By: - April 10, 2020 4:32 pm

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Experts “will have no difficulty in saying we entered a recession in March of 2020,” said Charles Ballard, an economics professor at Michigan State University.

The COVID-19 pandemic has ripped through the United States with almost 470,000 cases and almost 18,000 deaths as of Friday afternoon. And the virus has steamrolled the economy, causing plunges in the stock market and unemployment to soar. 

Charles Ballard

Michigan, which has the third-most cases of any state, has been reeling from COVID-19 with more than 22,000 cases and 1,200 deaths. And the fiscal picture is grim, from soaring state and local budget deficits to almost 1 million out of work.

From March 15 through April 4, 817,585 Michigan workers filed initial jobless claims, according to the Michigan Unemployment Insurance Agency (UIA).

To put that in perspective, the highest week for initial claims during the Great Recession from 2007 to 2009 was around 77,000 claims in January 2009.

Ballard said that even in the case that many of those who are filing for unemployment are able to bounce back in a month or two — assuming businesses are back open — this has caused “an extraordinarily deep downturn” for the economy. 

Michigan isn’t the only state seeing rising unemployment rates, although we do have the third-most jobless claims in the nation. 

The U.S. Bureau of Labor Statistics reports that the national unemployment rate rose to 4.4%, an increase from 1.4 million unemployed people to 7.1 million in March. In total, 16.8 million have applied for jobless benefits in the last three weeks.

“For a benchmark, this is as if the entire adult population of Michigan, Minnesota and Wisconsin applied for unemployment insurance in the last three weeks,” wrote senior Economic Policy Institute economists Elise Gould and Heidi Shierholz.

Southeast Michigan, the most populated part of the state, has been hit the hardest with positive cases of COVID-19, and simultaneously has been inundated with layoffs and unemployment. 

Since Feb. 29, just a week before Michigan saw its first two cases, through April 4, Wayne County residents filed 140,584 unemployment claims, Macomb County residents filed 85,469 and Oakland County residents filed 87,422.

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During the week of Gov. Gretchen Whitmer’s executive order to close most businesses, 127,810 workers filed claims, and in the following week 303,638 claims were filed. 

University of Michigan economists released its scheduled report Thursday through the Research Seminar of Quantitative Economics (RSQE) estimating the state’s payroll job count will fall by almost 1.2 million jobs in the second quarter of the year, from April 1 to June 30. 

For comparison, during the deepest pit of the Great Recession, Michigan lost about 140,000 jobs in the first quarter of 2009, from Jan. 1 to March 31. The state’s unemployment rate peaked in the Great Recession period at 14.4% in the third quarter of 2009, from July 1 to Sept. 30. 

The study estimates that currently 34.4% of Michigan employees are unable to work under the executive order, and more than 500,000 workers are currently out of work because of a lack of demand for their services. 

University of Michigan RSQE forecast for unemployment

The researchers also estimate that, for the near term, almost 740,000 workers who are not presently working will continue to be paid through sick leave and vacation time, from small business employers under the federal Paycheck Protection Program or through large employers refraining from layoffs.

Considering these factors, the study suggests that payroll employment will decline by almost 30% in April from its first-quarter level. However, the decline is expected to worsen in May as workers exhaust their paid time-off and employers become less able or willing to pay non-working employees.

According to the study, the state’s unemployment rate is expected to jump to 23% in the second quarter, easily its highest level since the current state-level data series began in 1976. Michigan’s previous peak unemployment rate was 16.4% in the fourth quarter of 1982.

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By June 2020, economists predict that as the economy begins to reopen, Michiganders will see an upswing in employment again, by almost 33% of unemployed workers returning to work in the third quarter of the year. 

The researchers credit the bipartisan Coronavirus Aid, Relief and Economic Security (CARES) Act, the $2 trillion federal stimulus President Trump signed last month, for helping to mitigate some of the economic fallout.

“That is arguably an optimistic forecast,” the researchers wrote, “but it reflects our judgment that the assistance in the CARES Act and the additional aid we expect to be forthcoming will prevent much of the long-term scarring that we would otherwise expect to result from the recession.”

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Allison R. Donahue
Allison R. Donahue

Allison R. Donahue covers education, women's issues and LGBTQ issues. Previously, she was a suburbs reporter at the St. Cloud Times in St. Cloud, Minn., covering local education and government. As a graduate of Grand Valley State University, she has previous experience as a freelance researcher for USA Today and an intern with WOOD TV-8. When she is away from her desk, she spends her time going to concerts, comedy shows or getting lost on hikes in different places around the world.

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