Steady Number of Unemployment Claims Points to Slowing Jobs Recovery

Steady Number of Unemployment Claims Points to Slowing Jobs Recovery

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Some companies warned of job cuts in recent weeks, while layoffs this summer were more than offset by the recalling of workers and new hiring. A Target store advertised jobs on Sept. 2.



Photo:

Gene J. Puskar/Associated Press

The number of people applying for jobless aid is expected to have held at a historically high level last week, as layoffs remain elevated despite signs of a broader labor-market recovery.

Weekly initial claims for jobless benefits through regular state programs have stabilized just below 900,000 in recent weeks. That is well down from the 6.9 million weekly claims filed in late March but remained above the highest level before this year in records going back to the 1960s. Similarly, the number of workers receiving unemployment payments has declined this summer but remained well above pre-coronavirus pandemic levels.

The decreased number of unemployment rolls covered by regular state programs—which covers most workers—indicates some laid off workers are finding new employment or are being recalled. However, the decrease could also reflect benefits that are expiring for others. Many states offer up to six months in jobless benefits, so those who applied in March could be losing those benefits and would need to shift to other emergency programs.

“Unemployment is down from its peak, but I remain concerned,” said Bradley Hardy, an economist at American University in Washington, D.C. He added that part-time workers and those with jobs tied to still sparsely populated downtowns, malls and universities are particularly vulnerable. “If you have the flu season combined with a potential second wave, I’d be concerned about forecasting continued improvement in the job market.”

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 the recalling of workers and new hiring.

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 million workers in recent weeks, according to the Labor Department. However, analysts are skeptical about that figure, which has recently exceeded the number of people paid under state programs, which insures about 146 million workers. At the end of last year, there were about 10 million self-employed workers, according to the Labor Department

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 U.S. unemployment rate shot up faster than in any other developed country during the pandemic. WSJ explains how differences in government aid and labor-market structures can help predict how and where jobs might recover. Video/Illustration: Jaden Urbi/WSJ

University of Illinois labor economist Eliza Forsythe found that states’ monthly reports to the Labor Department showed the amount paid out in dollars for pandemic beneficiaries implied fewer individuals are receiving payments than are appearing in the weekly data. That could show states are catching potentially fraudulent claims before they are paid, she said, but it could also suggest bureaucratic problems in issuing payments.

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.


‘Unemployment is down from its peak, but I remain concerned.’


— Bradley Hardy, an economist at American University

“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 income reporting.”

A second pandemic program pays 13 additional weeks of benefits to individuals who have exhausted their regular unemployment benefits. Enrollment in that program has exceeded 1 million in recent weeks, consistent with recipients migrating from state programs.

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.

The labor market has partially recovered from the severe downturn caused by the coronavirus pandemic and related business shutdowns. An Illinois warehouse in August.



Photo:

Olivia Obineme/Bloomberg News

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 spokesperson 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 an hour.

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 centers.

“We are seeing a lot of momentum,” she said. “There’s still decreased employment in some areas, but there are plenty of pockets of opportunity.”

Write to Eric Morath at eric.morath@wsj.com

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