What just happened?
Last week, 3.3 million Americans filed for unemployment benefits, which was quadruple the record set in 1982. This week, twice that number—6.6. million—of unemployment claims were filed, setting a record high. Economists at the Fed Reserve’s St. Louis district project total employment reductions of 47 million, which would result in an unemployment rate of 32.1 percent. That would top the highest previous rate of U.S. unemployment, which was 24.9 percent in 1933, during the Great Depression. (The official jobs report released today revealed that 701,000 jobs were lost last month and unemployment rose nearly a full point to 4.4%, the largest month-on-month jump in 45 years. But that was the estimate before March 14, and it will likely be revised next month to account for the last two weeks.)
What is unemployment?
If you consult a dictionary, you’ll find a number of commonsensical definitions for unemployment: the state of being without a job; being without a paid job but available to work, and so on. But like many other economic terms, the dictionary definition can vary significantly from how the term is officially used. For example, since your teenage daughter, your neighbor’s stay-at-home spouse, or your retired grandfather are without a job, are they considered “unemployed”? In each case the answer is the same: it depends.
According to the federal government, to be unemployed a person must (a) be jobless, (b) looking for a job, and (c) available for work.
People are considered employed if they have a job (whether temporary, part-time, and so on). People who are neither employed nor unemployed are considered to be not in the labor force.
In America, the labor force consists of all persons 16 years old and older who are not serving on active duty in the military and are not confined to institutions such as nursing homes and prisons, and either have a job or are looking for work. The labor force is made up of both the employed and also the unemployed.
From the government’s perspective, unemployment refers to anyone who doesn’t have a job, wants one and is available to work, and is actively looking for work. That last part is particularly important because “discouraged workers” are not counted as unemployed. (Receiving benefits from the unemployment insurance program has no bearing on whether a person is classified as unemployed. Household income also has no bearing on unemployment insurance, which is why in 2010 3,171 millionaires received unemployment checks.)
There are a variety of different types of unemployment, including structural unemployment (e.g., jobs may be in Chicago, but the workers who would take them are in Dallas), frictional unemployment (i.e., workers are between jobs, such as when recent college graduates search for employment), voluntary unemployment (e.g., workers choose not to take a job at the going wage rate), and seasonal unemployment (e.g., workers at a ski resort being laid off during the summer time). Under-employment is a related concept that refers to people who have a job that is part time or temporary, but they would like to work full-time.
Because of frictional and voluntary unemployment, many economists believe there is a natural rate of unemployment in a healthy economy. In America, the natural rate is believed to be around between 3.5 percent and 4.5 percent, so “full employment” is reached when less than about 4 percent of the population is unemployed.
Why should Christians care about unemployment?
The account of creation in Genesis tells us that from the beginning, humanity was created to work. God puts Adam in the garden to “to work it and keep it” (Gen. 2:15). For most of us, the work we do at our jobs is the primary way we serve our neighbor—and a significant way in which we glorify God. As Gene Veith says,
When we pray the Lord’s Prayer, we ask God to give us this day our daily bread. And he does. The way he gives us our daily bread is through the vocations of farmers, millers, and bakers. We might add truck drivers, factory workers, bankers, warehouse attendants, and the lady at the checkout counter. Virtually every step of our whole economic system contributes to that piece of toast you had for breakfast. And when you thanked God for the food that he provided, you were right to do so.
By serving our neighbors, we use our time, talent, and skills in a way that honors our Provider and leads to human flourishing. Because jobs can serve the needs of our neighbors and lead to human flourishing both for the individual and communities, they are the most important part of a morally functioning economy. And because jobs are important for human flourishing, unemployment should be a primary concern for Christians.
Conversely, not having a job can adversely affect spiritual and psychological well-being of individuals and families. Unemployment can have negative effects on communities, families, and a person’s subjective well-being and self-esteem.
The longer that Americans are unemployed, the more likely they are to report signs of poor psychological well-being. A Gallup survey found that about one in five Americans who has been unemployed for a year or more say they currently have or are being treated for depression. Gallup also found that unemployed Americans are more than twice as likely to say they currently have or are being treated for depression than both those with full-time jobs and those who have been unemployed for five weeks or less.
A 2011 study of the long-term unemployed published by the Heldrich Center for Workforce Development at Rutgers University also found that half of participants experienced shame and embarrassment that led them to isolate themselves from friends and associates. Among the long-term unemployed, 31.1 percent reported spending two hours or less with family or friends the previous day, versus 21.5 percent among short-term unemployed adults.
Long-term unemployment is not just a mental health crisis; it’s also a spiritual crisis. And the church is the only institution in American that can adequately respond. Helping people to find work that is uniquely their own and contributes to the flourishing of the wider community should therefore be one of the chief economic concerns for the Christian community.
What are “discouraged workers”?
