With ‘scarring in the economy,’ hiring outlook in U.S. dim; unemployment claims up in N.M.
The number of new state unemployment claims dipped last week, but job losses continue to batter the economy as rising coronavirus cases pushed some regions of the country to reverse course and reimpose shutdown orders on businesses.
More than 1.3 million workers, seasonally adjusted, filed new claims for regular unemployment benefits last week, the government reported Thursday. Another million first-time claims were filed under the federal Pandemic Unemployment Assistance program. Taken together, the report paints a disappointing picture of recovery: Total new unemployment claims have edged up from their mid-June lows.
Although hiring nationwide has picked up in recent weeks, most of the payroll gains were temporarily laid-off workers who were rehired. The pool of employees whose previous jobs have disappeared and who must search for new ones has grown.
“Their circumstances may be more challenging to rectify than those who were laid off because of a temporary closure,” said Elizabeth Akers, who was a staff economist with the Council of Economic Advisers under President George W. Bush. “Finding new jobs will be more difficult. There’s been scarring in the economy.”
Recent readings from employment sites also point to more lasting damage to the labor market. Overall job openings at ZipRecruiter rose last week, for instance, but the number of new jobs posted declined for the fourth week in a row.
“For now, at least, that suggests the increase in vacancies is being driven by a slowdown in hiring, not an increase in labor demand,” said Julia Pollak, ZipRecruiter’s labor economist.
“Recent jobs reports are encouraging, but the increase in employment entirely reflects rehires of workers on temporary layoff,” she added. “The recovery in new hiring has yet to begin.”
The longer the pandemic dampens or halts shopping, dining out, travel and business operations, the more likely it is that jobs put on a brief hold simply vanish.
In Texas, where a jump in coronavirus cases has led to a new round of business closings and other restrictions, unemployment claims have risen. More than 117,000 people filed for benefits in Texas last week, a jump of more than 20,000 from a week earlier. It was the second straight weekly increase and the most new filings since late May, although still below the peak in early April.
A wide range of indicators recently have suggested that the economic rebound is losing momentum in states where virus cases are rising quickly.
The unemployment data released Thursday didn’t paint a clear picture, however. New filings fell in Oklahoma, Florida and other virus hot spots, and rose only slightly in Arizona. Claims rose in New Jersey and New York, states where the virus is comparatively under control. And economists caution against reading too much into week-to-week changes in state filings, which can be volatile.
Congress created the emergency Pandemic Unemployment Assistance program in March to extend benefits to independent contractors, self-employed workers and others who don’t qualify for regular state unemployment insurance. The effort got off to a slow start: Many states struggled to roll out the program while dealing with a record number of regular unemployment claims. Jobless workers across the country reported encountering jammed websites, lost paperwork and confusing or contradictory instructions.
Those issues have spilled into the data itself. Backlogs, data-entry errors and other issues have made it hard to know how many people are receiving benefits under the program, or exactly when their claims were first filed. At least some states appear to be counting the same recipients multiple times.
But economists say there is little doubt that the program is helping millions of workers who would ordinarily fall through the cracks of the unemployment safety net. More than 10 million people have filed claims under the emergency pandemic program, which is set to expire at the end of the year.
A weekly $600 federal supplement for all jobless workers is scheduled to end this month. The Paycheck Protection Program, an effort designed to preserve jobs by offering forgivable loans to small business, was recently extended through October.
Lisa D. Cook, a professor of economics and international relations at Michigan State University, worries what will happen when these assistance programs dry up.
“At the heart of this is job loss,” said Cook, who testified before a congressional committee this week. State and local governments are laying off health care and education workers, and eviction bans are expiring even though a significant chunk of household renters and businesses are having trouble making payments.
“I just worry about this all piling up in the system,” she said.
UNEMPLOYMENT CLAIMS RISE IN N.M.
Initial regular unemployment claims in New Mexico crept up for the second week in a row, reaching 6,113 new claims for the week ending July 4, according to the U.S. Department of Labor‘s weekly unemployment report.
That runs counter to the national trend, which has seen decreases in new claims each week since April 4.
But New Mexico’s continued weekly benefit claims by those receiving unemployment benefits dipped under 100,000 for the first time since May 2 to 95,903. New Mexico had its highest number of people on the unemployment rolls May 23 with 108,714, according to Labor Department statistics from June 27.
The 11.94 percent unemployment rate in New Mexico for the week ending June 27 slipped below 12 percent for the first time since May 2.
Higher unemployment numbers could be on the horizon with the 14-day quarantine placed on visitors from out of state July 1 and new restaurant restrictions as coronavirus cases keep increasing.