Total initial UI claims have risen in each of the last four weeks: Congress must act
Last week 1.6 million workers applied for unemployment insurance (UI) benefits. Breaking that down: 881,000 applied for regular state unemployment insurance, and 759,000 applied for Pandemic Unemployment Assistance (PUA).
This is the fourth week in a row that total initial claims have risen. Further, last week was the 24th week in a row total initial claims were far greater than the worst week of the Great Recession. If you restrict to regular state claims (because we didn’t have PUA in the Great Recession), claims are still greater than the 2nd-worst week of the Great Recession. And remember this: people haven’t just lost their jobs. An estimated 12 million workers and their family members have lost employer-provided health insurance due to COVID-19.
There was a (mostly) positive methodological development with the release of the UI data this week—DOL changed their seasonal adjustment methodology. The way they had been doing seasonal adjustments was causing major distortions during this recession, and the change is a big improvement. One big problem, however, is that they didn’t revise prior seasonally adjusted data, which means you cannot compare seasonally adjusted numbers over time. So, remember this: It’s okay to use the seasonally-adjusted numbers, but if you want to compare UI data over time, use not-seasonally-adjusted numbers.
An example of how to do it wrong: some are saying regular state UI claims dropped by 130,000 last week (from 1.01 million to 881,000). That’s wrong because it’s comparing two seasonally adjusted numbers that were calculated using two different methods (the old way and the new way). Regular state UI claims actually ticked up by 7,600 last week, from 825,800 to 833,400 (using not seasonally adjusted data). Including initial PUA claims, total initial claims rose 159,000 last week, from 1.43 million to 1.59 million.Read more
What to Watch on Jobs Day: Widespread economic pain continues in August
Rent was due again this week and millions of unemployed workers have now gone five weeks without the enhanced $600 unemployment insurance benefit. This benefit was a vital lifeline and families across the country now face eviction and hunger in its absence. The drop in benefits will also make it far harder in coming months to claw back the jobs lost during the pandemic. As of the latest data, the labor market remains 12.9 million jobs below where it was in February, before the pandemic spread. And, the job gains we saw this summer slowed down remarkably in July, as a resurgence of the coronavirus re-shuttered part of the country. On Friday, the latest jobs data will tell us about the state of the labor market for August and how workers continue to fare in these difficult times.
Time and time again we learn how the recession has magnified the economic disparities many face in the U.S. labor market, whether it be by race, ethnicity, gender, age, education, or class. Women workers were disproportionately affected at the beginning of the recession with job losses in excess of their share of the workforce. In particular, Latina workers saw their unemployment rates skyrocket, exceeding 20% in March. Black workers also experienced devastating job losses, which they were less able to weather because of historical inequalities in employment, wages, and incomes, and, in particular, lower levels of liquid savings to fall back on. Black workers are also more likely to be unemployed. Historically, Black workers have been less likely to receive unemployment benefits after losing a job. However, the expanded eligibility criteria included in the CARES Act has been a great equalizer in the current downturn—though these expanded criteria will cut off at the end of this year. Further, as shown in the figure below, Black men have yet to see much in the way of job gains in the recovery thus far. Young workers are also experiencing unprecedented levels of unemployment, and will likely face significant aftershocks from starting their careers at such a difficult time (more on this in a forthcoming EPI report).Read more
Calling out anti-Blackness in our response to police violence and economic inequality
The Black community has faced a long history of racial exclusion, discrimination, and inequality in the United States, causing these families to shoulder unequal economic and health burdens.
We must address anti-Blackness in our society and center Black women and their communities in our policies.
That was the resounding message from a panel of Black and brown women—leading economic and social justice experts—on creating lasting change. These women spoke in June at the Economic Policy Institute’s webinar, Rebuilding the House That Anti-Blackness Built in Our COVID Response, after the police murder of George Floyd.
Their words resonate today, as the nation continues to grapple with its history of systemic racism, inequities, and injustice, following the police shooting of Jacob Blake in Kenosha, Wisconsin.
