The Morning Journal (Lorain, OH)
U.S. jobless claims climb as cutoff of extra $600 benefit nears
WASHINGTON » The nation got another dose of bad economic news Thursday as the number of laidoff workers seeking jobless benefits rose last week for the first time since late March, intensifying concerns the resurgent coronavirus is stalling or even reversing the economic recovery.
And an extra $600 in weekly unemployment benefits, provided by the federal government on top of whatever assistance states provide, is set to expire July 31, though this is the last week recipients will get the extra funds. It is the last major source of economic help from the $2 trillion relief package that Congress approved in March. A small business lending program and onetime $1,200 payment have largely run their course.
With the count of U.S. infections passing 4 million and the aid ending, nearly 30 million unemployed people could struggle to pay rent, utilities, or other bills and economists worry that overall consumer spending will drop, adding another economic blow.
“I’m going to be broke,” said Melissa Bennett, who was laid off from her job at a vacation timeshare in Myrtle Beach, South Carolina. “I’ll be broke-broke. I want to go to work, I want health insurance, I want a 401K. I want a life; I have no life right now.”
Without the extra unemployment benefits, Bennett will receive just $200 a week, and she’ll have to decide whether to pay her mortgage or her utilities first.
More than 1.4 million people applied for jobless benefits last week, the Labor Department said Thursday, up from 1.3 million the previous week. That is the first increase since March and 18th straight week that it has topped 1 million. Before the pandemic, applications had never exceeded 700,000. An additional 975,000 people applied for aid under a separate program that has made self-employed and gig workers eligible for the first time.
The news sent stocks slumping on Wall Street, with the S&P 500 recording its worst loss in nearly four weeks. Uncertainty across markets helped gold touch its highest price in nearly nine years.
The weakening of the labor market has raised fears the economy will shed jobs again in July, after two sharp hiring gains in May and June.
Analysts say the economy can’t improve until authorities can control the spread of the virus, a need that is complicating the reopening of businesses and schools.
Adm. Brett Giroir, assistant secretary of health and a member of the Trump Administration’s coronavirus task force, even suggested another shutdown might be necessary. He noted that nearly universal mask wearing, sharp restrictions on restaurant occupancy, and shutting down bars were nearly as effective in controlling the virus as another shutdown of all non-essential businesses.
“Now, if you don’t do that, and people don’t achieve those goals, particularly mask-wearing, there may be no alternative,” Giroir said on MSNBC.
Congress is negotiating another aid package that could extend the extra unemployment support, though likely at less than $600. With the extra $600, roughly two-thirds of the unemployed are receiving more in aid than they earned at their former jobs, research has shown — a finding that’s led Republicans to argue that it is discouraging people from returning to work.
On Thursday, Senate Republicans unveiled a $1 trillion package that would replace the $600 with an amount that would bring a laid-off worker’s jobless benefits to 70% of their previous income. Both parties have agreed on another $1,200 stimulus check.