US layoffs remain elevated as 898,000 seek jobless aid
WASHINGTON (AP) — The number of Americans seeking unemployment benefits rose last week by the most in two months, to 898,000, a historically high number and evidence that layoffs remain a hindrance to the economy’s recovery from the pandemic recession.
Thursday’s report from the Labor Department coincides with other recent data that have signaled a slowdown in hiring. The economy is still roughly 10.7 million jobs short of recovering all the 22 million jobs that were lost when the pandemic struck in early spring.
Confirmed coronavirus cases
have been rising again nationwide in the past month, likely causing more
Americans to hold back from eating out, shopping and engaging in other
commerce. Cases have spiked in Wisconsin, for example, prompting renewed
restrictions on business in Milwaukee and Madison.
Across the
country, applications for unemployment aid are rising while negotiations
over a new stimulus package between House Speaker Nancy Pelosi and
Treasury Secretary Steven Mnuchin remain mired in a stalemate.
The job search website Indeed said its job postings were unchanged
last week, remaining about 17% below last year’s levels. Many employers
still aren’t confident enough in their businesses or in their view of
the economy to ramp up hiring. Job postings had rebounded steadily over
the summer, but the gains have slowed in the past two months.
“Further
recovery looks to have stalled out,” said AnnElizabeth Konkel, an
economist at Indeed. “Holiday hiring is sluggish, and many businesses
need to make significant changes to ride out the colder months.”
California,
which typically accounts for about one-fourth of the nation’s jobless
aid applications, has reported the same number of claims for several
weeks as a placeholder. That’s because it temporarily stopped processing
new applications while it implements anti-fraud technology and clears a
backlog of claims.
That means jobless claims rose nationally last
week even though they were unchanged in the largest state. Applications
rose significantly in 17 states, including Florida, Georgia, Illinois,
Indiana and Massachusetts. In Wisconsin, they increased by a quarter to
nearly 15,000.
Fraud and issues around double-counting claims have caused many economists to take a more skeptical view
of whether jobless aid applications are a precise barometer of layoffs.
But most still see an increase in claims as a discouraging sign even if
the level may be inflated by people who have filed multiple
applications for different programs.
A report
Thursday from Moody’s Analytics, a forecasting firm, and Morning
Consult, a polling outfit, found that millions of people remain
dependent on government aid. Roughly half of respondents in a survey
last month said they were still using their $1,200 stimulus checks,
which the government distributed in April and May, to pay for expenses.
About 15% said they were relying on unemployment benefits.
More
than 40% of the unemployed are also relying on financial help from
relatives or friends. And 12 million households say they aren’t sure
they will be able to keep making their mortgage payments.
The
government’s report Thursday, showing that initial requests for jobless
aid rose 53,000 last week, also said the number of people who are
continuing to receive benefits dropped 1.2 million to 10 million. That
decline signals that many of the unemployed are being recalled to their
old jobs. But it also means that potentially even more people have used
up their regular state benefits — which usually expire after six months —
and have transitioned to extended benefit programs that last an
additional three months.
Indeed, the number of people receiving
extended benefits in late September, the latest data available, jumped
800,000 to 2.8 million. The government also said 373,000 people applied
for jobless aid under a separate program that made the self-employed,
contractors and gig workers eligible for unemployment benefits for the
first time.
That figure was 90,000 lower than in the previous
week. These figures aren’t adjusted for seasonal trends, so the
government reports them separately from the traditional jobless claims.
Nearly
all jobless benefit recipients are now receiving only regular state
unemployment payments because a federal weekly supplement of $300 has
ended in nearly all states. A $600-a-week federal benefit expired over
the summer.
The end of federal aid for the unemployed will likely
force many of the jobless to sharply cut their spending, thereby
weakening the economy. The full impact may have been delayed, though, by
the fact that most of the federal aid was saved or was used to pare
debt, according to research by the Federal Reserve Bank of New York.
According
to the New York Fed, at the end of June nearly one-quarter of jobless
aid payments had been saved. Nearly half were used to pay down debt.
Just 28% of the money was spent.
And more than one-third of the
$1,200 stimulus checks that went to most adults was saved, with an
additional one-third of that money used to pay off debt.
The end
of the federal payments has also underscored the dramatically uneven
nature of unemployment benefits across states. In Arizona, for example,
the maximum weekly payment is only $240, while in neighboring California
it’s $450. In Florida and Tennessee, the maximum is just $275. In New
Jersey, the top weekly benefit is $713.
Nationwide, on average,
unemployment benefits replace about 33% of what recipients earned at
their previous job. That is down from 36% in 2009.
“It is a
steady downward trend,” said Andrew Stettner, a senior fellow at the
Century Foundation. “The formulas have gradually gotten more stingy.”
Some
of the lowest benefits are provided in states where Black Americans
make up the largest proportion of jobless aid recipients. In
Mississippi, for instance, 54% of unemployment aid recipients in August
were Black, according the Century Foundation. The maximum benefit in
that state is $235 a week. Black Americans are much more likely to work
in restaurants, retail stores, hotels and other industries that have
suffered enormous job cuts.
In South Carolina, more than one-third of people receiving unemployment aid are Black. The maximum benefit is $326.