Over 824,000 work­ers file new un­em­ploy­ment claims

Num­bers tick up from pre­vi­ous week as pace of re­cov­ery re­mains slug­gish

USA TODAY US Edition - - MONEY+ LIFE - Charisse Jones

A re­bound in hir­ing that be­gan this sum­mer is sput­ter­ing amid re­gional flare­ups of the coronaviru­s, sig­nal­ing that it may be years be­fore the jobs mar­ket fully re­cov­ers.

More than 824,000 Amer­i­cans filed for un­em­ploy­ment in­surance for the first time last week, the La­bor Depart­ment said Thurs­day.

The new­est round of 824,542 claims is sig­nif­i­cantly lower than the record high 6.2 mil­lion who filed first­time claims in early spring when most non-es­sen­tial busi­nesses closed to slow the spread of the coronaviru­s.

But the num­ber of fil­ings rose from the week be­fore by 28,527. And in less than seven months, more than 57 mil­lion have sought un­em­ploy­ment as­sis­tance for the first time. The fig­ures are not sea­son­ally ad­justed.

USA TODAY is now us­ing non-sea­son­ally ad­justed job­less claims num­bers be­cause the La­bor Depart­ment has switched to a dif­fer­ent method to ad­just the data based on sea­sonal fac­tors, such as school work­ers los­ing jobs in June. The old method re­sulted in ad­just­ments that dra­mat­i­cally in­flated the num­ber of claims filed dur­ing the global health cri­sis.

Con­tin­u­ing claims, which rep­re­sent all Amer­i­cans still get­ting un­em­ploy­ment pay­ments with a one-week lag, con­tin­ued to drop, to­tal­ing 12,264,351, a de­crease of 1.4% from a week ear­lier.

Econ­o­mists have been fo­cus­ing more on that num­ber be­cause it re­flects all who re­main un­em­ployed, while its weekly changes give a clearer snapshot of how many peo­ple have re­turned to work.

While the slight dip in on­go­ing claims could mean some un­em­ployed

Amer­i­cans are now back at work, “it will take months of jobs re­cov­ery be­fore there will be enough jobs in the economy to reat­tach the 25.5 mil­lion work­ers who have been tem­po­rar­ily or per­ma­nently dis­placed by (the) pan­demic and who re­main on un­em­ploy­ment,” An­drew Stet­tner, se­nior fel­low at The Cen­tury Foun­da­tion, said in a state­ment.

Daniel Sil­ver of JP Mor­gan Chase added in a note that “re­cent de­clines in the con­tin­u­ing claims data likely re­flect a com­bi­na­tion of im­prove­ment in the la­bor mar­ket and the ex­haus­tion of el­i­gi­bil­ity for some fil­ers, in ad­di­tion to other fac­tors.”

The weekly tally of ini­tial claims re­mains stub­bornly close to what was pre­vi­ously the all-time high of roughly 1 mil­lion on a non-sea­son­ally ad­justed ba­sis dur­ing a 1982 re­ces­sion.

“As th­ese data show, the re­cov­ery still re­mains far too slow for mil­lions who were laid off in the spring and sum­mer,” Stet­tner said.

The weekly fig­ure also co­in­cides with ev­i­dence that some newly laid­off Amer­i­cans are fac­ing de­lays in re­ceiv­ing un­em­ploy­ment ben­e­fits as state agen­cies in­ten­sify ef­forts to com­bat fraud­u­lent ap­pli­ca­tions and clear their pipe­lines of a back­log of fil­ings.

Cal­i­for­nia has said it will stop pro­cess­ing new ap­pli­ca­tions for two weeks as it seeks to re­duce back­logs and pre­vent fraud­u­lent claims. Penn­syl­va­nia has found that up to 10,000 in­mates are im­prop­erly re­ceiv­ing aid.

Re­bound is un­der­way, but slow­ing down

The la­bor mar­ket is ex­pected to re­bound faster than it did in the wake of the Great Re­ces­sion, Sophia Koropeckyj, an econ­o­mist at Moody’s An­a­lyt­ics, said in a note. But the re­bound is slow­ing, econ­o­mists say, as some busi­nesses shut their doors amid flare­ups of the coronaviru­s in dif­fer­ent parts of the coun­try.

A se­ries of head­winds, from the fail­ure of Congress to ap­prove ad­di­tional fi­nan­cial re­lief for busi­nesses and the un­em­ployed, to lack of a vac­cine will likely mean it will be an­other three years be­fore the jobs pic­ture mir­rors what the na­tion ex­pe­ri­enced be­fore the pan­demic.

“Em­ploy­ment gains will stall com­pletely in the fourth quar­ter,” Koropeckyj said. “An en­dur­ing re­cov­ery will not oc­cur un­til a vac­cine is widely avail­able, likely a year from now. Only then will en­ter­prises from restau­rants and ho­tels to public tran­sit to per­form­ing arts or­ga­ni­za­tions be­gin to func­tion nor­mally ... The U.S. will not re­turn to its pre-COVID-19 em­ploy­ment level un­til the end of 2023.”

Mike Loewen­gart, man­ag­ing direc­tor, in­vest­ment strat­egy for E*TRADE Fi­nan­cial Cor­po­ra­tion said in a state­ment that “while job­less claims un­der a mil­lion for 4 straight weeks could be con­sid­ered a pos­i­tive, we’re star­ing down a pretty stag­nant la­bor mar­ket. This has been a slow roll to re­cov­ery, and with no signs of ad­di­tional stim­u­lus from Wash­ing­ton, job­less Amer­i­cans will likely con­tinue to ex­ist in limbo.”

An ex­tra weekly un­em­ploy­ment ben­e­fit of $600 ended in July. And many states have strug­gled to dis­trib­ute an ad­di­tional $300 a week in aid au­tho­rized by Pres­i­dent Don­ald Trump, while oth­ers have al­ready dis­pensed all the avail­able funds.

“Con­sumers’ spend­ing, nearly 70% of the economy, can’t con­tinue to in­crease at its re­cent pace in the af­ter­math of the end­ing of en­hanced un­em­ploy­ment ben­e­fits,” Ian Shep­herd­son, chief econ­o­mist with Pan­theon Macroe­co­nomics said in a note. “And the lat­est upturn in Covid cases and hos­pi­tal­iza­tions ... threat­ens to trig­ger re­newed re­stric­tions on eco­nomic ac­tiv­ity.”

Against this back­drop,” Shep­herd­son con­tin­ued, “the need for fur­ther fis­cal ac­tion is ob­vi­ous, but we no longer ex­pect any mean­ing­ful re­lief bill un­til February.”

THE TIMES-PICAYUNE/THE NEW OR­LEANS AD­VO­CATE VIA AP

Sean Har­ris holds a sign seeking help in New Or­leans on Sept. 4.

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