The COVID-19 pandemic has resulted in both a major public health crisis and a major economic crisis. The economic impact is coming primarily via social distancing (or stay-in-place) restrictions that have resulted in the temporary closing of nonessential businesses in many parts of the country. As a result, millions of workers have been laid off or furloughed. Unemployment claims for the week ending March 21 totaled more than 3 million—the highest number of seasonally adjusted initial claims in the history of the series at that time. That record was broken quickly. For the week ending March 28, the number of seasonally adjusted initial claims increased to an adjusted 6.9 million. For the week ending April 4 there were an additional 6.6 million new unemployment insurance claims.
In response, Congress has passed two laws that contain measures designed to help individuals affected by this shock: The Families First Coronavirus Response Act (FFCR Act), signed into law on March 18, and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law on March 27. (In addition, the Coronavirus Preparedness and Response Supplemental Appropriations Act was signed into law on March 6 and provided $8.3 billion in emergency funds to state and local governments to fight the outbreak.)
In this macroblog post, we summarize how the assistance offered in the acts supplement the preexisting social safety net to financially support a hypothetical displaced American working in a restaurant prior to the outbreak. We present our case study in two locations: Boston, Massachusetts, and Birmingham, Alabama. Overall, the potential impact of these acts depends on the ultimate length of the unemployment spell, variation in state unemployment insurance laws, and variation in cost of living.