Unemployment: 1.5 Million New State Claims in Weekly Tally

By Tori 4 years ago

As American businesses reopen in fits and starts — and anxiety over new coronavirus hot spots increases — state unemployment offices still have their hands full.

Nearly 1.5 million workers filed new claims for state unemployment insurance last week, the Labor Department reported Thursday, the 14th week in a row that the figure has topped one million.

An additional 728,000 filed for benefits from Pandemic Unemployment Assistance, a federally funded emergency program aimed at covering the self-employed, independent contractors and other workers who don’t qualify for traditional unemployment insurance.

To be sure, the weekly pace of new state filings is a fraction of the more than 6.5 million recorded in early April. As businesses have reopened, some employees have been called back. The total number of people collecting state unemployment insurance for the week ending June 13 was 19.5 million, seasonally adjusted, a decrease of 767,000 from the previous week and down from nearly 25 million in early May.

Still, the American economy has been sending conflicting signals. On the one hand, New York and some other places that were hard hit early in the outbreak are starting to get back to business.

But a spike in cases in states that reopened earlier has raised fears of new setbacks. On Tuesday, Gov. Greg Abbott of Texas urged residents to stay home and warned that the state might have to impose new restrictions if the virus could not be contained. And California and Florida have posted record numbers of new cases in recent days.

After reopening, Apple has shut its stores in four states — Florida, South Carolina, North Carolina and Arizona — and on Wednesday closed seven stores in Houston.

“The renewed outbreak will hinder the recovery,” said Carl Tannenbaum, chief economist at Northern Trust in Chicago. “I can’t help but think that the willingness of consumers to be in crowded places has diminished. It’s going to be a long haul to get back to where we were before the pandemic.”

The persistently high level of new jobless claims has raised questions for economists like Torsten Slok of Deutsche Bank, who terms the million-plus weekly totals a “real mystery.”

One possibility is that many states are still working through a huge backlog of claims, as old computer systems struggle to adapt to an inflow that dwarfs that of previous downturns.

In addition, some businesses that were spared early in the crisis may be starting to trim their work forces. Changes in the guidelines for the federal Paycheck Protection Program may also be playing a role; as requirements for maintaining payrolls expire, more workers may be getting pink slips.

The latest monthly jobs data from the federal government only added to the mystery. In May, employment rose by 2.5 million, the Labor Department reported, with the official unemployment rate dropping to 13.3 percent. The report for June will be released in a week.

“There’s a lot of turmoil in the labor market, a lot of churn,” said Joel Prakken, chief U.S. economist at the consulting and research firm IHS Markit. While economists have debated whether the recovery will take the form of a V or a Nike swoosh, Mr. Prakken said the recent uptick in coronavirus cases could create a W-shaped rebound. “The upturn in cases is worrisome,” he added.

So far, the recovery has been uneven, according to data analyzed by IHS. After being down 100 percent in April, the number of seated diners at restaurants is now off by 40 percent, a considerable improvement. Demand for gasoline is halfway back to where it was before the virus. But spending on air travel and moviegoing remains depressed.

The shaky economic outlook has both experts and workers worried about the looming expiration of the Federal Pandemic Unemployment Compensation program, which provides a supplement of $600 a week to those collecting state jobless benefits.

“It’s made all the difference, because basic unemployment isn’t enough,” said Richard Brenin, who was laid off in March from his position doing postproduction work for television shows and movies in Los Angeles.

Without the $600 federal payment, Mr. Brenin would collect $450 a week. “It barely covers the rent, with nothing left over for the car payment, basic expenses or food,” he said, and he and his husband “don’t have much saved up.”

Labor Secretary Eugene Scalia is opposed to extending the supplement, and many Republicans on Capitol Hill share his outlook as Congress considers new emergency relief.

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“I don’t think the $600 benefit is the answer going forward,” Mr. Scalia said in an interview with CNBC on Wednesday.

Many workers who filed for unemployment insurance never received it, a sign that the economic pain may be worse than the claims data suggests.

After Chris Bryan was furloughed from his job as the manager of a small health club in Portland, Ore., in March, he and his partner applied for several benefit programs.

They received food stamps but not unemployment insurance, and finances have been tight. Mr. Bryan got a letter on May 23 saying that he had been approved for unemployment payments on March 25, but is still empty-handed — he has tried calling four different numbers for at least an hour a day with no luck.

“I keep hearing the same guy on the automated recording — I think he and I are best friends now,” he said.

Mr. Bryan said his apartment complex had been understanding, allowing him to postpone his rent payments. He has tried to find odd jobs, with little success. If he does not receive government aid in the next week, he plans to start looking for work as a day laborer in construction, and he is considering moving somewhere more affordable with his partner and their 1-year-old daughter.

“I’m trying to stay pretty positive, but of course it’s rough,” he added. “Doubt creeps in — is there something more I could’ve done? Did I fail in not saving enough money? You beat yourself up about it.”

Even some of those back on the job are nervous. At the fast-casual restaurant chain where Chloe Spainhower works in Bellingham, Wash., managers only recently added a sneeze guard and many customers pass through without masks.

Her manager told employees that they could take a 30-day leave without pay, which is tempting to Ms. Spainhower. But she needs the money.

“I’m glad that I still have a job,” she said. “But I feel let down that my employer didn’t take things seriously at first.”

Tiffany Hsu contributed reporting, and Sheelagh McNeill contributed research.

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