The Economic Impact of COVID-19

In this article...
  • Millions of people have needed help during the COVID-19 pandemic. Find out what the unemployment eligibility guidelines are and what you could qualify for.

The emergence of the novel coronavirus in late 2019, first in Wuhan, China, took the world by surprise and triggered a global economic slowdown in almost every country. In the United States, the official response was divided between federal and state efforts, with each state taking a local approach to managing the crisis. Some states tried to contain the virus’s spread by closing public facilities and restricting gatherings. This had a predictable effect on public-facing businesses, as well as an untold number of small businesses.

As a result of the economic slowdown, tens of millions of Americans have found themselves out of work. Some displaced workers may return to their jobs after restrictions are lifted, while many more are permanently out of work as a result of their companies closing for good. In order to help these people, the federal government has passed a series of COVID relief packages, which focus on cash stimulus and support for people whose livelihoods have been affected by the COVID-19 pandemic.

If you are one of the displaced workers whose business has closed or whose job has been furloughed, you might be eligible for COVID-19 unemployment benefits. This aid is structured as a series of relief bills that together could help keep you and your family afloat until the economy returns to normalcy. To help people in a time of crisis, federal and most state unemployment guidelines have been relaxed. This has allowed millions of people who would not otherwise be eligible for unemployment benefits to claim relief funds at a time when they need them the most.

How Has COVID-19 Affected the Economy?

When the novel coronavirus first emerged from China at the end of 2019 and showed up in the United States at the beginning of 2020, governments around the world reacted in a variety of ways to contain the largely unknown danger. Many countries, including much of the United States, adopted policies of social distancing, lockdowns and restrictions on public gatherings. These measures inevitably put a strain on businesses that depend on personal contact to function, such as restaurants, catering companies, salons and similar businesses.

Across the developed world, the unprecedented lockdowns and labor disruptions have created what some economists call a triple shock in supply, demand and finance, all at once.

Job Losses Due to COVID-19

One result of this has been the displacement of more than 22 million workers in the United States, leading to the highest effective unemployment rate since the Great Depression. In just four months, from January to April 2020, the number of people involuntarily unemployed jumped by a factor of four.

COVID Relief Efforts

The federal government started relief efforts for people impacted by COVID-19 almost as soon as the lockdowns began. In March 2020, Congress passed the CARES Act, which included direct stimulus and expanded unemployment benefits for displaced workers. People who lost their jobs or saw their hours reduced as a result of the lockdowns and business closures became eligible for up to $300 a week in payments through their state unemployment benefits. The CARES Act also included direct and indirect forms of aid for small businesses, tribal governments and renters having trouble making their rent. Taxpayers also got a direct stimulus payment of $1,000 that was mostly deposited directly to their bank accounts.

The Role of Unemployment in COVID Relief

One of the major components of CARES Act relief was an expansion of unemployment insurance enrollment criteria. Under the CARES Act, the same people who were eligible for unemployment assistance prior to the pandemic could still get their weekly benefit, but those who had been displaced by the economic disruptions could apply for the extra $300 a week the act provided. In addition to this group, several other categories of displaced workers became eligible for unemployment benefits, some for the first time.

COVID-19 Relief Employment Eligibility

Part of the COVID relief package is an expansion of unemployment eligibility. New categories of unemployment claimants include freelance workers, small business owners and other groups who have not traditionally been eligible to collect unemployment benefits. Unlike unemployment eligibility in prior years, most states even expanded their pandemic relief efforts to include people who have not earned enough credits to normally receive unemployment benefits. As a rule, people in this group can apply for benefits and receive both their states’ minimum weekly benefit amounts, plus the $300 a week allocated in the CARES Act.

Who Else Can Get COVID-19 Unemployment Benefits?

Individual states are not limited by the federal CARES Act expansion of unemployment eligibility for benefits. Many states, such as California, issued additional benefits for many citizens. In some cases, undocumented immigrants could also claim limited cash support, most often delivered through nonprofit organizations in the state offering the expansion.

Can You Get COVID-19 Unemployment if You Quit Your Job?

As a rule, people who voluntarily separate from their jobs are not eligible for unemployment benefits. The rules for claiming unemployment benefits vary by state, but in general, a claimant’s termination must be through no fault of the applicant. Some states do allow people to claim benefits after quitting their jobs, but this is not universal. If you have left your job voluntarily, check with your state’s unemployment development division for guidance regarding benefits you may be eligible for.

Some exceptions to this rule have been carved out for unemployment applicants who have voluntarily left their jobs due to the COVID-19 pandemic. Workers in this category have left their jobs or reduced their hours for any COVID-19-related reason, including:

  • You have contracted the virus and become too sick to work
  • You have tested positive for COVID-19
  • A family member or someone you care for has either gotten sick or tested positive for COVID-19
  • You are unable to travel to work because of lockdowns or your decision to socially isolate

Applicants for COVID unemployment benefits may be asked as part of the application whether any of these terms apply to their situation. Be aware that most states draw a fine distinction between voluntarily leaving a job for reasons related to the virus and people who have quit their jobs in order to collect CARES Act benefits. Unless your decision to leave work was related to the pandemic, infection or other related cause, you generally can’t claim pandemic unemployment relief as an alternative to working.

Do You Have to Search for Work While Getting COVID-19 Unemployment?

People collecting unemployment benefits are expected to actively seek work in order to maintain employment eligibility and continue collecting benefits. The CARES Act does not impose work search requirements on recipients, though individual states are free to set their own standards. In some states, you are expected to continue actively seeking work for the entire time you collect COVID relief funds, and you may be disqualified if you refuse suitable work. Other states have decided not to require beneficiaries to look for work while COVID funds are available. Check with your state’s unemployment eligibility workers to find out what your state requires.

How to Apply for COVID-19 Unemployment Benefits

Most people can apply for COVID-19 assistance through their states’ unemployment eligibility and assistance office. Many of these offices accept applications online or by phone, and some can schedule in-person visits if necessary.