Jobless claims again top 1 million
After fall, rise unexpected; economists fear for labor market
The number of Americans filing for unemployment insurance unexpectedly rose last week, a sign of the job market’s fragility five months after the coronavirus pandemic began to devastate the economy.
Last week, 1.1 million workers filed new claims for state unemployment benefits, the Labor Department reported Thursday, compared with 971,000 the previous week.
The weekly jobless claims had sunk slowly in recent months but have remained well above historical highs, averaging about 1.18 million a week for the past four weeks. Economists had expected last week’s figure to approach the numbers from the week before, which had fallen below 1 million for the first time in about five months.
Instead, the initial claims and new claims for Pandemic Unemployment Assistance, the program available to gig and self-employed workers, both went up. About 543,000 new claims were filed for those benefits for the week that ended on Aug. 15, up from 488,000 the week before.
Including the self-employed and gig workers raises to 28 million the number of people receiving some form of jobless aid, though that figure may include double-counting in some states.
That number is little changed from a week earlier.
“The fact that the claims are so high this far into the crisis is concerning,” said Ann Elizabeth Konkel, an economist at the job site Indeed. “Yet the depths of the damage remain to be seen. I would definitely call it a canary raising alarms in the economic coal mine.”
Data shows the number of job postings slowly recovering in recent weeks. However, in the latest data postings took a turn for the worse. They had been running about 18% below normal and fell to 20.3% below normal last week.
“The longer we go into this crisis, the longer people that have been temporarily laid off may not get called back,” Konkel said. “Businesses can only ride out this crisis for so long.”
Job loss from the pandemic remains a singular crisis, without comparison in modern times.
The country’s unemployment rate, last calculated in July, was 10.2%, and economists have warned that it could go up in this month’s report as the virus continues to alter life around the country.
The extra $600 in unemployment benefits that many workers credit with keeping them afloat expired at the end of July. And funds from the $660 billion Paycheck Protection Program, which gave grants and loans to companies to keep workers on the payroll, have been running out for many recipients.
“We’re still at a historically high level of claims,” said Scott Anderson, chief economist at Bank of the West, noting that the weekly peak during the previous recession stood at 665,000.
“The labor market is in the ICU.”
But the pickup in initial jobless claims reinforces some economists’ forecasts that improvement in the labor market will occur in fits and starts, with the latest uptick likely representing a pause in that recovery — rather than a substantial change in direction. It would take sustained weekly increases in claims to raise concern that the job market is in danger of unraveling.
The labor market is bouncing around from week to week, but the trend remains intact, said Brett Ryan, senior U.S. economist at Deutsche Bank AG. “It’s not going to be simply a straight-line recovery.”
SILVER LINING, BIG CLOUD
Despite the number of jobless claims, Gus Faucher, chief economist at the PNC Financial Services Group, pointed to pockets of strength in the economy.
“We see continued improvement with housing starts increasing, consumer spending increasing, and industrial production increasing,” he said. “But the pace of improvement is slowing.”
While home construction and sales have bounced back along with auto purchases, small businesses are struggling, and spending on travel, entertainment and many other services is still weak. While more Americans are eating at restaurants, seated dining is still 54% below pre-pandemic levels, accord-ing to OpenTable.
Daniel Zhao, an economist at Glassdoor, an employment website, said the industries with the largest increase in job openings are health care and e-commerce and delivery services. But those gains reflect mainly responses to the outbreak rather than economic growth.
“While there has been a steep decline from crisis peaks, the fact that five months into the crisis initial claims are running at 1.1 million per week is, in absolute terms, very bad news,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. wrote in a note.
LOCKDOWNS, UNCERTAINTY
Many businesses and consumers remain paralyzed by uncertainty and restricted by lockdowns, and job gains appear to be slowing from the rapid bounce-backs of May and June, when millions of restaurant and store employees were rehired. The number of job openings posted on Indeed fell last week for the first time since April.
Twenty-two million jobs were lost to the outbreak in March and April. In the past three months, only 9.3 million have been regained.
Until the virus can be brought under control, economists agree, any recovery is destined to remain weak.
Kronos, a company that makes time-tracking software for small businesses, said the number of shifts worked by its clients is barely growing after rising steadily in the previous three months. Shifts worked are stuck at about 10% below their pre-pandemic level.
“It’s increasingly clear that the last 10% of the recovery will be the most challenging,” said Dave Gilbertson, a vice president at Kronos.
STRUGGLE DEEPENS
At the same time, those who are drawing unemployment are now getting far less aid because of the expiration of the $600-a-week federal benefit, which means they must get by solely on the much smaller benefits from their states. That has deepened the struggle for many and put some in danger of eviction.
For John Williams, a former cabdriver in Slidell, La., just outside New Orleans, the loss of the $600 landed him in a food bank line this week, waiting for groceries. He now receives just $107 a week in state unemployment aid, which is all that he qualifies for based on his previous income.
Before the virus dried up most of his business, Williams, 77, used to pick up fares at the New Orleans airport. Now, besides his jobless aid, he receives about $300 a month from Social Security and a small pension from a previous job as a maintenance man in the city’s school system. He can barely cover his mortgage.
Williams has gone two days without taking his blood pressure medication because when he went to have it refilled, the cost had doubled.
“I’m hanging in there, doing the best I can,” he said.
Information for this article was contributed by Eli Rosenberg of The Washington Post; by Nelson D. Schwartz of The New York Times; by Reade Pickert, Jordan Yadoo, Sophie Caronello and Maeve Sheehey of Bloomberg News; and by Christopher Rugaber, Rebecca Santana and Jocelyn Noveck of The Associated Press.
Job loss from the pandemic remains a singular crisis, without comparison in modern times. The country’s unemployment rate, last calculated in July, was 10.2%, and economists have warned that it could go up in this month’s report as the virus continues to alter life around the country.