An estimated 870,000 people filed for first-time unemployment benefits last week, up from the previously weekly figure, as the U.S. struggles to combat the coronavirus pandemic and its economic devastation.
“That number is still above the previous height for jobless claims since before the Covid crisis started,” Martha Gimbel, labor economist for Schmidt Futures, told NBC News. “It is astonishing that we are getting used to a number every week higher than we have ever seen before.”
While the labor market is showing signs of picking up, the pace at which it is improving has slowed, and some indicators even hinting at backsliding.
The number of hours worked has fallen since mid-August and continuing jobless benefit claims have increased after steadily falling since May, wrote Sophia Koropeckyj, an economist at Moody’s Analytics. Muted reopenings, reversals and soaring infection rates in some areas have chipped away at gains. Moody’s expects that the U.S. will not return to pre-coronavirus employment levels until the end of 2023.
With the official unemployment rate now at 8.4 percent, down from 10.2 percent in July, it is well below the peak of 14.7 percent in April. Economists have some words of caution, however: The exact nature of the work force situation has grown slightly fuzzy, with some market observers saying they’re having difficulty pinning down a firm number as several forces destabilize the underlying data.
“The misclassification of workers since the pandemic began, as well as a low response rate, render the results more questionable. Classification issues mean that the unemployment rate could be as high as 9.1 percent,” Koropeckyj said.
On top of traditional unemployment benefits, an additional 14.5 million people are receiving Pandemic Unemployment Assistance and another 1.5 million are getting Pandemic Emergency Unemployment Compensation.
While the number of workers receiving traditional unemployment aid has slowly decreased, the amount of people using the other two programs has increased. Combined, the overall total has remained constant, at about 30 million.
Antiquated state unemployment systems are also backlogged from a surge in claims from the historic number of unemployed workers and from fraudsters. Both add to processing delays and a lag in reliable reported data.
However that data is fine-tuned, it is clear that job growth appears to be settling in to a sluggish pace, well below optimal levels.
In testimony before the House Financial Services Committee on Tuesday, Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin both stressed that two key factors are necessary for a full economic recovery: Another stimulus package from Congress, and a vaccine — neither of which currently exists.
What recovery there has been has disproportionately benefited white and wealthier individuals while minority and lower-income workers have borne the brunt of negative impacts, on top of their increased vulnerability to the virus.
Owners of stocks and real estate have seen their fortunes increase, and knowledge workers are more likely to be able to do their jobs remotely. Meanwhile, lower-wage earners have seen benefits dry up and are less likely to be in positions that can be done from home.
Though about half of the 22 million employees who lost their jobs during the initial coronavirus lockdowns are now back at work, Powell said Wednesday, “There’s a long way to go…. We need to stay with it, all of us.”
