Jobless claims rise to 742,000 for U. S.; millions will lose aid
The number of Americans seeking unemployment aid rose last week to 742,000, the first increase in five weeks and a sign that the resurgent viral outbreak is likely slowing the economy and forcing more companies to cut jobs.
The worsening pandemic and the arrival of cold weather could accelerate layoffs in the weeks ahead. Of the roughly 20 million Americans now receiving some form of unemployment benefits, about half will lose those benefits when two federal programs expire at the end of the year.
“The risk of further job and income loss is high now from business operations being curtailed,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics, a forecasting firm. “Also, expiration of federal benefits later this year will put renewed strain on household incomes. Overall, the labor market remains under stress.”
The Labor Department’s report Thursday showed that applications for jobless aid rose from 711,000 in the previous week. In March, when the pandemic first intensified, the number had soared to 6.9 million. Before then, applications typically hovered about 225,000 a week.
The surge in confirmed viral infections, and worry about its effect on the economy, are putting pressure on financial markets. The Dow Jones Industrial Average declined in early trading Thursday for a third day.
In Virginia, initial jobless claims rose 11.9%, or an increase of 1,179 claimants, from the previous week, the Virginia Employment Commission reported Thursday. The number of initial claims stood at 11,088 for the week that ended Nov. 14.
The latest figures rose to its highest level in nearly a month, the commission said.
But in the Richmond region
— Richmond and the counties of Chesterfield, Hanover and Henrico— initial claims fell four claims last week compared with the previous week. The region had 1,163 claims, down from 1,095 claims in the previous week.
The number of peoplewho are continuing to receive traditional unemployment benefits fell to 6.4 million, the government said Thursday, from 6.8 million.
Some of that decline reflects more hiring. But it also indicates that many jobless people have used up their state unemployment aid — which typically expires after six months— and have transitioned to a federal extended benefits program that lasts 13 more weeks.
Yet that extended benefit program is one of two federal supports that are set to expire at year’s end, eliminating benefits for 9.1 million people, according to a report Wednesday from The Century Foundation.
Congress has so far failed to agree on any new stimulus package for jobless individuals and struggling businesses. The cutoff of aid will sharply reduce income for the unemployed, force a further reduction in their spending and perhaps weaken the economy.
One of those programs is Pandemic Unemployment Assistance, which made self-employed and contract workers eligible for unemployment aid for the first time. PUA was established by amulti-trillion-dollar aid package that Congress enacted in the spring.
The second measure in the stimulus package provided the additional 13 weeks of benefits for unemployed people who have used up their state benefits.
When those two programs expire on Dec. 26, the Century Foundation estimates that 12 million people will lose their benefits. About 2.9 million will probably transition to a state extended benefit program that can last from six to 20 weeks, the report said. The rest will lose benefits that average about $320 a week nationally.
The expiration of benefits will make it harder for the unemployed to make rent payments, afford food or keep up with utility bills. Most economists agree that because unemployed people tend to quickly spend their benefits, such aid is effective in boosting the economy.
Cutting off benefits with so many people still receiving themwould be unusually early compared with previous recessions. In the Great Recession of 2008-2009, the government extended unemployment benefits to 99 weeks, and the additional aid lasted through 2013. When that program ended, about 1.3 million people lost benefits— a fraction of the numberwho would lose their aid at the end of this year.
“We’re still down 10 million jobs since the pandemic began,” said Elizabeth Pancotti, co-author of the Century Foundation report and a policy adviser at Employ America, a left-leaning think tank. “We’re heading into the winter, we’re seeing additional business closures, consumer demand is already falling. ... Cutting off benefits seems inhumane to me.”