Persistently High Unemployment Claims Point to Slowing Jobs Market
August 06 2020 - 05:59AM
Dow Jones News
By Eric Morath
New applications for unemployment benefits have held
persistently at high levels in recent weeks, suggesting layoffs
remain elevated as the coronavirus pandemic continues and the labor
market's momentum is easing.
Initial claims for jobless benefits have held roughly steady at
more than 1.3 million a week since late June, according to the
Labor Department. That halted what had been a swift decline from a
peak of 6.9 million in late March, when the pandemic and business
closures shut down parts of the U.S. economy. The level recorded in
recent weeks remains well above the highest on record before this
year, which was 695,000 in 1982.
Similarly, the number of workers receiving unemployment benefits
through regular state programs -- which covers the vast majority of
workers -- has plateaued near 17 million in recent weeks. The
stable number suggests that new hires and recalls of workers are
offsetting layoffs, but no longer significantly pushing down the
number on jobless assistance.
"The labor market is still in very unsure territory," said
Monica Garcia-Perez, a labor economist at St. Cloud State
University in Minnesota.
After employers shed 21 million jobs earlier this year, hiring
surged in May and June, adding a combined 7.5 million jobs,
according to the Labor Department. That was largely because workers
temporarily laid off were recalled, she said. Ms. Garcia-Perez said
gains aren't likely to persist at that rate, and the future path of
hiring will be closely tied to whether or not the virus is
controlled and people have confidence to resume normal activities.
"If we see a new wave of cases this fall and new restrictions,
you'll see layoffs move back up," she said.
The Labor Department will release its broadest picture of July
employment on Friday in the monthly jobs report. Economists
surveyed by The Wall Street Journal forecast the report to show 1.5
million jobs were added last month and the unemployment rate fell
to 10.6% from 11.1% in June. While those would be historically
strong gains, they would also be a marked slowdown from the pace of
the prior two months with unemployment still well above
pre-pandemic levels.
Other data also point to an easing of hiring. Payroll processor
ADP said Wednesday private-sector payrolls grew by 167,000 last
month. Employees reported for 1% more shifts in July from the month
before, a slowdown from a 5.9% increase in June and an 8.7% gain in
May, according to Kronos, a Massachusetts workforce management
software company. The number of job postings remains well below
last year, according to job-search site Indeed.com.
The figures collectively indicate many people are still losing
their jobs months after the pandemic-induced economic downturn
began.
Shana O'Mara has been receiving unemployment benefits since
early July, after the expiration of a government loan that was
sustaining her Tempe, Ariz., travel agency. She stopped drawing a
salary from her business to keep it alive, but has continued to
work without pay helping customers rebook and cancel trips.
She said her most recent weekly unemployment benefit payment
fell to $214 after taxes, from $748 the preceding week, reflecting
the July 31 expiration of an additional $600 in pretax federal
benefits.
"I don't think anyone can live on $800 a month," she said. Her
family has stopped ordering takeout, and she called her auto lender
and credit-card issuers asking for deferrals. She said the enhanced
benefits allowed her to keep serving her clients, rather than seek
out a job. For now, she is trying to keep her business, the Pixie
Planner, afloat until more customers want to travel to Disney World
and board cruise ships.
"It's hard to see the end of this," she said. "And it's
especially frustrating because it doesn't feel like we have the
support of our government."
Still, some businesses say they are struggling to find workers
despite historically high unemployment.
Key Staffing in Topeka, Kan., is seeking to fill
customer-service, accounting and warehouse jobs, said Chief
Executive Patti Mellard. She said the staffing firm has seen an
increase in applicants in the past week since unemployment benefits
have been reduced. But she said some prospective workers are
concerned about becoming ill with the virus or say they don't have
available child care.
One option is customer-service jobs, which can be done at home.
Those jobs start at $12 to $15 an hour, she said. That is slightly
less than a person would have received on enhanced unemployment
benefits that expired at the end of July.
"There are a lot of jobs to fill in Topeka," Ms. Mellard
said.
Some workers who don't qualify for benefits under regular state
programs -- such as the self-employed, gig workers, parents who
can't find child care -- are able to tap unemployment benefits
under a law passed in March. Those programs continue through the
end of the year, but at a lower payment level with the expiration
of the $600 enhancement.
Nearly the same level of workers received aid last month through
pandemic programs as regular state programs.
--Kim Mackrael contributed to this article.
Write to Eric Morath at eric.morath@wsj.com
(END) Dow Jones Newswires
August 06, 2020 05:44 ET (09:44 GMT)
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