14,000. Housing market volatility was the significant factor and will be discussed in more detail below.

In the 10 years since the recession began, three of the four Mountainland counties — Summit, Utah and Wasatch — have fully recovered and exceeded their employment level from the start of the recession. Juab County is the lone exception, remaining 7.0 percent below its pre-recession employment base. The following table shows each county’s employment base when the recession began, where each is today and the percent change in the two levels.

Source: Department of Workforce Services, BLS

In addition to employment recovery across all industries, construction in the region rebounded to an annual average of 24,500 jobs in 2016. As mentioned, construction employment is tied, in part, to an area’s housing market. To better understand this connection, we now look at the housing market in context of the Great Recession.

Housing Market: Then and Now

In analyzing the Great Recession, many economists and pundits point to the housing market as one the downturn’s significant drivers. John Weinberg, of the Federal Reserve Bank of Richmond, in 2013 observed: “The housing sector led not only the financial crisis, but also the downturn in broader economic activity…the decline…was modest at first, but it steepened sharply in the fall of 2008 as stresses in financial markets reached their climax.”

Why does the housing market impact economic activity so broadly?

One way is through construction permitting activity. As population grows and demand for homes is high, additional construction takes place. The result is more jobs and more construction workers who spend their paychecks on goods and services in the community, which may create other jobs. This ripple effect also works in reverse. As construction workers are laid-off, less money is spent in the community and other jobs may be lost.

The aforementioned construction employment decline stemmed from a significant drop in residential construction permitting. Between 2007 and 2008, single-family home permits issued dropped by 73 percent and have remained lower than pre-recession levels since. Annual permits issued are shown in the table below.

 Mountainland Region Single-Family Home Permits: 2005 - 2017

 Source: Kem C. Gardner Ivory-Boyer Construction Database

In addition to the number of homes being built, the housing market also impacted the economy prior to the recession due to home financing (mortgages) being sold to investors. Instead of making their mortgage payments to a bank, homeowners’ essentially paid investors. This practice tied the housing market to the whole economy and worked well when homeowners paid their mortgages. Unfortunately, many individuals purchased homes they couldn’t afford³, which led to non-payment and disastrous consequences for banks and investors. For a more detailed explanation of the role mortgage speculation played in the Great Recession read John Weinberg’s full 2013 article.

A significant increase in home prices developed as the demand for houses increased and mortgages became readily available. According to John Weinberg (2013), between 1998 and 2006, U.S. average home prices doubled. Then, in 2007, the number of mortgage non-payments (i.e., defaults) began to rise and a ripple was sent through the entire economy — effectively dropping housing prices. This home price rise and fall was also evident in Utah. The state and Mountainland Region saw home prices rise and fall by a percent significantly greater than the United States as illustrated in the graph below.

 

 Source: Federal Housing Finance Agency (FHFA)

Following a 13.7 percent home price drop through January 2010, Mountainland home prices began to recover. Before returning to positive territory, the change in home prices again dipped in 2011. However, since the second quarter of 2012, the region’s home prices have steadily increased. According to the U.S. Census Bureau’s American Community Survey, Utah County’s median home value was $209,000 in 2012. The most recent data shows a median home value of $278,000 for 2016.

Mountainland Region: Then and Now

While there are many variables that could be discussed following the Great Recession, the two we have looked at — employment and housing — illustrate the recession’s impact and subsequent recovery in the Mountainland area. Despite significant recessionary job losses and home price declines, the region has recovered and surpassed many pre-recession metrics.

Endnotes:

1. 12-month moving average December 2007.

2. 12-month moving average June 2017

3. Fueled by sub-prime or other introductory mortgage rates that masked actual homeowner affordability.