The panel, moderated by EPI Director of EARN Naomi Walker, included:
- Anne Price, Insight Center
- Jaribu Hill, Mississippi Workers’ Center for Human Rights
- Jhumpa Bhattacharya, Insight Center
- Julianne Malveaux, Economic Education
- Rhonda Sharpe, Women’s Institute for Science, Equity, and Race
- Valerie Wilson, Economic Policy Institute
Here are some key moments from the discussion:
Naomi Walker: “Black people in this country face physical and economic violence every day, and all of this is taking place in the midst of a stunning—though not surprising—lack of leadership from the highest office in the land.”
Why should we address anti-Blackness in our society, in our research, and in our advocacy?
Julianne Malveaux: “These murders are consistent with murders that have happened as long as we’ve been here in this country. You don’t have to go to 2020. You can start at 1892, when Ida B. Wells documented a lynching of her friend, who had the nerve to start a grocery store on the same block that a white man had one. The long end of that short story was the white man was able to acquire the Black man’s store for eight cents on the dollar. Eight cents on the dollar. And we can talk about Wilmington, North Carolina, in 1898, when the anecdotal evidence was that ‘the river ran red.’ They said there were 60 or 70 dead people. Now, they’re finding it was 600 or 700. And then, of course, there’s Tulsa. Why is this all connected? It’s connected because in our psyches there is a block in terms of how we participate, how we manage, [and] what we do.”
Why is it important to talk about Black people when discussing the economic and health impact of both the pandemic and economic crisis?
Jaribu Hill: “Language is important. Over the last few days, we have heard some outlandish descriptions of what’s happening to our people, from ‘senseless rioting’ [and] ‘destroying things,’ but no one talked about the lynching by the knee. No one talked about how, with impunity, agents of the state who hide behind tin badges always, always, always get away with murdering Black people. You add that to—you match that up with—those who are dying in COVID beds disproportionately to those who have been dying in the streets since we were dragged over here as a result of a felony kidnapping, and it just makes you know that you’ve got to keep your rage. You’ve got to keep your rage. You can never let your rage down. I don’t even say ‘guard down.’ I say, ‘Never let your rage down.’”
What is the importance of language when discussing systemic racism?
Anne Price: “What we’re really talking about is the devaluation and disposability of Black lives. That’s what brings these all together—the convergence of police brutality, of policing Black bodies, and the negligence that we’ve seen in terms of COVID and Black people.”
What does “anti-Blackness” mean, in terms of the current health, economic, and political crises?
Rhonda Sharpe: “When you center on Black women—the most vulnerable—and you create policies that are focused on the most vulnerable, i.e., Black women, then you will get policies that lift everyone.”
Why is it important to focus on Black women when discussing anti-Blackness?
Jhumpa Bhattacharya: “There is something very specific about anti-Blackness. There is something very definitive about anti-Blackness that I think needs to be named. We’re seeing that now, in particular with what’s happening in our country. As women of color, if we don’t acknowledge the specificity of anti-Blackness, we’re actually doing a disservice and we’re contributing to it. One [step] is to really pause and examine the way in which our own communities are perpetuating anti-Blackness. The second thing is to center Black people in our policies, in our institutions, and our decision-making.”
How can other women of color address anti-Blackness and support Black women?
Valerie Wilson: “The laws that we have in place—and have for decades—there’s a real problem with enforcement there. This, again, gets to this issue related to power and representation and someone’s ability to really stand up and try to enact or call in the rights that on the books are ours, but in practice, we don’t see. That’s a lot of what’s behind the uprisings that we’re seeing in the streets. People keep saying, ‘Go through the system, follow the system, file this complaint. Do this, do that,’ and nothing happens. That’s because we have things on the books, but the way that they actually play out and actually work in real life, there’s very little teeth behind that, at all. We really need to change the way that we structure policy and the way that we enforce those laws and policies.”
