Week’s jobless claims climb by 4,000
Another 870,000 new applications for unemployment insurance were processed last week, an increase of 4,000 from the week before, as jobless-benefit claims remain stubbornly high six months into the pandemic.
Another 630,000 people had new claims processed for Pandemic Unemployment Assistance, the program for self-employed and gig workers, down from 675,000 the week before.
At the same time, many American workers applying for unemployment benefits after being thrown out of jobs by the coronavirus face a new complication: States’ efforts to prevent fraud have delayed or disrupted their payments.
The total number of people claiming unemployment insurance fell to 26 million for the week that ended Sept. 5 — a drop of more than 3.5 million, the Labor Department said Thursday.
The new claim numbers have fallen gradually from their peak in March but remain at historically high levels.
“There’s nothing surprising in this,” said Heidi Shierholz, an economist at the Economic Policy Institute. “It’s just an ongoing crisis in the labor market.”
And as weeks turn to months since the extra $600 unemployment benefits lapsed at the end of July, concerns grow about the longterm effects to the economy and the ability of the unemployed to pay basic bills with only state benefits.
About 105,000 people who
have used up their regular aid were added to an extended jobless-benefit program, created in the economic relief package approved by Congress this spring. That program is now paying benefits to 1.6 million people.
“The data are so messed up that it’s important to not make too much of individual movements week to week, but the broad story really is we still have a lot of people needing new … claims and that are depending on that,” Shierholz said.
Meanwhile, California has said it will stop processing new applications for two weeks as it seeks to reduce backlogs and stop phony claims. Pennsylvania has found that up to 10,000 inmates improperly applied for aid.
FRAUD RINGS
The biggest threat is posed by sophisticated international fraud rings that often use stolen identities to apply for benefits, filling out the forms with a wealth of accurate information that enables their applications to “sail through the system,” said Michele Evermore, an expert on jobless aid at the National Employment Law Project.
The bogus applications have combined with large backlogs and miscounts to make unemployment benefit data, a key economic indicator, a less-reliable measure of the nation’s job market.
Applications for jobless aid soared in March after the outbreak suddenly shut down businesses across the U.S., throwing tens of millions out of work and triggering a deep recession. Since then, as states have slowly reopened their economies, about half the jobs that were initially lost have been recovered.
Yet job growth has been slowing, and unemployment remains elevated at 8.4%. Many employers appear reluctant to hire in the face of deep uncertainty about the course of the virus.
Most economists say it will be hard for the job market or the economy to sustain a recovery unless Congress enacts another rescue package.
The economy may not fully recover until a vaccine becomes available.
The concerns about fraud have focused mainly on the Pandemic Unemployment Assistance for self-employed people, gig workers and contractors.
The program has been targeted for fraud in many states and has also double-counted beneficiaries.
Last week, California cut nearly in half the number of people receiving benefits under the program, apparently after purging double-counts. It now says 3.4 million people are collecting the aid.
APPLICATIONS HELD UP
Sharon Hilliard, director of California’s Employment Development Department, said her agency has stopped accepting applications for aid for two weeks while it adopts reforms.
The department will try to clear a backlog of nearly 600,000 first-time applications and review about 1 million people who have received benefits but whose cases have come under scrutiny.
Kimberly Maldonado, a 31-year-old out-of-work music instructor, is among the thousands of Californians whose benefits are tied up by bureaucratic snags and the suspension.
Maldonado applied four weeks ago. She said she calls daily to check on the status yet reaches only a recording that says the department is overwhelmed. For her, the wait is growing critical.
“It’s literally the difference between food on my table or not,” said Maldonado, who lives in Placentia, Calif. “I’ve got a 2-year-old, and I’m not really sure how I pay for anything in the coming weeks.”
Washington was the first state to be hit as an international fraud ring based in Nigeria managed to steal up to $650 million in benefit payments, though at least half that money has been recovered. Texas, Florida and Oklahoma have also been affected.
“Any time you try to do fraud prevention or fraud detection, it is often over-inclusive, and the people who are hurt are often the most vulnerable workers,” said Julia Simon-Mishel, supervising attorney at Philadelphia Legal Assistance. “I don’t have a single client who hasn’t had a benefit interrupted at some point.”
Christopher Thornberg, a founder of Beacon Economics, an economic consulting firm, said all the new programs have taxed most states’ unemployment agencies and made the economic data less reliable.
“It’s kind of the Wild West,” Thornberg said. “I have just largely dismissed this data.”