US workers are still massing on the unemployment lines. Last week, 898,000 Americans filed for jobless claims, which is the highest number since August 22. In contrast, Dow Jones economists predicted 830,000 jobless in the period. The higher figure means the labor market remains struggling to return to normal. The previous week’s numbers were 845,000. Pre-pandemic, unemployment claims were highest at 695,000.
Rebounding Economy, But Very Slowly
The economy is rebounding, albeit at a slower pace. Some 11.4 million positions returned, or about half those who lost jobs. While the unemployment rate is down to 7.9%, it remains more than double the pre-pandemic level. The four-week moving average of continuing claims fell by 682,250 to 11.48 million. The insured unemployment rate dropped 0.9 percentage points to 6.8%.
First-time recipients of unemployment benefits decreased to 372,981. The Pandemic Unemployment Assistance Program provides aid to freelancers and independent contractors. Recipients under the PUAP accounted for more than half of beneficiaries as of Sept. 26. Those availing emergency claims benefits increased by more than 800,000 at the same time. Total beneficiaries declined by 200,000, from 25.5 million to 25.3 million.
Citigroup economist Andrew Hollenhorst noted that “Although the absolute level of claims remains well above the pre-pandemic level, the declining trend of continuing claims is more important to watch. The decline in claims over the past few weeks, even after netting out those who transferred to federal PEUC, is encouraging, pointing to still-robust rehiring in late September, and should continue into Q4.”
The state of California affected an accurate count of claims. Its local employment agencies have stopped processing claims while it clears its backlogs. At the same, it is looking at ways to prevent fraud through new technology. The Labor Department began using 225,000 for the state, which was the latest count before it stopped.
Unemployment Supposedly Temporary, Now It’s Permanent
While millions of Americans returned to work over the last few months, a few million remain at home. 13 million US workers remain jobless, which is almost double the pre-pandemic levels.
Analysts worry that a growing percentage of lost jobs are becoming extinct. By definition, job loss is those positions that remain unfilled beyond six months. Economists say that this alarming trend carries negative financial effects. This includes lost income, remote opportunities, and lower earnings if ever they get a new job.
They are less likely to withstand the eventual hardships of losing jobs now. Behnaz Mansouri of the Unemployment Law Project sees the impact. He said: “The impacts [this] will have on the community are tremendous.”
Most people expected unemployment as temporary. Businesses thought that by June, offices, and shops will reopen and jobs will come back. About 80% of workers laid off during the pandemic, expected to get back to work. This represents about 18 million workers. By September, there are still 4.6 million Americans waiting for their jobs to come back.
Those called back to report for duty helped bring unemployment levels down to 7.9%. At the height of coronavirus in April, the unemployment rate is 14.7%. Yet, permanent job loss grew in September by 345,000 to 3.8 million, according to the Bureau of Labor Statistics. This dwarfs pre-pandemic levels by 2.5 million. Economists say that layoffs once thought temporary are now permanent.
Jobs won’t be back until 2023 – at least
50% of economists polled by the Wall Street Journal said they expect the market to regain all jobs only by 2023. Businesses and governments learned their lessons on reopening the economy. States, aware that the virus is still out there, are more cautious in lifting restrictions. Many industries, including travel and tourism, and hospitality, remain limited operations-wise. Consumers themselves have stayed away. Many altered their spending habits and have yet to get back to their old spending habits. Job recovery now becomes dependent on demand. Businesses will have to make a decision if reopening now would make sense. Without a clear path to conquering coronavirus as of now, jobs may be taking a backseat.
Watch this as CNBC reports that October 10 weekly jobless claims come in at 898,000, higher than the expected number of 830,000:
Business owners of the Capitalist, have you fully reopened your business yet? Have you filled up your job lineup, or are you taking it slow? Share with us what you think the business needs to do at this point.