What role does policy play in perpetuating anti-Blackness?
These videos are excerpts from the event. To see the full video, click here.
The Milwaukee Bucks’ strike shows what’s possible when workers band together
Typically, workers strike over pay or benefits, or to protest their employer’s violation of labor law. But last week, NBA players for the Milwaukee Bucks refused to take part in a playoff game against the Orlando Magic to protest the police shooting in Kenosha, Wisconsin of Jacob Blake, an unarmed Black man who was shot multiple times in front of his children and was handcuffed to his hospital bed. The Milwaukee Bucks players’ actions sparked a movement within the NBA and larger sports community, with athletes from the WNBA, Major League Baseball, and Major League Soccer following suit in solidarity, causing games to be postponed in their respective leagues. On an unprecedented day in sports history, these athletes showed the power of workers’ collective voice in the workplace.
Professional athletes aren’t the only workers who have banded together to make their voices heard. During the coronavirus pandemic, thousands of essential workers have utilized their right to engage in concerted activity by protesting unsafe working conditions. This was most evident by the walkouts organized by Amazon, Instacart, and Target workers as well as the dozens of strikes organized by fast food and delivery workers earlier this spring. Even before the pandemic, data from the Bureau of Labor Statistics showed an upsurge in major strike activity in 2018 and 2019, marking a 35-year high for the number of workers involved in a major work stoppage over a two-year period. The resurgence of strike activity in recent years has given over a million workers an active role in demanding improvements in their pay and working conditions.
Number of workers involved in major work stoppages, 1973–2019
| Year | Number of workers |
|---|---|
| 1973 | 1,400,000 |
| 1974 | 1,796,000 |
| 1975 | 965,000 |
| 1976 | 1,519,000 |
| 1977 | 1,212,000 |
| 1978 | 1,006,000 |
| 1979 | 1,021,000 |
| 1980 | 795,000 |
| 1981 | 728,900 |
| 1982 | 655,800 |
| 1983 | 909,400 |
| 1984 | 376,000 |
| 1985 | 323,900 |
| 1986 | 533,100 |
| 1987 | 174,400 |
| 1988 | 118,300 |
| 1989 | 452,100 |
| 1990 | 184,900 |
| 1991 | 392,000 |
| 1992 | 363,800 |
| 1993 | 181,900 |
| 1994 | 322,200 |
| 1995 | 191,500 |
| 1996 | 272,700 |
| 1997 | 338,600 |
| 1998 | 386,800 |
| 1999 | 72,600 |
| 2000 | 393,700 |
| 2001 | 99,100 |
| 2002 | 45,900 |
| 2003 | 129,200 |
| 2004 | 170,700 |
| 2005 | 99,600 |
| 2006 | 70,100 |
| 2007 | 189,200 |
| 2008 | 72,200 |
| 2009 | 12,500 |
| 2010 | 44,500 |
| 2011 | 112,500 |
| 2012 | 148,100 |
| 2013 | 54,500 |
| 2014 | 34,300 |
| 2015 | 47,300 |
| 2016 | 99,400 |
| 2017 | 25,300 |
| 2018 | 485,200 |
| 2019 | 425,500 |
Note: The Bureau of Labor Statistics does not distinguish between strikes and lockouts in its work stoppage data. However, lockouts (which are initiated by management) are rare relative to strikes, so it is reasonable to think of the major work stoppage data as a proxy for data on major strikes. Data are for work stoppages that began in the data year.
Source: Bureau of Labor Statistics, “Major Work Stoppages in 2019” (news release), February 11, 2020, and related table, “Annual Work Stoppages Involving 1,000 or More Workers, 1947–2019.”
The Milwaukee Bucks showed that when workers organize and use their collective power, they can create change in their workplace, their industry, and society. However, the erosion of workers’ rights over the last several decades have made it difficult for workers to come together and engage in collective action. When workers are able to join together in a union, they are able to tackle some of the biggest problems that plague our economy, including growing economic inequality and racial and gender inequities. Policymakers must enact reforms that promote workers’ collective power, which in turn can create a more just economy and democracy.
