FARGO — Many tens of thousands of people have filed unemployment insurance claims in North Dakota since COVID-19 sparked an economic shutdown in mid-March — a situation that could leave the state with an unemployment rate that dwarfs the current record and an unemployment insurance trust fund that is starving for dollars by June.
When the coronavirus pandemic began shutting down business activity, the number of people filing unemployment insurance claims in North Dakota and the U.S. began to soar.
An official unemployment rate that reflects effects of the shutdown has yet to be calculated for North Dakota, but numbers that are known suggest an unemployment rate near 18%, according to a Forum analysis. That rate would shatter the state's record high since 1976 of about 6.2%, which happened in early 1983.
In the simplest terms, unemployment rates are calculated as the ratio of the number of people who are unemployed to the total labor force, with the labor force being the number of people who have jobs plus the unemployed who are looking for work.
When determining official unemployment rates, the government incorporates surveys that attempt to obtain the most timely information possible regarding how many people are unemployed and looking for work.
However, when talking about unemployment rates it can be useful to look at who is filing initial unemployment insurance claims, as many who file for unemployment will likely show up in the official statistics, data analysts say.
With that in mind, The Forum attempted to quantify North Dakota's moving-target unemployment rate by using a basic formula: pick a moment in time and divide the state's apparent unemployed number by the state's apparent labor force number.
To establish a number for the unemployed, we started with the 61,593 people who filed initial unemployment insurance claims in North Dakota between March 16 and April 24.
We added to that number the number of existing unemployed people in North Dakota in March, which was 11,145, and came up with a total unemployed number of 72,738.
We then divided 72,738 by the North Dakota labor force number for March — 401,671 — and came up with an unemployment rate of 18%.
It should be underscored that that's not an official number. The official unemployment rate that eventually will reflect effects of the economic shutdown could be higher or lower than 18%.
Still, it's a sobering statistic to consider, given that the seasonally adjusted unemployment rate for North Dakota in March was 2.2%, the lowest in the nation.
Insurance trust fund draining fast
North Dakota's unemployment insurance program is administered by Job Service North Dakota. The trust fund that covers payouts for the program had a balance on April 10 of about $158 million.
Sarah Arntson, a spokeswoman for Job Service North Dakota, said the duration of the pandemic will determine whether further action will be needed to ensure the trust fund remains solvent. If the current rate of benefit payments continues, the agency may have to start borrowing funds in June, Arntson said.
If the agency does have to borrow, it could obtain interest-free loans from the federal government and the agency has statutory authority to borrow from the Bank of North Dakota, Arntson said.
Bryan Klipfel, director of Workforce Safety and Insurance, said during a recent web conference that was reported on by the Grand Forks Herald that he expects the total number of unemployment claims in North Dakota will hit 70,000.
If the trust fund hits negative levels and is forced to borrow funds either from the U.S. Department of Labor or the Bank of North Dakota, such borrowing would put a heavy tax burden on employers that "would be devastating to the state," Klipfel said.
Sen. John Hoeven, R-N.D., and Gov. Doug Burgum said late last week they had been told by President Donald Trump's administration that North Dakota will be able to use $1.2 billion it will receive from the Coronavirus Relief Fund to offset unemployment insurance costs.
"Allowing states to utilize CARES Act funding to cover unemployment insurance expenses will help employers avoid huge increases in unemployment insurance premiums as they reopen and the economy gets back on track," Burgum said.
A recent New York Times story explored what the national unemployment rate might look like in the wake of millions of Americans filing unemployment claims because of the pandemic-induced shutdown.
The official national unemployment rate in March, not seasonally adjusted, was 4.5%.
Using its own calculations, the New York Times said the nation's unemployment rate in early April may have reached 13%.
"These are obviously rough estimates," the Times story said, adding that the paper's calculations didn't account for the possibility that some people who lose their jobs will leave the labor force rather than continue to search for work.
If that happens, the estimated 13% unemployment rate would overstate the rise in unemployment.
Shades of the Great Depression
Since 1929, the highest unemployment rate recorded in the U.S. was 24.9%. That was in 1933 during the Great Depression.
The nation's unemployment rate remained above 14% until 1941, when it fell into the single digits and remained in the single digits until 1982, when it rose to about 10%.
Thereafter, the unemployment rate again remained in the single digits until the height of the Great Recession in 2009, when it again reached 10%.
The national unemployment rate has fallen every year since 2009. It reached 3.5% in February.
In March, Minnesota's labor force numbered about 3 million people.
From mid-March to about April 18, about 526,218 people filed for unemployment benefits in Minnesota.
Dividing that number by Minnesota's labor force number of 3 million, Minnesota's unemployment rate could be in the neighborhood of 17.5%, though that figure is unofficial and the actual number could be higher or lower.
Minnesota's seasonally adjusted unemployment rate in March was 3.1%, tying it for seventh place among the states.
What about North Dakota's job glut?
Job Service North Dakota reports that in March the state had a total of 15,682 open and available online job openings.
The number of job openings in the state has been relatively high for several years, even though many employers in the state have tried in vain to attract workers.
It remains unclear how skyrocketing unemployment may affect the number of job openings in North Dakota.
Carey Fry, the Fargo Workforce Center manager for Job Service, said what she hears from people filing for unemployment is that most feel they still have a job and they plan to go back to it when the current crisis is over.
Employment figures from before the crisis indicate that many people in the area were working at jobs, and if any open jobs were going to be filled, the workers would have to come from outside of the area, Fry said.
"It's about getting people to come here and take those jobs," she said, adding that few of those open positions involve low-paying jobs. "There are very few employers in the Fargo-Moorhead area who are getting away with paying minimum wage. They just won't have any workers."
When it comes to the latest job opening report, new job openings accounted for about 64% of all job openings.
Of those openings, about 55% required either a high school diploma or equivalent or no educational credential. The remaining job openings required some sort of post-secondary education or credential.
Of the 22 non-military major occupational groups, health care practitioners and technical positions reported the largest number of job openings with 2,678, followed by farming, fishing and forestry with 1,495, and sales and related fields with 1,172.
Cass County reported the largest number of job openings in the March jobs report with 4,316 openings, followed by Burleigh County with 2,654 and Grand Forks County with 1,469.
'The backbone of our economy'
In 2017, a Federal Reserve study found that four out of 10 adults in America did not have the savings to cover a $400 cost they did not expect.
The current crisis underscores just how fragile the American economy is and how few people are enjoying its fruits, said Nick Archuleta, president of North Dakota United, a labor union that serves 11,500 public employees, including those who work in education.
"About 40% of the workforce are low-wage workers, but they're the backbone of our economy and we found out during this crisis just how essential they are," he said.
Archuleta said unemployment insurance is one part of a social safety net that has become increasingly tattered over time. He said the country must do more to ensure all workers share in the country's economic success.
"Salaries have been stagnant for years and years," Archuleta said. "We have to make sure that isn't the case and everybody gets to live the American Dream."