Daily Camera (Boulder)

U.S. lay­off numbers still high

Econ­o­mists say they are in­creas­ingly du­bi­ous about the fig­ures

- By Christo­pher Ru­gaber Business · Unemployment · Employment · Society · United States of America · Washington · KPMG Corporate Finance · North Carolina · Elizabeth · California · Donald Trump · The Walt Disney Company · American Airlines · United Airlines · White House

WASHINGTON — The num­ber of Amer­i­cans seek­ing un­em­ploy­ment ben­e­fits dipped last week to a still­high 840,000, ev­i­dence that lay­offs re­main el­e­vated seven months into the pan­demic re­ces­sion.

Yet econ­o­mists say they are in­creas­ingly du­bi­ous about the un­em­ploy­ment claims fig­ures, even though there is lit­tle doubt that hir­ing has slowed and em­ploy­ers have con­tin­ued to lay off work­ers.

One rea­son lay­offs re­main high is that com­pa­nies of­ten hold on to work­ers when a re­ces­sion be­gins, if they can, in hopes of out­last­ing the down­turn. Yet if the re­ces­sion drags on, many will even­tu­ally give up and cut jobs.

“Some of these new lay­offs are com­ing from firms that didn’t want or didn’t have to lay peo­ple off at first,” said Con­stance Hunter, chief econ­o­mist at KPMG. Now, “they have no choice but to start re­duc­ing their work­force.”

Con­sider Luke Mccann. He had hoped through Septem­ber that busi­ness would fi­nally pick up at his on­line mar­ket­ing com­pany, Col­lec tion­a­gen­cy­match. com, based in Win­ston-salem, North Carolina.

It didn’t. So Mccann was forced to lay off seven of the 15 staffers at his com­pany, which helps busi­nesses find col­lec­tion agen­cies. His rev­enue had shrunk as small busi­nesses ei­ther closed down or de­cided not to pur­sue cus­tomers who hadn’t paid their bills, Mccann said.

A loan from the gov­ern­ment’s Pay­check Pro­tec­tion Pro­gram had helped Mccann stave off cut­ting work­ers. But “with­out more (gov­ern­ment help) on the way and de­mand not pick­ing up, we had to lay off em­ploy­ees to help save ex­penses to stay in busi­ness.”

At face value, the La­bor Depart­ment’s re­port Thurs­day in­di­cated that more than 800,000 peo­ple are still be­ing laid off each week, a his­tor­i­cally huge num­ber — more than in any week dur­ing the 20082009 Great Re­ces­sion. Weekly ap­pli­ca­tions for un­em­ploy­ment ben­e­fits have long been con­sid­ered a proxy for job cuts.

But the flood of lay­offs dur­ing the pan­demic re­ces­sion and the cre­ation of some new job­less-aid pro­grams have over­whelmed state un­em­ploy­ment agen­cies. A re­sult is that the job­less claims fig­ures the gov­ern­ment has been re­port­ing have be­come an ob­ject of skep­ti­cism.

“We can’t view it as re­al­time job sep­a­ra­tion data,” said El­iz­a­beth Pan­cotti, a pol­icy ad­viser at Em­ploy Amer­ica, a left-lean­ing ad­vo­cacy group, re­fer­ring to lay­offs. “We’re still see­ing mas­sive over­count­ing of ini­tial claims.”

Some states are still pro­cess­ing back­logged ap­pli­ca­tions from this sum­mer, Pan­cotti noted. Cal­i­for­nia, for ex­am­ple, stopped ac­cept­ing new claims for two weeks so it could clear a back­log of 600,000 ap­pli­ca­tions that are more than three weeks old.

In many states, the data for ini­tial job­less claims also in­cludes work­ers who had been laid off pre­vi­ously, then found tem­po­rary work or were re­called tem­po­rar­ily — only to lose their jobs again and reap­ply for un­em­ploy­ment ben­e­fits. These re­peat ap­pli­cants ac­count for roughly half of job­less claims in Cal­i­for­nia, ac­cord­ing to the Cal­i­for­nia Pol­icy Lab.

Till von Wachter, an econ­o­mist at UCLA and di­rec­tor of the Pol­icy Lab, said that ini­tial ap­pli­ca­tions can also in­clude work­ers who have used up their 26 weeks of state un­em­ploy­ment and are tran­si­tion­ing to an ex­tended ben­e­fits pro­gram that pro­vides three ad­di­tional months of pay­ments.

And this spring, Congress cre­ated a new pro­gram, Pan­demic Un­em­ploy­ment As­sis­tance, or PUA, that made self-em­ployed and gig work­ers el­i­gi­ble for un­em­ploy­ment aid for the first time. Yet in many states, to qual­ify for the PUA pro­gram, the un­em­ployed must first ap­ply for reg­u­lar job­less ben­e­fits. Only af­ter they have been re­jected un­der that sys­tem can they ap­ply for PUA.

