US jobless claims rise for second straight week

The second consecutive rise in claims for state unemployment benefits signals US jobs market recovery is stalling.

The fragile US labour market recovery is faltering as a spike in COVID-19 infections in some parts of the country derails plans to reopen local and state economies [File: Mario Anzuoni/Reuters]
The fragile US labour market recovery is faltering as a spike in COVID-19 infections in some parts of the country derails plans to reopen local and state economies [File: Mario Anzuoni/Reuters]

More than 1.4 million workers in the United States applied for state unemployment benefits last week, in the latest sign that the fragile labour market recovery is stalling as virus cases surge in parts of the country.  

This is the second consecutive rise in state weekly jobless claims – a proxy for layoffs – since the labour market tanked in March, as coronavirus lockdowns shut businesses and threw tens of millions of people out of work. 

The labour market had started showing signs of recovery as states eased their lockdown restrictions. But a spike in cases of COVID-19 infections has led many states to halt plans to reopen businesses, causing millions of consumers to delay their return to travelling, shopping and other normal economic activity.

Those trends have forced many businesses to cut jobs or at least delay hiring.

The Labor Department’s report on Thursday marked the 19th straight week that more than one million people have applied for state unemployment benefits. Before the coronavirus hit hard in March, the number of Americans seeking unemployment checks had never exceeded 700,000 in any one week, even during the Great Recession.

Nobody gets back to you.

Miranda Meyerson, 38, on applying to jobs

All told, 17 million people are collecting traditional, state jobless benefits, a sign that unemployment checks are keeping many American families afloat financially at a time of big job losses and agonising economic uncertainty.

The pain could soon intensify: A supplemental $600 in weekly federal unemployment benefits effectively expired last week, and Congress is squabbling about extending the aid.

Democrats want to extend the federal weekly $600 top-up through January, while Senate Republicans want to slash it to $200 for two months, after which state and federal benefits would combine to achieve 70 percent wage replacement for jobless workers, with a cap of $500 on the federal supplement. 

“The spending made possible by the $400 that the Senate wants to cut is supporting 3.4 million jobs,” Heidi Shierholz, senior economist at the progressive-leaning Economic Policy Institute, wrote in a blog post on Thursday. “If you cut the $400, you cut those jobs.” 

A resurgence of COVID-19 cases in the South and the West has forced many bars, restaurants, beauty salons and other businesses to close again or to reduce occupancy. Between June 21 and July 19, for example, the percentage of Texas bars that were closed shot up from 25 to 73 percent; likewise, 75 percent of California beauty shops were shuttered July 19, up from 40 percent just a week earlier; according to the data firm Womply.

And many states have imposed restrictions on visitors from states that have reported a high level of virus cases, which hurts hotels, airlines and other industries that depend on travel.

Rubeela Farooqi, chief US economist at High Frequency Economics, said the jobs numbers were disheartening.

“A resurgence in virus cases has resulted in a pause or rollback of reopenings across states and the pace of layoffs is likely to pick up just as expanded unemployment benefits are expiring,” Farooqi said. “The risk of temporary job losses becoming permanent is high from repeated closures of businesses. That could result in an even slower pace of recovery.”

A man walks past a retail store that is going out of business in Winnetka, Illinois, United States [File: Nam Y Huh/AP Photo]

The virus and the lockdowns meant to contain it have hammered the American economy: Employers slashed a record 20.8 million jobs in April, restoring about 7.5 million of them in May and June as many states began to reopen their economies.

Last week, an additional 830,000 million people applied for jobless aid under a new programme that extends eligibility for the first time to self-employed and gig workers. That figure is not adjusted for seasonal trends, so it is reported separately.

Altogether, the Labor Department said 30.2 million people are receiving some form of unemployment benefits, though the figure may be inflated by double-counting by states.

Since she was laid off by a tech industry non-profit on May 15, Miranda Meyerson, 38, has been trying to find another job and to sign up for unemployment benefits. “It’s just incredibly frustrating and demoralizing,” she said. Potential employers seem to be delaying hiring decisions. “Nobody gets back to you,” she said. “You feel like there’s only so long you can submit (applications) into a void.”

Dominick Walton, who is homeless herself, serves food to homeless people in Houston, Texas, US [File: Go Nakamura/Reuters]

Meyerson and her partner moved from New York to Oakland, California, in March, just as the virus began to spread rapidly across the United States. The move to a new state has complicated her so far futile efforts to collect benefits from a swamped California unemployment benefits system. “They’re obviously totally overwhelmed,” she said. “You can’t even get on the phone to talk to anybody.”

Allegra Troiano, 64, was stunned when the Milwaukee English language learning centre she ran was closed in May. “They got through SARS. They got through the Ebola scare,” she said. “Nobody ever thought it would get to the point where we were shutting down.”

The extra $600 in unemployment pay has been a lifeline as she contends with a $2,200 mortgage and $600 in monthly health insurance expenses. “It means surviving,” she said.

Laid off from his job as a bank security guard in March, James Adams, 53, of New Kensington, Pennsylvania, said “losing that $600 a week would be devastating. I have been having a hard time sleeping.”

A Trump voter, Adams has a message for Republican senators reluctant to spend more money on unemployment aid: “I know they want to be fiscal hawks, but swallow the bitter pill and help out the people who need this help.”

Source : Al Jazeera, News Agencies

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