By Eric Morath
Filings for jobless benefits fell last week to their lowest
level since the coronavirus hit the U.S. in March, a sign layoffs
eased somewhat as the labor market tries to recover from economic
disruptions related to the pandemic.
Initial unemployment claims fell by a seasonally adjusted
249,000 to 1.2 million for the week ended Aug. 1, the Labor
Department said Thursday. The decline came as an extra $600 a week
in pandemic-related unemployment benefits ended.
Still, it was the 20th straight week applications were above the
pre-pandemic record of 695,000 in 1982.
The number of people receiving benefits through regular state
programs, which cover the majority of workers, also decreased, by
844,000 to 16.1 million for the week ended July 25. Those
continuing claims, reported with a week lag, fell to lowest level
"It's promising that initial unemployment claims number ticked
down, but we're certainly not out of the woods," said AnnElizabeth
Konkel, an economist at job search site Indeed.com "The magnitude
of layoffs is so much higher than in the pre-Covid era."
Before last week, applications had plateaued in recent weeks,
halting what had been a steady decline from a peak of 6.9 million
in late March.
Analysts were split on the degree to which the end of enhanced
unemployment benefits caused the decline in new applications.
Lawmakers and the White House continue to negotiate benefit levels
as part of a broader stimulus package.
"The elimination of those benefits -- which has gotten
widespread press coverage -- may have discouraged some works from
filing," Nancy Vanden Houten, economist at Oxford Economics, wrote
in a note to clients. "If that's the case, claims may increase when
those benefits are renewed."
Others disagreed. "For those who are unemployed, they need every
dollar possible...and claims numbers remain at extremely elevated
levels," said Andrew Stettner, a senior fellow at the left-leaning
Century Foundation who studies the unemployment system. He said
last week's drop wasn't large enough to attribute it to the cutoff
of the $600 weekly enhancement.
Without the $600 weekly boost, payments dropped to the level set
by states, which averaged $332.11 a week, for the 12 months ending
June 30, according to the Labor Department.
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.
That report will be a snapshot of the labor market in mid-July,
and won't reflect last week's decline in unemployment
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 Indeed.com.
"The labor market is still underwater," said Monica
Garcia-Perez, a labor economist at St. Cloud State University in
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.
However, some businesses say the decreased unemployment benefits
are spurring new job searches.
Patti Mellard, chief executive of Key Staffing in Topeka, Kan.,
said the employment firm has seen a rise in applicants in the past
week since the $600-a-week federal benefit ended. The company is
seeking to fill customer-service, accounting and warehouse jobs,
she said, adding that some prospective workers are concerned about
becoming ill with the virus or say they don't have available child
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 with the enhanced
"There are a lot of jobs to fill in Topeka," Ms. Mellard
However, thousands of others 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
"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."
Some workers who don't qualify for benefits under regular state
programs -- such as the self-employed, gig workers and 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-a-week enhancement.
Depending on individual circumstances, the programs can pay as
little as half of the regular state amount, or less than $150 a
week in some states.
The number applying for the largest of those programs fell last
week as well.
Write to Eric Morath at firstname.lastname@example.org
(END) Dow Jones Newswires
August 06, 2020 12:22 ET (16:22 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.