Outlook for jobs remains uncertain
787,000 initial filings for benefits last week
When unemployment benefits were slashed this summer, followed by weeks of wildfires and choking smoke, Michael Michalske and Diana Broker made the difficult decision to leave the Bay Area with their toddler, Fiona Lee Michalske.
They loved Brisbane’s smalltown feel and perfect location for their careers — his as a union stagehand, hers as a dancer and Pilates instructor — but with theaters closed indefinitely, they simply “weren’t willing to spend our entire life savings waiting for an incredibly uncertain future,” he said.
This month they gave up their rental home and moved 200 miles south to live with Broker’s parents in Templeton, a small community in San Luis Obispo County.
They’re among millions of people whose lives were upended when the pandemic decimated employment.
That pain continues to spread, with 787,000 more Americans claiming jobless benefits for the first time during the week ended Oct. 17. While the number inched down from the previous week — and marks the first time initial claims were below 800,000 since March — it’s still triple the normal rate. In addition, 345,440 people applied for Pandemic Unemployment Assistance, a new program that pays benefits to freelancers, gig workers and selfemployed people.
“I’m not surprised the number is going down — and I’m not surprised that it is still extremely high,” said Erica Groshen, an economics professor at Cornell University and former head of the U. S. Bureau of Labor Statistics.
Across all forms of unemployment, a total of 23.1 million people were collecting benefits for the week ended Oct. 3, down a bit more than 1 million from the prior week.
California resumed providing actual numbers after three weeks during which it was fixing its struggling system for claims processing. The state’s new filings were at the lowest level since the pandemic started, with 158,877 claims for regular unemployment — four times the prepandemic level — and 25,168 for the pandemic selfemployed benefits. Pandemic assistance claims had run about 200,000 in recent weeks and surpassed 400,000 one week.
That dramatic decline in Pandemic Unemployment Assistance claims suggests that they “were highly inflated in August and September by fraudulent claims,” said Michael Bernick, a San Francisco lawyer and former head of the California Employment Development Department.
California has discussed fraudulent claims in general terms without giving any specifics, but other states have reported widespread fraud. Colorado said that more than three quarters of pandemicassistance claims were fake, while Arizona said about 1 million out of 2.4 million such claims could be fraudulent, he said.
California’s ongoing regular claims totaled 1.87 million for the week that ended Oct. 10, down 144,902 from the prior week, while ongoing selfemployed claims were 2.87 million, down 101,900.
“California looks slightly better because the lockdown is easing, a credit to that it was aggressive and early on so we can relax now — but not too much until there’s a vaccine,” said Nick Bloom, an economics professor at Stanford. But overoutdated all, it has the same bigpicture trend as the nation, he said: an economic recovery that is petering out.
California’s unemployment office said it has paid out $ 105 billion for 15.2 million claims since March, when the pandemic took hold. The state is still trying to clear a backlog of new claims that swamped its systems. The office said Thursday that the backlog for new claims that have taken over 21 days to process has fallen 44%, but more than 330,000 claims from the backlog still have not been processed.
“The recovery is like a marathon,” Bloom said. “We’re on mile 14 and we’re out of breath and collapsing. We’re basically going to be walking the rest of the marathon. The economy is being held back by the election in the short run, and by not having a vaccine in the medium run.” He doesn’t expect a full recovery until 2022 or 2023.
Several factors constrain prospects for a bounceback.
“Winter is coming,” Bloom said. “We’ve kept a lot of restaurants and bars afloat by serving food and drinks outside, and that clearly will be harder when it’s cold and raining. That will have a double whammy: You can serve less people outside, and some of the activity will sneak inside, where almost all ( coronavirus) infections occur.”
Groshen noted that several factors continue to loom large. Shutdowns are both increasing and decreasing in different areas. Government help to maintain economic activity, such as the $ 600 ( and later $ 300) weekly supplement to unemployment benefits has ended.
Losing that influx of money creates a “recessionary dynamic,” she said. “You get less investment and less spending by households and by firms. That, in turn, reduces revenues for the people they would have bought from, so they then become less certain and they spend less, they lay off workers, who then face their own crises and cut their spending. It feeds on itself, it is a selfreinforcing downward spiral.”
Michalske and Broker encapsulate that dynamic of people who had to curb their spending to get by, as well as reflecting a sector that’s been decimated.
He was laid off from the electrical crew at the Curran’s production of “Harry Potter and the Cursed Child” as soon as shelterinplace started. He qualified for unemployment and Broker was still working for a gym.
The combination of benefits and income “kept us housed and bought us some time,” he said.
But this summer, when the federal $ 600 weekly benefits supplement ended, they realized that they could no longer make ends meet in the Bay Area — and there is no timeline on when performing arts may resume. Physical distancing requirements have walloped the sector, which is experiencing widespread unemployment.
“The city is in my blood; I’m a fourthor fifthgeneration native San Franciscan,” he said. “Leaving the Bay Area was definitely emotional.”
They aren’t the only ones fleeing the pricey Bay Area.
“It was a nightmare trying to get a truck,” Michalske said. “The closest UHaul was in Redding. It’s an exodus.”