Last week, more than 464,000 peo­ple ap­plied for aid through PUA. These fig­ures aren’t ad­justed for sea­sonal trends, so the gov­ern­ment re­ports them sep­a­rately from the traditiona­l job­less claims. Yet the fig­ure may in­clude some peo­ple who ap­plied un­der the traditiona­l ben­e­fits pro­gram.

Or­ga­nized fraud has also been a prob­lem, par­tic­u­larly in the PUA pro­gram, in which it’s dif­fi­cult for states to ver­ify ap­pli­cants’ in­comes. Con­trac­tors and gig work­ers, for ex­am­ple, rarely have W-2 tax forms, which em­ploy­ees in traditiona­l jobs re­ceive.

Thurs­day’s re­port from the La­bor Depart­ment said the num­ber of peo­ple who are con­tin­u­ing to re­ceive un­em­ploy­ment ben­e­fits dropped 1 mil­lion to 11 mil­lion. The de­cline sug­gests that many of the un­em­ployed are find­ing work. But it also re­flects the fact that some have used up the 26 weeks of their reg­u­lar state ben­e­fits and have tran­si­tioned to ex­tended ben­e­fit pro­grams.

About 2 mil­lion peo­ple are re­ceiv­ing aid un­der a fed­eral ex­tended ben­e­fit pro­gram cre­ated this spring, and an ad­di­tional 11.4 mil­lion peo­ple are do­ing so through PUA. All told, 25.5 mil­lion peo­ple were re­ceiv­ing some form of un­em­ploy­ment aid in the week that ended Sept. 19, the gov­ern­ment said.

Yet those fig­ures are also likely in­flated, mostly by dou­ble-count­ing. Cal­i­for­nia and other states have counted retroac­tive pay­ments un­der PUA as mul­ti­ple pay­ments to sep­a­rate in­di­vid­u­als.

“No­body knows ex­actly how many peo­ple are re­ceiv­ing un­em­ploy­ment in­sur­ance ben­e­fits right now,” said Heidi Shier­holz, pol­icy di­rec­tor at the Eco­nomic Pol­icy In­sti­tute and for­mer chief econ­o­mist at the La­bor Depart­ment. That is a “re­minder that we need to in­vest heav­ily in our data in­fra­struc­ture and tech­nol­ogy.”

The fig­ures nev­er­the­less point to a flag­ging re­cov­ery and come two days af­ter Pres­i­dent Don­ald Trump cut off talks over a new res­cue aid pack­age that econ­o­mists say is ur­gently needed. A fail­ure to en­act an­other round of gov­ern­ment aid would crimp house­hold in­come and spend­ing, and some econ­o­mists say it would raise the risk of a dou­ble-dip re­ces­sion.

In the mean­time, the pace of lay­offs shows lit­tle sign of flag­ging. Dis­ney said last week that it would cut 28,000 jobs. And Amer­i­can Air­lines and United Air­lines com­bined fur­loughed 32,000 em­ploy­ees last week.

Air­lines had been barred from cut­ting jobs as long as they were re­ceiv­ing fed­eral aid, which ex­pired this month.

The Amer­i­can Ho­tel & Lodg­ing As­so­ci­a­tion has said that nearly three-quar­ters of ho­tels say they’ll have to lay off more work­ers with­out fur­ther fi­nan­cial aid.

Congress is still con­sid­er­ing ex­tend­ing the air­line aid in stand-alone leg­is­la­tion. But there is lit­tle sign that a deal will be reached with the White House.

Across the coun­try, hir­ing has slowed just as fed­eral res­cue aid has run out, ham­per­ing an econ­omy still climb­ing out of the deep hole cre­ated by the pan­demic. Em­ploy­ers added just 661,000 jobs in Septem­ber, less than half of Au­gust’s gain and the third straight monthly de­cline.

Just over half the 22 mil­lion jobs lost to the coro­n­avirus have been re­cov­ered, leav­ing the econ­omy with 10.7 mil­lion fewer jobs than in Fe­bru­ary — a fig­ure that ex­ceeds all the job losses from the Great Re­ces­sion.

 ?? Olivier Douliery / AFP ?? In this Aug. 4 file photo, a restau­rant dis­plays a “Now Hir­ing” sign amid the coro­n­avirus pan­demic in Ar­ling­ton, Va.
Olivier Douliery / AFP In this Aug. 4 file photo, a restau­rant dis­plays a “Now Hir­ing” sign amid the coro­n­avirus pan­demic in Ar­ling­ton, Va.

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