Economy

Nearly 30 Million People Are On Unemployment Again

JM Ashby
Written by JM Ashby

New, initial claims for unemployment benefits fell to 881,000 last week according to the Labor Department.

That's good, but that may also be the least important number in today's report.

The number of new claims fell by a significant amount, in part, because the Labor Department changed their methodology. Unadjusted claims actually increased last week.

The number of new applications for unemployment benefits fell sharply last week to a fresh pandemic low, but the entire decline stemmed from a major change in how the data is reported instead a big increase in people finding jobs. Without the change the labor market showed no progress. [...]

The Bureau of Labor Statistics said last week it would alter its adjustment process to make the report more accurate. The level of seasonally adjusted new claims has run notably higher than the real or actual number of people applying for benefits each week, a problem that became more pronounced in the past month.

The unadjusted or real number of new jobless claims, meanwhile, suggested there was barely any change last week in how many people are applying for benefits. They rose slightly to 833,352 from 825,761. It was the fifth straight week in which unadjusted claims have been below 1 million.

I'm not necessarily going to quibble over seasonal adjustments, but one thing we can say for sure is that long-term unemployment and permanent job losses are mounting.

Today's report tells us over 2 million additional people are currently receiving unemployment and, if you include gig-economy workers who fall outside state-based systems, the number of new claims actually jumped by over 100,000.

Adding in self-employed workers who filed under a separate federal program, actual or unadjusted new claims totaled 1.59 million last week. That marks a sizable increase from 1.43 million the prior week. [...]

Altogether, the number of people getting benefits through eight state and federal programs rose to an unadjusted 29.2 million as of Aug. 15 from 27 million in the prior week. The data is released with a two-week delay.

I think we can fairly infer and say that the increased number of people receiving benefits last month can be attributed to the expiration of every pandemic assistance program passed by Congress earlier this year.

The Congressional Budget Office (CBO) estimated that the pandemic unemployment program was supporting between 3 to 5 million jobs by itself by giving consumers money to spend. That program expired on August 1st so anyone who had a job that was only possible because of stimulus spending may have lost it.

You could be generous and say today's report from the Labor Department is genuinely good news, but I don't think there should be any doubt that things are still worse than they would be if Republicans in Congress were not categorically opposed to more stimulus spending. And the Trump White House can't be let off the hook, either. Republicans ultimately do what Trump says and Trump's point man in negotiations with congressional Democrats, his chief of staff Mark Meadows, has made it his personal mission to kill any compromise.

Republican opposition is baking in more long-term damage to the economy and vulnerable communities that will linger under the surface for years even once new claims for unemployment eventually fall to more "normal" levels.

I don't think we know what our future normal will look like yet and we probably won't after until a majority of the country is vaccinated against the coronavirus.

  • muselet

    1) If the Trump administration had responded quickly and effectively to Covid-19, the economy would probably have suffered a couple of quarters of job losses and slowed economic activity, as did European countries (and South Korea and Singapore and …). It didn’t, so here we are.

    2) Altering a long-standing method of adjusting unemployment numbers in the middle of a pandemic and a consequent increase in unemployment claims, even if statistically valid, smells fishy.

    3) It will take a very long time—and a lot of public investment—for the economy to recover. Expect Rs to fight fiercely against the gummint doing anything at all, apart from cutting taxes on high earners.

    –alopecia

  • Georgie

    Ugh, usually we’ve missed the worst of it up in Northern Minnesota, but we are even starting to feel it.