Jobless claims still high but fewer unemployed
The numbers reveal a puzzle about the nation’s economy: The unemployment rate in the U.S. fell sharply from May to June, but claims for benefits by the newly jobless continued to arrive at nearly the same pace as they have for weeks.
Another 1.4 million Americans filed for unemployment benefits last week, the Department of Labor reported Thursday, even as the national unemployment rate fell from 13.3% to 11.1%, another arm of the federal agency said. The numbers, still without recent
precedent after a decadelong economic boom, show that the pandemic’s deep economic wounds have not been stanched.
In California, 279,341 claimants filed for new unemployment benefits last week, down only slightly from the 284,494 claims sought two weeks ago.
With cases of the virus spiking across the country and in California, experts said they expect slumping demand and climbing unemployment numbers, possibly through the end of the year. The latest figures reflect the situation in middle or late June, as states were rushing to reopen their economies before a rise in coronavirus cases put a pause on those plans.
“Today’s jobs report ... is a look in the rearview mirror,” said Andrew Chamberlain, chief economist at hiring site Glassdoor, in a statement. “Rough waters are surely ahead for the economy in the coming months as a second wave could again shutter millions of American small businesses and put a freeze on hiring,” he added.
“It feels like a steady bleed,” said Josh Bivens, director of research at the nonprofit Economic Policy Institute in Washington. With business reopenings sputtering amid a resurgence in daily virus cases, and the supplemental $600aweek federal unemployment benefits set to expire at the end of the month, Bivens said he hopes Congress will act to assure some money keeps flowing to the jobless as long as the virus looms.
“If we get a scenario where there’s a shutdown again and the benefits get cut off, you’ve got a bunch of people who will be suffering terribly,” he said. “That’s going to spill over into sectors where people can keep working.”
On Wednesday, the Employment Development Department said jobless Californians could get up to seven additional weeks of unemployment insurance benefits, meaning those receiving regular state benefits could get up to 59 total weeks of payments. Selfemployed people and gig workers paid through the federal Pandemic Unemployment Assistance program could get up to 46 weeks of payments.
That may buy time for workers affected by new shutdowns or the extension of restrictions on economic activity taken to quell a surge in coronavirus infections.
Dire health numbers could lead to continuing business closures, according to Carl Tannenbaum, chief economist at Northern Trust.
“Some businesses are in a bit of economic limbo, neither fully open nor fully closed,” he said. “We may be in for a period of stopstart recovery.”
For business owners like Yen Tuyet Le of San Francisco’s Paua Beauty Lounge, local authorities’ wavering reopening plans mean she can’t hire back staff. San Francisco had given nail salons like hers the goahead to open last week, then pulled back in the face of the threatening health trends.
“Monday, we were fully booked,” she said, adding she had planned to double her staff because of the backlog of customers in need of beauty services. “I had to cancel them all.”
In addition to the bulkedup hiring, Le spent time and money installing precautions like plastic shields and temperature scanners for her employees and customers. She’s now waiting to hear for a new date to open back up.
Pulling out of the current economic tailspin and revving up spending to prepandemic levels is inextricably linked to gaining the upper hand over the coronavirus, according to Joel Prakken, chief U.S. economist at IHS Markit.
“It’s not about ... ordering a reopening of the economy, it’s about getting on top of the virus,” Prakken said. He said his firm expects the economy will see “a pretty big pop” between now and September as some states reopen businesses, but it will hit a slog in the last three months of the year.
That could mean a steady stream of new and continuing unemployment claims, burdening state unemployment benefits systems, including California’s, that have often not seemed up to the task of tackling the tidal wave of applications.
Theresa “Tess” Vasquez is one of thousands of Californians who have been waiting anxiously for word from the EDD on the application for benefits she filed over two months ago after being forced to close her massage practice in Pleasant Hill.
Vasquez, who specializes in deep tissue and injury massage, said she has been unable to see clients under shutdown orders since March, and with planned business reopenings in Contra Costa County delayed, she has been getting increasingly desperate.
On Thursday, Vasquez said her months of waiting paid off. The money she applied for became available on her stateissued debit card. “This helps so much,” she said in a text message. She had worried that she and another masseuse and a physical therapist might lose the space they share, with no money coming in to cover the rent.
Like many others, Vasquez had found herself listening to recorded messages that go nowhere as she pursued her claim. “It’s so insensitive,” Vasquez said. “It’s like talking to a piece of furniture.” The department only offers limited hours of phone service staffed by agents trained to investigate claim problems.
The EDD has hired thousands more staff during the pandemic to work phones and assist the legions of unemployed, but wait times are still extremely long.
“People are going to get desperate, and they’re going to go work,” Vasquez said. She said her own small group of clients is willing to see her in person again, despite the risks.
“I will take the clients on and I will go back, I have no choice,” she said. She planned to work with a chiropractor, which would categorize her services as essential, and wear extensive protective equipment, requiring the same of her clients.
The number of unemployment claims waiting to be processed, as Vasquez’s had been, could be a factor in the high weekly unemployment filings, according to Prakken, the economist.
“State systems have been overwhelmed by the volume of claims and still may be catching up,” he said. “That could explain why the level of claims is still pretty darn high.”
The Employment Development Department said Thursday that it had processed 7 million claims in recent months, almost twice the total it had dealt with in 2010, as the economy recovered from the 20072009 recession. The agency said it has paid $37.5 billion in benefits to outof-work Californians since the onset of the pandemic
Chase DiFeliciantonio is a San Francisco Chronicle staff writer. Email: chase.difeliciantonio@sfchronicle.com Twitter: @ChaseDiFelice