Unemployment Claims Expected to Continue Easing
May 28 2020 - 5:59AM
Dow Jones News
By Eric Morath
Applications for unemployment insurance are expected to have
declined last week for the eighth straight decrease, but the number
of workers seeking assistance remains about 10 times higher than
before coronavirus-related lockdowns began in March.
Many economists see the pace of layoffs slowing, with all states
taking some steps to let businesses reopen and citizens to move
more freely. But they also expect a labor-market recovery to take
many months, if not years, to replace the tens of millions of jobs
lost since February.
Weekly unemployment claims -- a proxy for layoffs -- have held
above 2 million jobs since mid-March, breaking records dating back
to the late 1960s. The number of workers initially seeking jobless
benefits peaked at a seasonally adjusted 6.9 million for the week
ended March 28, and has eased since to around 2.5 million in recent
weeks.
The number of Americans receiving jobless benefits, also known
as continuing claims, topped 25 million this month. The record
prior to this year was 6.5 million in 2009, near the end of the
last recession.
A continued high level of jobless-benefit applications indicates
that retailers, factories, municipal governments and other
employers are laying off more workers, and that Americans out of
work for weeks are managing their way through overwhelmed state
systems. However, rising claims no longer necessarily means
unemployment rising further because new job losses are increasingly
offset by workers being recalled or otherwise finding
employment.
"I think we've hit the bottom, as far as layoffs," said Marianne
Wanamaker, a labor economist at the University of Tennessee, adding
that she doesn't yet see rapid hiring. "People should be starting
to come off unemployment insurance...auto factories and suppliers
have called back workers and you're seeing states that shut down
construction allowing those projects to restart."
Tents Unlimited, an event-rental company in Torrington, Conn.,
recently recalled three laid-off workers after it qualified for a
federal loan and the state allowed restaurants to start serving
patrons outside last week. That caused a rush in orders for tents
and tables, said Brittany Sherwood, who owns the business.
The company still has one employee who hasn't been recalled and
has forgone hiring about six temporary workers it would have needed
-- had the coronavirus pandemic not happened -- to staff the usual
crush of spring weddings and corporate events.
"It's going better -- it was pretty bleak before," Ms. Sherwood
said. The restaurant orders don't replace all the lost work "but it
helps pay the bills." The company's sales are still down 80% from
last year, but she is hopeful it can survive until 2021, which she
expects to be a spring busy with rebooked weddings.
Economists typically look at jobless claims as a measure of very
recent layoffs, but the data has become a less reliable indicator,
said Donald Grimes, a labor economist at the University of
Michigan.
The recent data is counting up workers who struggled for weeks
to file for benefits and those previously jobless who are enticed
by enhanced payments and expanded eligibility, he said.
Some of those applying last week may have applied earlier and
been rejected. Others may have been jobless before March.
The primary claims totals exclude hundreds of thousands of
self-employed and gig-economy workers receiving unemployment
benefits for the first time through a temporary coronavirus-related
program. The omission of self-employed workers means the actual
number of workers seeking claims has been higher since the federal
program -- called pandemic unemployment assistance and included in
a stimulus package approved in late March -- got under way.
Many states have only started paying benefits through that
program in recent weeks.
"Claims are likely to remain high for some time, even as the
economy improves, because there is such a backlog," Mr. Grimes
said. He and colleagues project the pandemic-related shock will
result in about 30 million total jobs lost, with about a third of
those returning during the summer months.
Write to Eric Morath at eric.morath@wsj.com
(END) Dow Jones Newswires
May 28, 2020 05:44 ET (09:44 GMT)
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