If someone had traveled from the future to tell us 2020 would be a year of global pandemic, widespread unemployment, and murder hornets, we wouldn’t have known what to believe. This year has been exceptionally challenging for many families, with more than 10 million people looking for work as of June.

If you’re facing unemployment and unsure of your next steps, consider us your sympathetic ear. We can walk you through how to file for unemployment, why the 2020 job market is different from other historic slumps, and where to find the financial help you need.

What Is Unemployment?

Unemployment is a condition that describes people without a job who are available and actively looking for work. It’s possible for someone not to have a job but also not qualify as unemployed. For example, stay-at-home parents, retirees, and people who cannot work due to disability are examples of people classified as outside the workforce, rather than unemployed.

Types of unemployment

People can find themselves temporarily out of work for various reasons. There are a few types of unemployment that help define more nuance about the person’s particular situation:

• Frictional unemployment: If you leave a position voluntarily to find other work, you may find yourself here. Generally, frictional unemployment happens not because the job market is poor, but because workers are taking the time to find a position that matches their skills and needs.
• Cyclical unemployment: As the economy rises and falls, jobs often experience direct impact. If you’ve lost your job due to economic recession, this is probably the category that fits you best.
• Structural unemployment: Expectations can change dramatically within a particular industry. Technological changes that make it difficult for a worker to meet the requirements of the job can lead to structural unemployment.
• Institutional unemployment: Long-standing institutional factors can contribute to unemployment. High rates of unionization, high minimum wage, and discriminatory hiring practices are examples of these factors.

What are unemployment benefits?

The government has an interest in tracking how many people are unemployed and which demographics are affected. An active workforce helps the economy and is essential for supporting people outside the workforce. If too many people in the workforce become unemployed, this can cause a domino effect where spending and demand drop and put other workers’ jobs at risk, too. Tracking unemployment by demographic is also an important part of observing possible effects of racism, sexism, or other kinds of systemic inequality.

Unemployment insurance operates as a joint state and federal program through individual states and the Department of Labor. Eligible workers who become unemployed can file to receive cash benefits to temporarily provide financial assistance while they search for a new job.

How to File for Unemployment

If you are unemployed, it doesn’t automatically follow that you will receive unemployment benefits. The government has no way of tracking whether you intend to remain part of the labor force. If you want benefits, you need to apply with your state unemployment department. Filing can qualify you to receive financial assistance if you meet the eligibility requirements.

Am I eligible for unemployment?

First, check whether you qualify for unemployment benefits. The standard case is that you’re unemployed through no fault of your own (e.g., you were laid off). You also need to meet your state’s requirement for wages earned or time worked in the “base period” before you filed for unemployment. Meaning, if you had been out of the labor force for a long time and only worked your new job for a week before being laid off due to coronavirus, you’re likely not eligible for unemployment.

The coronavirus pandemic has led to many workers facing difficult decisions. For some people, the choice is between working outside the home (and assuming greater risk of exposure) or leaving their job and facing the loss of a paycheck.

Unfortunately, if you leave your job voluntarily to limit exposure and you don’t have proof of COVID-19 contact (i.e., a positive diagnosis), you won’t be considered eligible for unemployment assistance. If you try to get benefits anyway, the federal government can consider this to be fraud.

How to file an unemployment claim

If you are eligible for unemployment, file a claim through the state where you worked. If you worked in multiple states in the last year, you may need to apply through each state separately. You can look up your state’s unemployment office through the Department of Labor. 

When you file an unemployment claim, you will need:

• Pay stubs, W-2 forms, or other documents showing your earnings
• Your Social Security Number
• Documentation showing you are no longer employed (e.g., layoff notice)
• Former employer’s unemployment insurance account number, if you have it (your employer may have given you paperwork to help file for unemployment when they let you go, or you may be able to contact your former supervisor for this information)

Unemployment Rate 2020

The U.S. unemployment rate had been holding fairly steady between around 4-6% for the past 5 years. In April 2020, pandemic underemployment caused the unemployment rate to hit an all-time high of 14.7%. As of the end of June 2020, unemployment rates dropped to 11.1%, but this is still higher than peak overall unemployment rates in the Great Recession. It is worth noting that for some demographics of workers, current unemployment rates are lower now than they were in the Great Recession (e.g., unemployment for Black men in May 2020 was 15.8%, vs. a 21.2% peak in the Great Recession).

Historically, high unemployment rates are a sign of economic distress. That seems to be the case with unemployment rates in 2020. It hardly feels controversial to acknowledge that adapting to pandemic considerations has caused many businesses to suffer.

COVID-19 Pandemic Unemployment

Many people are hesitant to compare the current situation to any of the previous types of unemployment because it’s so unprecedented and due to an ongoing health disaster, rather than a purely economic shift. You might have heard people describe what’s happening now as “crisis unemployment” or “pandemic unemployment.” So what is pandemic unemployment, and why is it so different from what we’ve faced before?

When states entered periods of business shutdown, the economic downturn wasn’t based on the overall market. Businesses split into “essential” versus “non-essential” businesses. Some industries have been able to continue more or less as usual, while others have seen many businesses close their doors permanently. This makes it a different case from other periods of high unemployment that had more to do with general economic conditions.

Pandemic unemployment is also distinct because we don’t have clear knowledge about when shutdowns can be reversed, or which areas may go through several cycles of shutdown and reopening. A lot depends on what measures elected officials take to control the spread of infection and provide financial relief for workers and businesses affected by the pandemic.