The government considers people to be “marginally attached to the labor force” if they currently want a job, have looked for work in the last 12 months, and are available for work. “Discouraged workers” are a subset of the marginally attached. Discouraged workers report they are not currently looking for work for one of four reasons:
- They believe no job is available to them in their line of work or area.
- They had previously been unable to find work.
- They lack the necessary schooling, training, skills, or experience.
- Employers think they are too young or too old, or they face some other type of discrimination.
How is unemployment measured?
Each month the Bureau of Labor Statistics issues the Employment Situation Summary, which is often referred to as the “jobs report.” The most widely reported number in the jobs report is the unemployment rate.
Taken alone, the unemployment rate can be a misleading statistic, since it does not include discouraged workers. The unemployment rate can drop if people are discouraged from looking for a job and have not looked for employment in the last month.
A more significant statistic in the report is whether the nonfarm payroll employment rose or fell and by how much. The economy needs to add about 120,000 new jobs just to keep up with population growth. If the number of new jobs is higher than the replacement rate, then the outlook for employment is positive; if the number is lower, then the outlook is negative, and economy is likely heading for a downturn.
What are unemployment benefits?
Unemployment benefits are government provided benefits to offset the financial effect of losing one’s job. The most common benefit is a weekly stipend from unemployment insurance.
Unemployment insurance is a joint federal-state program that provides temporary benefit payments to employees who are out of work through no fault of their own. Each state sets its own unemployment insurance benefits eligibility guidelines, but a person would normally qualify if they:
- Are unemployed through no fault of their own. In most states, this means they have to have separated from their last job due to a lack of available work.
- Meet work and wage requirements. A person must meet their state’s requirements for wages earned or time worked during an established period of time referred to as a “base period.” (In most states, this is usually the first four out of the last five completed calendar quarters before the time that a claim is filed.)
- Meet any additional state requirements.
Unemployment benefits are intended to partially replace lost wages, so the precise amount a person receives will depend on what they previously earned. States use different formulas to calculate benefit payments, but all states take prior earnings into account in some way.
Some states provide an additional benefit amount to employees with dependents. These amounts tend to be small, as Aaron Hotfelder notes, and most states that provide this benefit offer $25 or less per dependent per week in additional benefits.
Unemployment benefits are taxable, and a person may elect to have up to 10 percent of their benefit amount withheld to pay federal income taxes.
Many states require file unemployment benefits via the web, while some provide toll-free numbers or other ways to file. Learn more about your own state’s program.
What new unemployment benefits are available because of the COVID-19 crisis?
The federal government has recently made several new benefits available to unemployed workers.
Individual workers who have been fired or furloughed (i.e., put on temporary leave due to special needs of a company or employer) qualify for an expansion of unemployment benefits that expands unemployment insurance by 13 weeks and include a four-month enhancement of benefits of $600 per week, on top of what state unemployment programs pay. The maximum duration of unemployment benefits has also been set to 39 weeks.
Last month state programs paid an average $385 weekly to unemployed workers. With the added benefits, the average unemployed worker will receive $985 per week for 16 weeks, and then $385 for up to 23 more weeks.
Also qualifying are freelancers and gig workers, such as Lyft or Uber drivers, as well people seeking part-time work who have been furloughed. People who quit their job as a “direct result of COVID-19” would also qualify (states typically do not allow workers who quit to receive unemployment benefits).
A previous supplemental bill passed earlier this month expanded access to emergency paid sick leave to employees at companies with fewer than 500 employees.
Eligible full-time employees are entitled to two weeks (80 hours) of fully paid time off (up to $511 per day) to self-quarantine, seek a diagnosis or preventive care, or receive treatment for COVID-19. They are also entitled to two weeks (80 hours) paid time off at two-thirds of their regular pay (up to $200 per day) to care for a family member or to care for a child whose school has closed, or if their child-care provider is unavailable due to COVID-19.
Eligible part-time employees are entitled to fully paid time off (up to $511 per day) for the typical number of hours that they work in a typical two-week period, and to the typical number of hours that they work in a typical two-week period at two-thirds of their typical pay (up to $200 per day).
Should Christians accept unemployment benefits?
Christians who have no moral objections to other forms of insurance should have no qualms about accepting money from unemployment insurance.
Unemployment insurance is funded by federal and states taxes (the Federal Unemployment Tax Act and the State Unemployment Tax Act), which are paid primarily by your employers. Presumably, the employer would pay you a higher wage if they were not required to pay this benefit on your behalf, so unemployment insurance can be considered a form of indirect employee compensation.
Are church employees eligible for unemployment benefits?
Probably not. Churches and religious organizations are not liable for the Federal Unemployment Tax Act. States are also not required to cover ministers or employees of churches or organizations (such as private Christian schools) operated and controlled by a church or religious organization. Because most churches do not pay these taxes, their furloughed employees are not eligible for these benefits.
