COVID-19 and High Unemployment in 2020

Need a job pandemic
Annalisa Renovitch

In April 2020, 23 million workers lost their jobs in response to the COVID-19 pandemic. During April, the unemployment rate peaked at an unprecedented level of 14.7% (in the last 80 years) before declining to a still-elevated level of 6.9% in October. Due to the large amount of uncertainty in the economy, it is estimated that high unemployment will persist in the next few years, despite the significant gains seen in employment since April.

Human Resources professionals can help laid off workers by providing a prepared list of resources such as unemployment compensation, eviction protection, credit card debt and loans. Compassion and empathy can also go a long way to ease the difficult transition for employees. Employers may face rising tax rates for unemployment compensation during this period as their rates are determined partially by how many employees are claiming unemployment benefits.

In this blog we posed the following question, do you know what the answer is? Read on to test your knowledge and see if you know the correct answer:

Which of the following is not true about unemployment compensation?

  1. It was established as part of the Social Security Act of 1935.
  2. Employees are eligible for unemployment compensation from their first day of hire.
  3. Employees terminated for misconduct are not eligible for unemployment.
  4. Fraud is a serious problem for unemployment insurance programs.

In the United States, the unemployment rate measures the number of people actively looking for a job as a percentage of the labor force. It is a key indicator of the health of the country’s economy. The COVID-19 pandemic has had a significant effect on unemployment in every state, industry, and major demographic group in the United States. In April 2020, 23 million workers lost their jobs in response to the pandemic. During April, the unemployment rate peaked at an unprecedented level of 14.7% (in the last 80 years) before declining to a still-elevated level in October (6.9%). This is the highest unemployment rate since the Great Depression when unemployment spiked to 24.9%. By comparison, over the last 20 years, unemployment rates have been reported from 3.5% in 2019 to 9.9% in 2009 during the Great Recession. Among those hit the hardest by unemployment in 2020 are those in the Hospitality industry, part-time workers, young workers, and those without a college degree.

Due to the large amount of uncertainty in the economy, it is estimated that high unemployment will persist in the next few years, despite the significant gains seen in employment since April. The longer the pandemic and resulting recession last, the more likely unemployment is to continue at higher than normal rates.

 

What can HR do to help employees faced with unemployment?

One important thing for Human Resources professionals to provide laid off workers is a prepared list of resources. Many families are living paycheck to paycheck and may not know the avenues they can pursue for help. Provide information about receiving unemployment compensation. Inform employees of any local protections against evictions and let them know they can work on payment plans with credit card companies and apply for special loans through local banks. Be sure to be compassionate and show empathy for those losing their jobs. Let them know their performance was not a factor in the decision and that if possible, they will be hired back. It may also be helpful to work in pairs if emotional tension is very high.

 

How does unemployment impact businesses?

As an employer, responsibility for unemployment begins the day of hire. Employers must pay both federal taxes (FUTA) and state taxes (SUTA) based on the compensation of the employee and factors such as experience, industry, and how many employees claimed unemployment benefits. Independent contractors are not eligible to receive unemployment benefits because employers do not pay unemployment taxes on their pay.


At the beginning of this blog we posed the following question, did you answer it correctly?

Which of the following is not true about unemployment compensation?

  1. It was established as part of the Social Security Act of 1935.
  2. Employees are eligible for unemployment compensation from their first day of hire.
  3. Employees terminated for misconduct are not eligible for unemployment.
  4. Fraud is a serious problem for unemployment insurance programs.

The correct answer is b) Employees are eligible for unemployment compensation from their first day of hire. To find out more about unemployment laws, talk to an HRTrainingClasses.com professional today!


If you would like to learn more about the laws that that do or could impact you as an HR Professional while earning continuing education credits towards your SHRM or HRCI certification please join us at one of our upcoming Certificate Program Trainings on topics such as FMLA, ADA, Pregnancy Descrimination, Employment Laws, and Sexual Harassment Law and Investigation Techniques.

If you would like to learn more about our SHRM-CP®, SHRM-SCP®, aPHR™, PHR®, SPHR® Exam Prep Courses and Boot Camps please check out our upcoming Exam Prep Trainings and check out our Student Testimonials and Success Stories.


 

Sources:

Amadeo, Kimberly. Sept. 17, 2020. Unemployment Rate by Year Since 1929 Compared to Inflation and GDP 

Blakely-Gray, Rachel. Sept. 11, 2020. How Does Unemployment Work for Employers When a Former Employee Files a Claim?

Congressional Research Service, Nov. 6, 2020, Unemployment Rates During the COVID-19

Pandemic: In Brief

Kochhar, Rakesh. June 11, 2020. Unemployment rose higher in three months of COVID-19 than it did in two years of the Great Recession

Navarra, Katie. April 9, 2020. How to Help Employees Navigate Unemployment During COVID-19

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