1.5 Million Jobless Claims Filed Last Week

A State of Michigan Unemployment Agency office is seen in Cadillac Place that is currently closed because of COVID-19 in Detroit, Michigan on March 26, 2020. (Photo by JEFF KOWALSKY/AFP via Getty Images)
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The Department of Labor reported on Thursday morning that 1,542,000 unemployment claims were filed in the week ending on June 6.

The latest figure from the Labor Department marked the 10th straight weekly decline in applications for jobless aid since they peaked in mid-March when the coronavirus hit hard. Still, the pace of layoffs remains historically high.

The total number of people who are receiving unemployment aid fell slightly, a sign that some people who were laid off when restaurants, retail chains and small businesses suddenly shut down have been recalled to work.

Last week’s jobs report showed that employers added 2.5 million jobs in May, an unexpected increase that suggested that the job market has bottomed out.

But the recovery has begun slowly. Though the unemployment rate unexpectedly declined from 14.7%, it is still a high 13.3%. And even with the May hiring gain, just one in nine jobs that were lost in March and April have returned. Nearly 21 million people are officially classified as unemployed.

But that doesn’t capture the full scope of the damage to the job market. Including those the government said were erroneously categorized as employed in the May jobs report and those who lost jobs but didn’t search for new ones, 32.5 million people are out of work, economists estimate.

Thursday’s report also shows that an additional 706,000 people applied for jobless benefits last week under a new program for self-employed and gig workers that made them eligible for aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.

In February, the economy fell into a deep recession, according to the National Bureau of Economic Research, the association of economists that is the official arbiter of recessions. The Federal Reserve estimated Wednesday that the economy will shrink 6.5% this year. That would be, by far, the deepest annual contraction on records dating to World War II.

Even as restaurants, bars and gyms reopen, they are doing so at lower capacity. And consumer spending on such services remains far below what it was before the viral outbreak.

Unemployment benefits are providing significant support for jobless Americans, with total payments having reached $94 billion in May — six times the previous record set in 2010 just after the previous recession. This time, the benefits include an additional $600 a week from the federal government.

But that extra benefit is set to end July 31, and the Trump administration opposes extending it. Its opposition has set up a possible clash with House Democrats, who have approved legislation to extend the $600-a-week in federal benefits for an additional six months.

Republicans in Congress argue that the extra $600, which comes on top of state benefits that average about $375 nationwide, means many of the unemployed are receiving more money from jobless benefits than they earned at their old jobs. Republicans argue that this discourages people from returning to work.

Studies suggest that roughly two-thirds of the recipients are receiving total unemployment aid that exceeds their previous paychecks. But many workers are also wary about returning to their old jobs for fear of contracting the virus. And recipients who receive aid can lose their benefits if they turn down job offers.

Karin Jensen of Concord, California, has been out of work since being laid off from a managerial position with Men’s Wearhouse in late March. Jensen, 27, says she plans to return to her job whenever she is called back and is grateful that her company is continuing employee health care in the meantime.

Jensen acknowledged that receiving the extra $600 has made her less eager to return to work because she is among recipients whose total benefits exceed their former income. But she’s also worried about returning to retail work.

“I’d be in close contact with people,” Jensen said. “We have to measure customers, actually touch them. There’s no way we could do any minimum social distancing if we were to return to business as usual. I’m more than a little uneasy about it.”

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  1. Serious question: how bad is this number? And please, I’m not much of an economist, so do hope for some legit commentary to help my fecklessness.


  2. When will the revised numbers be released?

  3. It’s an improvement over the past month, hard to say if it’s “bad” or not. For one thing, claims should be dropping by this point as most companies would have already laid off their staff, and should be looking at re-hiring since we have begun the “reopening.” The fact that it didn’t drop farther makes me wonder why so many people are still just now hitting the unemployment line.

    Bottom line is we just don’t know. Cases are rising again in many states. As I’ve said before, you can’t simply will an economy to restart. Lots of people going out again, but what percent aren’t? If the “second wave” is as bad as it could be, we’re right back where we were in March. I don’t expect to see shutdowns in the manner we had before, but it will come down to how many people will essentially self-isolate, and that might be a considerable percentage.

    Stock market exuberance is completely unhinged from reality as pointed out by many people with more expertise than me (though the last 3 days suggest reality might be catching hold again).

    Personally, my company has re-opened and we are keeping all our employees on payroll because we got a PPP loan and we need to in order to qualify for forgiveness. But our business level is not pre-pandemic, and come July we may have to cut our staff. Those won’t be “temporary” layoffs. We have a loooooong slog to make it though for the rest of the year. FED says unemployment will be back below 10% by December, I’ll believe it when I see it. Way to many unknowns and variables.

    Long answer, sorry. How bad is it? It’s not great in my opinion. Lower yes, but we’re still adding. So I personally don’t see it as a great number.

  4. The June jobs report was a example of when your model that deals with incomplete data is thrust into a regime where it is no longer valid…

    This UI claims report is simply more evidence of that. I expect massive revisions to the June numbers when the July report comes out (first friday of the month, but will be the thursday the 2nd as the 3rd is a holiday)…

    I will be shocked at any number less than 17.5% for U3 and 25% for U6…

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