As usual, most of the national media reporting on the sharp rise in new unemployment insurance benefit claims in state programs last week failed to mention, or only noted in passing, that new claims also rose significantly in the federal Pandemic Unemployment Assistance program that covers self-employed and gig workers ineligible for state benefits. Much of the coverage erases these latter workers altogether, distorting the actual situation.
For the week ending Dec. 5, the U.S. Department of Labor reported Thursday that new state claims soared 137,000 to a seasonally adjusted 853,000. New claims under the federal program climbed 139,000 to 428,000 for a total of 1.28 million, a rise over the previous week of 27%. As noted here last week, the surge in additional new claims was expected because the surge in COVID-19 cases has forced several states to impose or reimpose restrictions on economic activity and that means more furloughs or layoffs.
Said Daniel Zhao, senior economist at job placement site Glassdoor: “The surge in initial claims is especially concerning when claims are still above levels near the peak of the Great Recession.”
Nela Richardson, chief economist at human-resources software firm Automatic Data Processing Inc. said “We’re seeing a cooling trend in the labor market, with rising layoffs. That’s concerning because a lot of the unemployment benefits these folks are applying for expire at the end of the year.” Last month’s growth in jobs was the slowest since April, and Richardson noted that a return to job losses this winter “can’t be ruled out if we’re seeing a surging pandemic causing states to take steps to roll back the reopening process.”
Robert Frick, corporate economist at Navy Federal Credit Union, said, “Given COVID-19 cases and deaths are now regularly setting new highs, these reports put into question job growth in December, especially given the rapid slowdown in growth in November."
While vaccines promise better days ahead in 2021, the virus is going to add to the grim toll it has already exacted, killing and causing long-term health problems for tens of thousands of people over the next few months. A grim economic toll lies ahead as well.
Even if a new financial relief package is approved by Congress before year’s end, millions long ago exhausted their savings, and many have resorted to making do with loans from family or friends, an unsustainable course of action. Without an extension of the limit on how long someone can collect unemployment benefits, workers who have been jobless the longest this year will exhaust those benefits the day after Christmas. According to a report by Andrew Stettner and Elizabeth Pancotti at the Century Foundation, 4.4 million workers had already exhausted their benefits last month. They also found that some 12 million workers will lose PUA or benefits from another federal emergency program when these expire on Dec. 26.
Heidi Shierholz at the liberal-leaning Economic Policy Institute writes:
It’s important to remember that UI is great stimulus. Reinstating and extending pandemic UI provisions would create or save more than five million jobs. November jobs data were released last Friday, showing that there were 26.1 million workers who were unemployed or otherwise out of work because of the virus, or who have seen a drop in hours and pay because of the pandemic. And job growth has slowed dramatically. Stimulus is desperately needed.
A national eviction moratorium issued by the Centers for Disease Control has not stopped the flood of evictions, and people who have managed to keep a roof over their heads without paying rent face eviction or huge back-rent bills when the moratorium expires. The queues at food banks have gotten longer. Many lost their health care coverage when they lost their jobs. Come the time we can get back to some semblance of normality—scientists put that at 6-12 months—millions of workers are going to have accumulated a huge pile of debt that they’ll be carrying with them for years to come.
It didn’t have to be this way. With more timely government relief, much of the economic damage afflicting the nation could have been prevented. It’s now left to the Biden-Harris administration to come up with ways to repair that damage, always more difficult than preventing it from happening in the first place.
Note: When the Government Accountability Office scrutinized Labor’s previous report, it found flaws in how continuing claims were reported. It recommended that the department pursue means of getting a more accurate count and also point out in each week’s press release that the continuing claims count is not of unique claims. The disclaimer included as a footnote this today: “Continued weeks claimed represent all weeks of benefits claimed during the week being reported, and do not represent the number of unique individuals filing continued claims.”