A year ago 6 million people applied for unemployment. They are still near pre-pandemic heights
A person walks under a marquis to an enclosed Paramount theater in Oakland, California on February 12, 2021.
JOSH EDELSON | AFP | Getty Images
It’s been a year since jobless claims peaked in nosebleeds, signaling the depth and severity of the Covid downturn.
However, according to labor economists, unemployment benefit entitlements continue to exist at rates that would be considered high by the standards of previous recessions.
“They are still a weekly reminder of how severe this crisis was and how deep the economic damage continues,” said Daniel Zhao, senior economist at Glassdoor, a job and recruiting site.
More from Personal Finance:
Here’s how to deal with Uncle Sam’s big tax bill
A Biden tax plan can lead to more Roth retirement accounts
The new career prospects for college graduates look promising for the 2021 class
New entitlements to government benefits were around 741,000 last week through April 3, the Labor Department said Thursday. (The data does not include an adjustment for seasonal factors.)
That’s 18,000 more than the previous week, and claims have increased for the second week in a row.
By comparison, nearly 6.2 million Americans filed an initial application for unemployment benefit in the same week last year, according to the Labor Office.
Never before had the country seen this flood of claims in such a compressed time frame.
Initial claims were around 200,000 a week before mid-March 2020 when officials began issuing lockdown and residency orders to help contain the coronavirus outbreak.
“You’re dealing with a whole different set of initial applications,” said Stephen Wandner, a senior fellow at the National Academy of Social Insurance and a former actuary with the Department of Labor. “In a year we’re no more than 6 million, but we’re not anywhere near recovery either.”
Before the pandemic, the peak was just under 700,000 in October 1982, when seasonal factors such as vacation and winter layoffs were taken into account.
The Department of Labor changed its seasonal methodology during the pandemic, making comparisons with previous recessions difficult. According to labor economists, however, the numbers are high by historical standards.
“The numbers are still exceptional,” said Wandner. “The highest previous number was around 700,000, and that’s across any post-war recession.”
Another 152,000 people filed a new application last week for assistance with Pandemic Unemployment, a federal program for the self-employed, gig workers, and others created by the CARES Act.
The nation’s economy is not yet fully open and the pandemic is not yet over.
Senior Economic Analyst at Bankrate
Demands have remained stubbornly high, even if an economic recovery seems to be gaining momentum.
The US created 916,000 jobs in March, and the national unemployment rate fell to 6%, according to the Bureau of Labor Statistics, which released its monthly job report on Friday.
The employment report is encouraging and offers a more reliable economic indicator than unemployment claims, said Zhao.
Damage data was a strong early indicator of the onset of the pain pandemic to come. However, they are more administrative in nature than economic, as they may be influenced by persistently high fraud rates and the relative capabilities of states to process applications, he added.
“I would say it’s a little worrying, but I don’t pull the fire alarm,” he said of the weekly unemployment claims.
Still, it is somewhat surprising why unemployment claims have not rebounded like employment numbers, Zhao said.
The momentum suggests persistent volatility in the labor market as people continue to get in and out of work and get laid off, economists said.
The numbers are likely to improve as vaccinations continue and business restrictions continue to mount across the country, economists said. However, some industries may not recover as quickly.
Business travel, for example, is unlikely to recover immediately – a dynamic that is likely to impact hotels and other sectors that rely on such travelers, Wandner said.
Overall, according to the Bureau of Labor Statistics, there are 8.4 million fewer jobs available than before the pandemic. Leisure and hospitality industries make up more than a third of this hole.
“The country’s economy is not yet fully open and the pandemic is not yet over,” said Mark Hamrick, senior economic analyst at Bankrate.
According to the Department of Labor, more than 18 million people continue to receive unemployment benefits through various programs.
The American rescue plan, a $ 1.9 trillion Covid relief measure signed by President Joe Biden last month, extends employee benefits through Labor Day and offers an additional $ 300 per week.
“We expect them to fall,” Zhao said of people seeking unemployment benefits. “But we also expected them to fall for a while and haven’t seen the improvement that we would expect.”