803,000 Americans Filed For Unemployment Last Week: 70 Million Sought Unemployment Benefits Since The Pandemic
The good news is that the number of people filing for first time unemployment benefits fell last week. According to the Department of Labor’s report on Wednesday, the amount of people seeking unemployment claims- 803,000 -remains stubbornly high.
Last week’s numbers were lower than prior weeks but still far greater than 2019 at this time, which was 218,000 people filing initial claims. If you back out the DoL’s seasonal adjustments-a model that is more predictive than based on actual counts-the number of people filing for unemployment would be at around 869,398.
In addition to these figures, about 397,511 workers filed for unemployment benefits under the Pandemic Unemployment Assistance program. This program was created during the pandemic to provide assistance to gig-workers, the self-employed and contractors. When you add the two groups together, roughly 1.3 million Americans filed for first time jobless claims last week.
Economists contend that the unemployment rate remains stubbornly high due, in part, to the U.S. coping with an uncomfortable increase in Covid-19 cases and deaths. States have called for business shutdowns and strongly advised people not to travel or congregate in large numbers. The resurgence of the disease and accompanying lockdowns is not conducive for a healthy business climate. It forces companies to retrench, lay off or furlough personnel and hold-off on any new hiring.
We can take a small measure of comfort that, although the unemployment data looks dark, it’s substantially down from the March and April zenith of nearly 7 million losing their jobs. Sadly, a staggering, almost incomprehensible amount of people filed for unemployment since the start of the pandemic-70 million Americans which represents about 40% of the entire labor force. Over 20 million Americans are receiving some sort of jobless benefits as of the first week in December. The same time period last year there were only 1.7 million filing continuing claims.
There were high hopes that the $900 billion Covid-19 relief package that was passed by Congress would be signed by President Trump this week. The funds, in addition to the $2.3 trillion federal budget for 2021, was seen as a smart way to stimulate the economy. The firehouse flow of money in the economy would lead to businesses faring better. They’d start bringing back furloughed workers and hire new talent.
President Trump pushed back on the exorbitant amount of money going to foreign countries saying that it’s much needed at home. Trump also demanded $2,000 checks going to families instead of the previously agreed to $600 per person. He said he won’t sign off on the piece of legislature unless Congress meets his demands and enacts the changes.
This may cause additional pressure on companies to hold off on hiring until there is greater clarity and certainty. A major part of the Covid-19 relief bill includes another round of the Paycheck Protection Program (PPP). This entails the federal government backing billions of dollars in loans that would be underwritten by banks with the requirement that companies must retain employees for a specified time period. Without the PPP, businesses may hold off on hiring and continue downsizing workers.
Given the trajectory of the last nine months, it’s reasonable to conclude that hiring will be soft and layoffs will continue until the vaccines are rolled out and proven effective. Once Covid-19 is “crushed” and remains beaten down for a while, we’ll most likely see the “animal spirits’’ kick in. Businesses will commence aggressively hiring again as we get closer to returning to a more normal economy and stronger job market. This may take some time. Hopefully, by the second quarter of 2021 we’ll be at the beginning of the end of the pandemic era and looking forward to a new, exciting growth-oriented environment characterized by optimism and the unleashing of pent up demand for hiring people.
Originally published at https://www.forbes.com.