1.3 million people filed initial unemployment insurance claims last week: It is terrible economics to pause stimulus talks

Another 1.3 million people applied for unemployment insurance (UI) benefits last week. That includes 840,000 people who applied for regular state UI and 464,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year.

The 1.3 million who applied for UI last week was a decline of 53,000 from the prior week’s revised figures, although trends over time should be interpreted with caution right now because California data are being imputed because the state has temporarily paused its processing of initial claims. It is worth noting that today’s data on initial claims do not include any workers who may have been laid off or furloughed in the wake of President Trump tweeting earlier this week that he was halting stimulus talks (more on that below).

Republicans in the Senate allowed the across-the-board $600 increase in weekly UI benefits to expire at the end of July, so last week was the tenth week of unemployment in this pandemic for which recipients did not get the extra $600. On Tuesday, President Trump announced he had ordered his negotiators to stop talks with Democratic leaders on another stimulus package. If that abrupt move holds, it means the extra $600 is not coming back anytime soon, and the economy will also not be getting other crucial stimulus measures it needs, including aid to state and local governments.

This is terrible economics. For example, the extra $600 in weekly UI benefits was supporting a huge amount of spending by people who, without it, have to make drastic cuts. The spending made possible by the $600 was supporting millions of jobs. Cutting that $600 means cutting those jobs—it means the workers who were providing the goods and services that UI recipients were spending that $600 on lose their jobs. The map in Figure B of this blog post shows how many jobs will be lost by state because of the expiration of the $600.

Not providing aid to state and local governments will also cost millions of jobs. The labor market is still more than 12 million jobs below where we would be if the recession hadn’t happened, and job growth is slowing. Now is not the time to cut off stimulus talks. Cutting off talks also means no additional housing and nutrition assistance, no COVID-related health and safety measures for workers, no aid to the Postal Service during this critical time, and no additional support for virus testing, tracing, and isolation measures or virus treatment and support for hospitals and other health providers. All of these things would have helped our economy and the people in it recover from the COVID crisis. Cutting it off is unthinkable at a time like this, yet that is what the president seems to have done.

Cutting off stimulus is also exacerbating racial inequality. Due to the impact of historic and current systemic racism, Black and Latinx communities have seen more job loss in this recession and have less wealth to fall back on. The lack of stimulus hits these workers the hardest. Further, workers in this pandemic aren’t just losing their jobs—an estimated 12 million workers and their family members have lost employer-provided health insurance due to COVID-19. Now is when Congress should act to boost the economy to bring back jobs; the president ordering talks to stop is a deeply irresponsible move.

But what about, for example, the supposed work disincentive effect of the extra $600? Rigorous empirical studies show that any theoretical work disincentive effect of the $600 was so minor that it cannot even be detected. Further, there are 6.6 million more unemployed workers than job openings, meaning millions will remain jobless no matter what they do. Dropping the $600 cannot incentivize people to get jobs that are not there.

Most states provide 26 weeks (6 months) of regular benefits, and October is the 8th month of this crisis. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by a million, from 12.0 million to 11.0 million.

The good news is that after an individual exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which provides an additional 13 weeks of benefits to people who have exhausted regular state UI. However, in the latest data available for PEUC (the week ending September 19), PEUC claims rose by 154,000, offsetting less than 20% of the 802,000 decline in continuing claims for regular state benefits for the same week. The relatively small increase in PEUC relative to the decline in continuing claims for regular state benefits suggests that workers may be experiencing delays getting on to PEUC.

DOL data suggest that right now, 26.7 million workers are either on unemployment benefits or have applied recently and are waiting to get approved (see Figure A). But importantly, that number is a substantial overestimate. For one thing, initial claims for regular state UI and PUA should be nonoverlapping—that is how DOL has directed state agencies to report them—but some individuals are erroneously being counted as being in both programs. An even bigger issue is that states are including retroactive payments in their continuing PUA claims, which would also lead to double-counting. All this means nobody knows exactly how many people are receiving unemployment insurance benefits right now, which is another reminder that we need to invest heavily in our data infrastructure and technology.

Figure A

DOL numbers indicate that 26.7 million workers are either receiving unemployment benefits or have applied and are waiting to see if they will get benefits (as of October 3, 2020): *But caution, this is an overestimate due to reporting issues (see below)*

Regular state UI: Continued claims PEUC: Continued claims Regular state UI: Initial claims PUA: Continued claims PUA: Initial claims Other programs (mostly STC and EB) Total
Cumulative  10,976,000
1,959,953  840,000
 11,394,832
 973,144
589,652 0

 

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Caution: This is a substantial overestimate. For one thing, initial claims for regular state UI and PUA should be nonoverlapping—that is how DOL has directed agencies to report them—but some individuals are erroneously being counted as being in both programs. Also, some states are including retroactive payments in their continuing PUA claims, which would also lead to double counting.

Click here for notes.

Seasonally adjusted data are used for regular state UI claims; seasonally adjusted data are not available for the other components of the chart. Regular state UI continued claims are for the week ending September 26; PEUC continued claims are for the week ending September 19; regular state UI initial claims are for the week ending October 3. PUA continued claims are for the week ending September 19; PUA initial claims are for the weeks ending September 26 and October 3. “Other programs” are continued claims in other programs for the week ending September 19. A full list of programs can be found in the bottom panel of the table on page 4 at this link: https://www.dol.gov/ui/data.pdf.

