Disconcertingly, “initial” state and federal unemployment claims are skipping. 28 million people on unemployment insurance, 17.5% of the labor force: week 22 of the collapse of the US labor market


The number of people who recently lost their jobs and filed for state or federal unemployment insurance during the week rose to 1.43 million. A rate of 6 million per month.

By Wolf Richter for WOLF STREET.

What happened in the last week of reporting for unemployment claims was baffling: “initial” claims under state unemployment insurance programs by newly laid-off workers have increased. And initial claims under the Federal Pandemic Unemployment Assistance Program (PUA) under the CARES Act that covers on-demand workers have also increased. This means that people are losing their jobs at a faster rate than they did the week before.

In terms of “ongoing” claims: The number of people receiving Unemployment Insurance (UI) under public programs (blue bars) has declined as some people have returned to work. But the number of people receiving unemployment insurance under federal and other programs (red bars) has jumped. Together, the number of people receiving unemployment insurance under all programs has fallen from 199,000 to 28.06 million, the Labor Ministry reported this morning. It was the least disastrous read since mid-May, but still a horribly huge number, representing around 17.5% of the workforce:

Blue columns:

The number of people who continued to apply for unemployment insurance under the state’s regular programs fell from nearly one million to 14.27 million (not seasonally adjusted), continuing the fairly steady downward trend that had started in May.

Red columns:

The number of people receiving UI under all federal and some other programs – after falling 2.4 million last week – jumped 737k to 13.79 million (unadjusted ), due to the increase in Federal Pandemic Unemployment Assistance (PUA) and Federal Pandemic Emergency Unemployment (PEUC) claims:

  • Federal PUA demands surged from 502k to 11.2 million contract workers, self-employed workers, etc. who had lost their jobs.
  • Federal PEUC claims increased from 66k to 1.29 million.
  • Extended benefits fell from 33k to 93k.
  • STC / Workshare claims fell from 142k to 309k. Under these state programs, an employer avoids layoffs by reducing the number of regular working hours; employees receive a portion of their salary plus a proportional share of weekly benefits based on reduced weekly hours.
  • Federal employee complaints checked at 14.6k.
  • Complaints from Newly Released Veterans: checked at 13.9k.

Newly unemployed: initial demands, state and federal:

Initial claims under state programs, filed by newly laid off workers, caused a few scratches this morning, as they increased “unexpectedly” – and they increased both on a seasonally adjusted basis (from 135,000 to 1.11 million) and on a not seasonally adjusted (from 53,000 to 892k). So we can’t blame some seasonal adjustments that went wrong. This was the first increase since the week ended July 11:

Initial complaints under the federal PUA program for contract workers rose to 543k (unadjusted) from 490k the previous week.

These combined federal and state initial claims have increased to 1.43 million people who recently lost their jobs and applied for unemployment benefit during the week.

At this rate, around 6 million people per month are losing their jobs and claiming unemployment benefit. So for 28 million jobless claims to continue to hold up even at this rate of initial claims now, 6 million unemployed must find a new job during the month.

This is the dynamic that the labor market is facing: 6 million people a month are still made redundant, and for the labor market to improve, well over 6 million people would have to return to work.

What it boils down to.

The labor market data chaos continues with the two government data providers wildly contradicting each other: the Labor Department’s weekly Unemployment Insurance report, which shows a still dire situation of over 28 million people claiming unemployment insurance in all programs; and the Bureau of Labor Statistics monthly employment report, which claimed that in July there were only 16.8 million unemployed.

There is still no clarity. But we know that the labor market is still in a sorry state, even though the peak of the unemployment crisis is likely in the past. But the current increase in initial requests at the federal and state levels is a baffling factor.

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