By Eric Morath
The labor market's recovery is showing fresh signs of losing
momentum as persistently elevated applications for unemployment
benefits show layoffs remain historically high despite summer
Weekly initial claims for jobless benefits fell by 33,000 to a
seasonally adjusted 860,000 in the week ended Sept. 12, the Labor
Department said Thursday. The number of people collecting
unemployment benefits through regular state programs, which cover
most workers, decreased by 916,000 to about 12.6 million for the
week ended Sept. 5.
The coronavirus pandemic and related shutdowns caused both
unemployment applications and payments to rise to the highest
levels on record back to the 1960s this spring.
After sharply falling later in the spring and early summer, new
applications have largely held steady since early August. The
declining number of people receiving state benefits likely reflects
that workers are finding new jobs, or are being recalled to old
ones. But it also shows some workers who applied for benefits in
March have hit the six-month limit set in many states.
Both figures remain above any recorded level before this
"While there is some rehiring going on, longer term labor market
scarring is occurring as well," said AnnElizabeth Konkel, economist
at job search site Indeed. She added the economy has improved
substantially since spring but "a fuller labor market recovery
appears to have stalled out."
The labor market has partially recovered from the severe
downturn caused by the coronavirus pandemic and related shutdowns
of businesses. Employers through August have replaced about 11
million jobs of the 22 million shed in March and April at the
beginning of the pandemic. But the pace of hiring slowed later in
the summer, and layoffs have remained persistent.
Companies from bakery chain Maison Kayser to apparel company
Under Armour to hotel operator Marriott International Inc. are
among those warning of job cuts in recent weeks. Still, layoffs
this summer were more than offset by hiring. And Amazon.com Inc.
this week said it plans to hire 100,000 additional employees in the
U.S. and Canada.
The Labor Department's weekly unemployment-benefits report
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 14.5 million workers in the week ended
Aug. 29, on an unadjusted basis, according to the Labor Department.
However, analysts are skeptical about that figure. It exceeds the
number of people paid under state programs, which insure about 146
million workers. At the end of last year, there were about 10
million self-employed workers, according to the Labor
State reporting and accounting errors are causing the Labor
Department to overstate the figure, said Andrew Stettner, senior
fellow at the left-leaning Century Foundation who studies the
unemployment system. He estimated about 10 million people are being
paid benefits under the program. He said such errors are to be
expected from a new program that was set up quickly.
The Labor Department is monitoring Pandemic Unemployment
Assistance claims data to identify potential anomalies and is
working with states where the claims load appears to be overstated,
a spokesman said.
The Pandemic Unemployment Assistance program is also more
susceptible to fraud, said Wayne Vroman, an economist at the Urban
Institute, who also studies unemployment. While state unemployment
programs are tied to businesses' tax records, the pandemic program
asks self-employed workers to report their own income and other
information, opening the system up to abuse.
"There has to be a lot more fraud," Mr. Vroman said. "Eventually
you're supposed to verify eligibility against individual tax forms,
but I don't think states have time to check on accuracy of the
A second pandemic program pays 13 additional weeks of benefits
to individuals who have exhausted their regular unemployment
benefits. Enrollment in that program rose to 1.5 million in the
Aug. 29 week, its highest recorded level. That is consistent with
recipients migrating from state programs, where enrollment is
A high number of workers tapping those emergency benefits shows
many workers, particularly those that held part-time positions and
those with jobs tied to still sparsely populated downtowns, malls
and universities, are vulnerable, said Bradley Hardy, an economist
at American University in Washington, D.C.
"Unemployment is down from its peak, but I remain concerned," he
said. "If you have the flu season combined with a potential second
wave, I'd be concerned about forecasting continued improvement in
the job market."
In addition to the emergency programs, Congress had authorized
federal funding for an extra $600 a week in unemployment benefits
on top of amounts paid by states. Those benefits expired at the end
of July. In early August, President Trump issued an executive
action allowing states to tap $44 billion disaster-relief funds for
$300 a week in enhanced aid.
Since then, the Federal Emergency Management Agency has
distributed more than $35 billion in funds to 49 states, Guam, the
U.S. Virgin Islands and the District of Columbia, an agency
representative said Wednesday. South Dakota didn't seek the funds.
States are authorized to make the $300 enhanced payments for no
more than six weeks.
While unemployment remains elevated, demand for labor is
increasing in some industries, said Karen Fichuk, chief executive
of Randstad North America.
She said her company is seeing more placements at
auto-manufacturing firms, companies tied to loan refinancing, and
at warehouses and call centers, the latter two reflecting growth in
online shopping. Randstad has 13,500 open positions, including
entry-level warehouse jobs that start at $12 an hour and
call-center jobs that can be done from home and pay as much as $20
The staffing firm is offering training to those who lost jobs in
the hard-hit hospitality industry. Ms. Fichuk said their
customer-service skills make those workers good fits at call
"We are seeing a lot of momentum," she said. "There's still
decreased employment in some areas, but there are plenty of pockets
Write to Eric Morath at firstname.lastname@example.org
(END) Dow Jones Newswires
September 17, 2020 10:33 ET (14:33 GMT)
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