Americans are five months deep in a historic economic crisis. From February to April, the country’s unemployment rate shot up from under 4 percent to nearly 15 percent. It has since declined to roughly 10 percent—about what it was at its peak during the Great Recession.
In response to that turmoil, the government spent $2 trillion via legislation called the CARES Act to support American people and businesses. The act provided households with crucial financial help for several months, notably in the form of an extra $600 in unemployment assistance a week. But that help was cut off last month, and without additional support, American families face “a looming hunger crisis and a looming eviction crisis,” Lawrence Katz, an economist at Harvard, told me.
“No national economic shock or downturn in the U.S. has ever happened as fast as this one,” Katz said. “We had increases in unemployment [over the course of] two months that took two years in the Great Depression.” That was the last time the unemployment rate was higher than 15 percent. (At the height of the Depression, it reached 25 percent.)
What carried many American households through the Depression, Katz told me, was “a lot of direct relief” from the government—“things like the Works Progress Administration and the Civilian Conservation Corps, where we directly used the federal government to hire people.” The Great Depression was also when the government, by passing the Social Security Act in 1935, helped establish the unemployment-insurance safety net that the U.S. still has today. In 2020, Katz said, “a huge advantage we have relative to the Great Depression … [is] the existence of an unemployment-insurance system where we were able to get over 30 million workers quick support.”
The current crisis spurred some important modifications to that system. In addition to dispensing the extra $600 a week, the CARES Act, signed into law in late March, ordered a one-time stimulus of $1,200 to most American households (plus $500 a child) and allowed a larger pool of people, including self-employed and gig workers, to qualify for receiving benefits.