(Headline USA) The number of laid-off workers applying for unemployment aid fell below 1 million last week for the first time since the pandemic intensified five months ago, yet still remains at a high level.
The Labor Department said applications fell to 963,000, the second straight drop, from 1.2 million the previous week. The decline suggests that layoffs are slowing.
“This great news on unemployment claims is further evidence that jobs are coming back at a record pace and the V-shaped recovery lives on,” said economist Stephen Moore, co-founder of the Committee to Unleash Prosperity.
All told, fewer people are also continuing to receive state jobless aid. That figure dropped to 15.5 million, from 16.1 million the previous week.
For months, the unemployed had also been receiving the $600 a week in federal jobless aid on top of their state benefit. But the federal payment has expired, and negotiations in Congress to extend that benefit, likely at a lower level of payment, have collapsed in rancor.
The supplemental federal aid had enabled many jobless Americans to afford rent, food and utilities, and its expiration threatens to weaken consumer spending and further slow the economy. Unemployment benefits have accounted for roughly 5% of national income since April, a larger share than even Social Security. The loss of the $600 has shrunk benefits for the average recipient by one-half to three-quarters.
Michelle Meyer, an economist at Bank of America Merrill Lynch, says that the loss of the additional aid will reduce Americans’ incomes by $18 billion a week.
“That’s a big hit to purchasing power,” she said.
Last week, President Donald Trump issued an executive order that would provide $300 a week in federal aid to the jobless to replace the expired $600-a-week benefit. But experts say it would take weeks for the states to implement that payment.
In addition to people who applied last week for state benefits, nearly 489,000 others sought jobless aid under a new program that has made self-employed and gig workers eligible for the first time. That figure isn’t adjusted for seasonal trends, so it’s reported separately.
But including that group, the Labor Department says 28.2 million people are receiving some form of unemployment benefits, though that figure may be inflated by double-counting by some states.
For states to set up systems to distribute a new $300 federal jobless benefit, their labor departments would need more guidance from the federal government, noted Michele Evermore, a senior researcher at the National Employment Law Project. The money, which is supposed to come from a federal disaster relief fund, would likely require states to hire more people and possibly contract with software vendors to establish a system to process the payments, Evermore said.
“I can’t imagine that this goes up in less than a month anywhere,” she said.
After the pandemic hit, Congress approved a $2 trillion aid package. Among other things, it provided the $600-a-week benefit and made self-employed and gig workers newly eligible for unemployment aid.
Both programs required the states to create new processing systems while handling a crush of benefit applications. That influx resulted in huge backlogs and left millions of the unemployed frustrated by their inability to access benefits. Washington state, for one, eventually called in National Guard troops to help process applications.
In the meantime, with confirmed virus cases still high, it’s not clear when business owners will be able to reopen or will have enough customers to rehire.
Adapted from reporting by Associated Press.
