Jobless claims rise once again
Unemployment jumps in eighth straight week
Jobless claims jumped higher for the eighth week in a row, but the rate of people filing unemployment claims is decreasing from its April peak.
Nationally, close to 3 million more people filed new claims for unemployment for the week ending May 9, according to numbers released Thursday by the U.S. Labor Department, higher than the 2.5 million that stock traders and analysts had expected, but pushing the total to 36 million since the pandemic exploded in March.
In Michigan, another 47,438 people filed new jobless claims for the week ending May 9.
The state labor department announced Wednesday that 1,717,555 have filed jobless claims since the pandemic sparked historic layoffs and furloughs driven by stay-athome orders and the shuttering of businesses deemed non-essential by the state. Those numbers include those who have applied for benefits as well as those whose claims are pending.
In all, Michigan has paid out $5.62 billion in unemployment money – whether for long-term layoffs or short, temporary furloughs – to 1,374,751 workers in Michigan.
The number of jobless claims in the state system indicates that many who have received unemployment benefits have been on short-term furloughs, although
the majority are experiencing extended joblessness.
The state labor department said county-by-county unemployment numbers wouldn’t be available this week, but will resume next week.
The trend in most Michigan counties since Feb. 22 shows jobless claims spiked higher beginning with the week ending March 21 and continued to climb through April 25 to more than a million active claims in the state system before falling back slightly the week ending May 2 to more than 90,000.
Locally, continuing jobless claims in the state system through the week of May 2, the last week that county numbers are currently available, were 118,714 in Macomb County, 113,270 in Oakland County, and 178,580 in Wayne County.
Oakland County was also looking forward to release of county by county unemployment numbers with manufacturers and suppliers scheduled to resume operations.
“Our expectation is that we would see a slight improvement in the week to week numbers but I don’t have anything anecdotally to support that,” said Bill Mullan, spokesman for Oakland County government.
The waves of job cuts have heightened concerns that additional government aid, on top of the nearly $3 trillion already allocated, is necessary to sustain the economy. Without another aid package, many economists worry that thousands of small businesses will go bankrupt, leaving millions of the unemployed with no job to return to. And state and local governments, facing huge revenue shortfalls, could be forced to lay off millions more workers and cut services.
Federal Reserve Chair Jerome Powell this week stressed his belief that Congress should consider providing additional rescue money to avoid prolonging an economic catastrophe.
Republicans in Congress are locked in a standoff with Democrats, who have proposed trillions more in aid. Republican leaders say they want to first see how the previous rescue packages affect the economy and have expressed skepticism about approving much more spending now. That sentiment has alarmed some economists.
“There really isn’t any sign that the labor market is bottoming out yet,” said Daniel Zhao, senior economist at Glassdoor, the career website.
The Trump administration insists that as states reopen, more Americans will shop, dine out and resume other activities, thereby stimulating the economy. But early data suggests it is fear of contracting the virus, even more than shutdown orders, that may be impairing the economy.
Without stronger public health measures, such as widespread testing or a vaccine, economists say such fear will depress growth even as more states reopen their economies.
Even though Georgia reopened its restaurants for sit-down dining late last month, Adam Ozimek, chief economist at Upwork, said data from the reservation site OpenTable shows that reservations are still 91% below their pre-virus level.
“Simply ending lockdowns is not going to be a panacea for these companies,” Ozimek said. “People aren’t going out because they don’t feel safe yet.”
The number of people seeking unemployment benefits actually rose last week in Georgia, as well as in Florida, which has also started to reopen. In Florida, that increase likely reflects a troubled system that caused a belated processing of claims that had been filed earlier.
A few other states that have lifted some restrictions, like South Carolina and Texas, reported declines in jobless claims.
President Donald Trump appeared to respond to the report by tweeting, “Good numbers coming out of States that are opening. America is getting its life back!”
In Ohio, shopping malls have reopened for the first time since March but have
seen little traffic. Roughly two-thirds of the stores in one mall outside Toledo were still closed Tuesday.
Ozimek pointed to signs that business failures are rising. A study from the Becker-Friedman Institute found that 43% of small businesses have closed, at least temporarily. Other research has found that half of small businesses lack enough cash to survive longer than a month without revenue.
“Those are the signs that we’ve stretched the economy too far, and it’s starting to tear,” Ozimek said.
State and local governments, which cut nearly 1 million workers in April, are running out of money and collectively posing a threat to the national economy. The recession will likely produce the sharpest plunge in state tax revenue since the center began tracking such data in the early 1970s, said Lucy Dadayan, senior research associate at the Urban-Brookings Tax Policy Center.
About two-thirds of the states have reported data for April, with most showing worrisome declines. California’s tax revenue fell 65% compared with a year earlier.
New Jersey’s dropped 59%, Pennsylvania’s 51%. Sales tax revenue has shrunk as consumer spending has tumbled. And income taxes have been diminished by the widespread job losses.
Spending by states and localities plays a vital role in the national economy: It amounted to $2.33 trillion last year — 11% of the U.S. gross domestic product. States and localities employed nearly 20 million
workers in February.
In the meantime, jobless workers in some states are still reporting difficulty applying for or receiving benefits. These include freelance, gig and self-employed workers, who became newly eligible for jobless aid this year.
Kelly Kelso, a stage crew member in Nashville, filed for unemployment aid after her company, Live Nation, canceled all summer tours. She has no idea when touring will resume. She applied in late March but hasn’t received a single check. And she can’t get answers.
“I’ve probably called a hundred times and been disconnected every time,” Kelso said.
Kelso’s partner is a selfemployed musician who finally began receiving unemployment benefits after five weeks. But for the couple, who have a 5-year-old son, money is scarce. Their landlord is demanding rent.
The latest jobless claims follow a devastating jobs
report last week. The unemployment rate soared to 14.7% in April, the highest rate since the Great Depression, and employers shed 20.5 million jobs. A decade’s worth of job growth was wiped out in a single month.
Even those figures failed to capture the full scale of the damage. Many workers in April were counted as employed but absent from work but should have been counted as temporarily unemployed.
Millions of other laid-off workers didn’t look for a new job in April, likely discouraged by their prospects in a mostly shuttered economy, and weren’t included, either. If all those people had been counted as unemployed, the jobless rate would have reached nearly 24%.
Most economists have forecast that the official unemployment rate could hit 18% or higher in May before potentially declining by summer.
About two-thirds of the states have reported data for April, with most showing worrisome declines. California’s tax revenue fell 65% compared with a year earlier.