Elevated Jobless Claims Reflect Cooling Labor Market
October 22 2020 - 5:59AM
Dow Jones News
By Eric Morath
The number of people applying for jobless aid is expected to
have held nearly steady for the eighth straight week, a sign that
the summer's rapid labor market improvement cooled dramatically
this fall.
Weekly initial claims for unemployment benefits through regular
state programs have stabilized between 800,000 and 900,000 since
the last week of August, as fresh layoffs offset employment gains.
That level remains elevated above pre-pandemic peaks but is down
significantly from March, when the coronavirus pandemic and related
shutdowns triggered 6.9 million claims in a single week.
The number of people receiving benefits through state programs,
which cover most workers, has declined in recent weeks to the
lowest levels since late March. That is consistent with many
employers recalling workers furloughed earlier this year, and some,
such as online retailers and logistics firms, adding staff.
However, it could also reflect some long-term unemployed workers
losing eligibility for such programs, which typically are capped at
six months or less.
Companies ranging from American Airlines Group Inc. and United
Airlines Holdings Inc. to Walt Disney Co. and AT&T Inc.'s
WarnerMedia have announced job cuts in recent weeks, and those
layoffs might have affected filed claims last week. Meanwhile,
businesses such as restaurants, gyms and theaters are closing doors
due to what appears to be a prolonged-slump for services and
products that rely on public gatherings.
"The labor market recovery has stalled and might be beginning to
reverse, " said Alfredo A. Romero, economist at North Carolina
A&T State University. He expects the unemployment rate, which
was 7.9% last month, to stabilize near that level or increase until
a vaccine to combat the coronavirus is available.
"The economy has been allowed to open back up," he said. "But
the question remains if people will be willing to come back, to eat
a restaurant or shop at a mall, especially now that the colder
weather is coming and cases are rising."
The labor market broadly had a strong, but partial, rebound this
summer, regaining through September more than half the 22 million
jobs lost in March and April. But the pace of those gains eased in
recent months, and jobless claims figures indicate momentum is
slowing further. That is consistent with economists' expectations
of a prolonged period of slow recovery.
Most economists The Wall Street Journal surveyed earlier this
month said they didn't expect the labor market to claw back all the
jobs lost as a result of coronavirus-related shutdowns until 2023
or later. That was a slower timeline than economists predicted six
months ago.
While the number of posted jobs have increased from this spring,
they remain 15.3% lower than a year earlier, as of Oct. 16,
according to job search site Indeed.com.
Thursday's report from the Labor Department provides data on
regular state programs -- which have served as an economic
bellwether for a half-century -- as well as details from two
pandemic-specific programs first implemented in March.
The larger of those programs -- available to the self-employed,
gig workers and others not typically eligible for unemployment aid
-- paid benefits to about 11 million workers in late September,
according to the Labor Department. That number exceeded the 10.8
million receiving benefits from state programs in the same week,
which cover more than 140 million workers.
Analysts are skeptical about the figures for the new program. At
the end of last year, there were about 10 million self-employed
workers, according to the Labor Department.
A second pandemic program pays 13 additional weeks of benefits
to individuals who have exhausted regular unemployment benefits.
Enrollment in that program moved higher in recent weeks. That
suggests that some of the decline in state-benefit recipients
represents workers who have exhausted the maximum amount of
payments available through those programs.
Jeremy Terlecki, 37 years old, has been receiving unemployment
benefits since shortly after he was laid from an engineering job in
the oil-and-gas industry in Bakersfield, Calif. "Everything seemed
to be going well with the economy and my job, then it changed so
fast," he said. "Now jobs are difficult to find...I don't think
it's going to be an immediate comeback."
Mr. Terlecki moved with his 4-year-old daughter back to his home
state of Louisiana, in hopes of better job opportunities, and is
living with his sister. He said employers have expressed some
interest in hiring him, but he hasn't received an offer. He thinks
companies are waiting until after the presidential election or even
early next year before making commitments. Mr. Terlecki is
considering relocating again, to Houston, if he doesn't find work
soon.
"I'm trying to stay afloat but I'm paying $1,000 a month in
health insurance," he said. "That hurts."
Write to Eric Morath at eric.morath@wsj.com
(END) Dow Jones Newswires
October 22, 2020 05:44 ET (09:44 GMT)
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