California unemployment claims jump to two-month high

Unemployment reaches highest levels in 2 months; 287,700 file in past week

Unemployment claims jumped in California to their highest levels in more than two months, a grim trend that emerged as state and local government agencies decided to reimpose coronavirus-linked shutdowns of businesses after they had been briefly opened.

“The increased claims reflect the lockdowns reimposed in early July” in California, said Michael Bernick, a Milken Institute fellow and a former director of the state’s Employment Development Department.

An estimated 287,700 California workers filed initial claims for unemployment last week, up 22,900 from the week before, officials reported Thursday.

“If you reopen and you had folks who were working for a couple of weeks and then new restrictions were put in place, they had to stop and they weren’t working any longer,” said Patrick Kallerman, research director with the Bay Area Council’s Economic Institute.

In contrast, unemployment claims in the United States — which totaled 1.3 million for the week that ended on July 11 — fell to their lowest levels in four months.

About 6.55 million California workers have filed first-time claims for unemployment since the week that ended on March 14, the week when government officials started to order business shutdowns to help combat the spread of the coronavirus.

Over the most recent four weeks that ended on July 11, California initial unem

ployment claims have averaged 278,600 per week. That was up 11,600 from the weekly average of 267,000 for the four weeks that ended on July 4. The fourweek moving average is a way to smooth out the often sharp weekly fluctuations in jobless claims.

Some workers continued to complain on Thursday that the EDD is lagging by three to four months in some cases in making even the first payments to people who have been laid off.

Since mid-March, the Employment Development Department has paid out $45.6 billion in unemployment

benefits, the state labor agency reported Thursday.

What’s really jaw-dropping about that figure is that the EDD payouts over a roughly four-month stretch this year are more than double the $22.9 billion the state agency paid out during all of 2010, the worst year of the Great Recession.

To be sure, part of that increase is due to the $600 in extra payments weekly provided by the federal government to laid-off workers. That benefit is scheduled to expire later this month. That means the maximum payment of $1,050 a week during the period of additional assistance will drop 57 percent to a new maximum of $450 a week.

With the renewal of business shutdowns, unemployed workers might have to combat the multiple

pressures of the EDD’s broken call center and flagging efforts to pay unemployment benefits, along with renewed business shutdowns, and smaller benefit payments.

“The job market may very well deteriorate in the coming weeks,” Sung Won Sohn, a professor of finance and economics with Loyola Marymount University, said in a research note on Thursday.

A number of businesses such as shopping malls, salons, barbershops, restaurants, and bars have been ordered to shut down or curtail indoor operations, just days after they had been allowed to reopen.

“In some cases, workers rehired in late June have been laid off within a

short time,” Bernick said. “In other cases, companies decide they can no longer hang on.”

Some businesses may have attempted to operate at relatively high staffing levels akin to the pre-coronavirus period.

“With a lot of businesses, when the shelter-in-place orders were lifted a little bit, they may have tried new kinds of business models,” Kallerman said.

The revived attempts could have been as varied as the businesses themselves.

“Some restaurants tried models of food pickup, bars attempted drinks to go, retailers attempted drive-up service, auto body shops tried to open,” Kallerman said. “A lot of places brought back a certain number of employees and then realized the business was just not there.”

In his Oakland neighborhood, Kallerman recalls that numerous restaurants had opened for a few days or even weeks, then were locked down again upon the orders of state and local government agencies. This time, these East Bay dining establishments aren’t bothering to put an optimistic spin on their closed for business signs.

“The restaurants in my neighborhood just put up signs that said closed until further notice,” Kallerman said. “Not everyone is going to make it through this.”