Source: Department of Labor (DOL) Unemployment Insurance Weekly Claims (News Release), retrieved from DOL, https://www.dol.gov/ui/data.pdf, October 8, 2020.

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Figure B shows continuing claims in all programs over time (the latest data are for September 19). Continuing claims are more than 24 million above where they were a year ago. However, the above caveat about continuing PUA claims applies here too, which means the trends over time in PUA claims may be distorted.

Figure B

Continuing unemployment claims in all programs, March 23, 2019–September 19, 2020: *Use caution interpreting trends over time because of reporting issues (see below)*

Date Regular state UI PEUC PUA Other programs (mostly STC and EB)
2019-03-23 1,905,627 31,510
2019-03-30 1,858,954 31,446
2019-04-06 1,727,261 30,454
2019-04-13 1,700,689 30,404
2019-04-20 1,645,387 28,281
2019-04-27 1,630,382 29,795
2019-05-04 1,536,652 27,937
2019-05-11 1,540,486 28,727
2019-05-18 1,506,501 27,949
2019-05-25 1,519,345 26,263
2019-06-01 1,535,572 26,905
2019-06-08 1,520,520 25,694
2019-06-15 1,556,252 26,057
2019-06-22 1,586,714 25,409
2019-06-29 1,608,769 23,926
2019-07-06 1,700,329 25,630
2019-07-13 1,694,876 27,169
2019-07-20 1,676,883 30,390
2019-07-27 1,662,427 28,319
2019-08-03 1,676,979 27,403
2019-08-10 1,616,985 27,330
2019-08-17 1,613,394 26,234
2019-08-24 1,564,203 27,253
2019-08-31 1,473,997 25,003
2019-09-07 1,462,776 25,909
2019-09-14 1,397,267 26,699
2019-09-21 1,380,668 26,641
2019-09-28 1,390,061 25,460
2019-10-05 1,366,978 26,977
2019-10-12 1,384,208 27,501
2019-10-19 1,416,816 28,088
2019-10-26 1,420,918 28,576
2019-11-02 1,447,411 29,080
2019-11-09 1,457,789 30,024
2019-11-16 1,541,860 31,593
2019-11-23 1,505,742 29,499
2019-11-30 1,752,141 30,315
2019-12-07 1,725,237 32,895
2019-12-14 1,796,247 31,893
2019-12-21 1,773,949 29,888
2019-12-28 2,143,802 32,517
2020-01-04 2,245,684 32,520
2020-01-11 2,137,910 33,882
2020-01-18 2,075,857 32,625
2020-01-25 2,148,764 35,828
2020-02-01 2,084,204 33,884
2020-02-08 2,095,001 35,605
2020-02-15 2,057,774 34,683
2020-02-22 2,101,301 35,440
2020-02-29 2,054,129 33,053
2020-03-07 1,973,560 32,803
2020-03-14 2,071,070 34,149
2020-03-21 3,410,969 36,758
2020-03-28 8,158,043 52,494 48,963
2020-04-04 12,444,309 3,802 68,897 64,201
2020-04-11 16,249,334 31,392 210,939 89,915
2020-04-18 17,756,054 59,760 1,088,281 116,162
2020-04-25 21,723,230 86,972 3,498,790 158,031
2020-05-02 20,823,294 171,580 6,226,074 175,289
2020-05-09 22,725,217 232,057 7,929,418 216,576
2020-05-16 18,791,926 233,288 11,095,269 226,164
2020-05-23 19,022,578 534,958 9,761,879 247,595
2020-05-30 18,548,442 1,093,338 9,392,718 259,499
2020-06-06 18,330,293 867,226 11,067,905 325,282
2020-06-13 17,552,371 769,155 12,853,484 336,537
2020-06-20 17,316,689 850,461 13,870,617 392,042
2020-06-27 16,410,059 936,726 12,008,146 373,841
2020-07-04 17,188,908 940,001 13,179,377 495,296
2020-07-11 16,221,070 1,055,778 13,008,659 513,141
2020-07-18 16,691,210 1,155,692 12,956,006 518,584
2020-07-25 15,700,971 1,223,255 10,717,042 609,328
2020-08-01 15,112,240 1,289,125 11,212,827 433,416
2020-08-08 14,098,536 1,407,802 10,957,527 549,603
2020-08-15 13,792,016 1,393,314 13,550,916 469,028
2020-08-22 13,067,660 1,422,483 14,656,297 523,430
2020-08-29 13,283,721 1,527,166 14,467,064 490,514
2020-09-05 12,373,201 1,631,645 11,510,888 529,220
2020-09-12 12,363,489 1,806,241 11,828,338 510,610
2020-09-19 11,561,062 1,959,953 11,394,832 589,652
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The data below can be saved or copied directly into Excel.

Caution: Trends over time in PUA claims may be distorted because when an individual is owed retroactive payments, some states report all retroactive PUA claims during the week the individual received their payment.

Click here for notes.

Data are not seasonally adjusted. A full list of programs can be found in the bottom panel of the table on page 4 at this link: https://www.dol.gov/ui/data.pdf.

Source: U.S. Employment and Training Administration, Initial Claims [ICSA], retrieved from Department of Labor (DOL), https://oui.doleta.gov/unemploy/docs/persons.xls and https://www.dol.gov/ui/data.pdf, October 8, 2020.

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