Updated state unemployment data: Congress has failed to act as jobless claims remain high and workers scrape by on inadequate unemployment benefits
The most recent unemployment insurance (UI) claims data released on Thursday show that another 1.4 million people filed for UI benefits last week. For the past four weeks, workers have gone without the extra $600 in weekly UI benefits—which Senate Republicans allowed to expire—and are instead typically receiving around 40% of their pre-virus earnings. This is far too meager to sustain workers and their families through lengthy periods of joblessness.
In a largely unserious stunt, the Trump administration has issued an executive order that, at best, will slash the benefit in half to $300. On its own, this cut will cause such a huge drop in spending that it will cost 2.6 million jobs over the next year. In addition to being woefully insufficient, this aid will take many weeks to reach jobless workers, exclude low-wage workers, and only last through September with its current funding. Furthermore, it is distracting from the dire need for Congressional action to strengthen UI benefits.
To give a sense of how many workers the Trump administration and Republicans in Congress are leaving behind, Figure A shows the share of workers in each state who either made it through at least the first round of state UI processing (these are known as “continued” claims) or filed initial UI claims in the following weeks. The map includes separate totals for regular UI and Pandemic Unemployment Assistance (PUA), the new program for workers who aren’t eligible for regular UI, such as gig workers.
UI claims remain historically high and the president’s executive memorandum is doing more harm than good: Congress must reinstate the extra $600
Last week 1.4 million workers applied for unemployment insurance (UI) benefits. Breaking that down: 822,000 applied for regular state unemployment insurance (not seasonally adjusted), and 608,000 applied for Pandemic Unemployment Assistance (PUA). Some headlines this morning are saying there were 1.0 million UI claims last week, but that’s not the right number to use. For one thing, it ignores PUA, the federal program that is serving millions of workers who are not eligible for regular UI, like the self-employed. It also uses seasonally adjusted data, which is distorted right now because of the way Department of Labor (DOL) does seasonal adjustments. One bit of good news is that with today’s release, DOL announced that starting next week, they will be changing the way they do seasonal adjustments. The change should address the issues that have plagued seasonally adjustments during this pandemic.
Republicans in the Senate allowed the across-the-board $600 increase in weekly UI benefits to expire. Last week was the fourth week of unemployment in this pandemic for which recipients did not get the extra $600. That means people on UI are now are forced to get by on the meager benefits that are in place without the extra payment, benefits which are typically around 40% of their pre-virus earnings. It goes without saying that most folks can’t exist on 40% of prior earnings without experiencing a sharp drop in living standards and enormous pain.
Earlier this month, President Trump issued a joke of an executive memorandum. It was supposed to give recipients an additional $300 or $400 in benefits per week. But in reality, even this drastically reduced benefit will be extremely delayed, is only available for a few weeks, and is not available at all for many. The executive memorandum is a false promise that actually does more harm than good because it diverts attention from the desperate need for the real relief that can only come through legislation.Read more
The Way Out Through State and Local Aid: Bipartisan group of economists breaks down why local governments need aid now
If a bipartisan group of the nation’s top economists were trapped in an elevator with Republican members of Congress, what would they tell them about the need for state and local aid?
Towns across the country are already hemorrhaging red ink, and substantial federal aid is needed now in order to derail the worsening economic shock brought on by the pandemic.
That was the consensus among economists the Economic Policy Institute brought together recently to discuss the urgent need for state and local aid.
The panel included:
- Gbenga Ajilore, Senior Economist, Center for American Progress
- Glenn Hubbard, Dean Emeritus and Russell L. Carson Professor of Finance and Economics, Columbia University
- Jason Furman, Professor of the Practice of Economic Policy, Harvard Kennedy School and Harvard University Economics Department
- Josh Bivens, Director of Research, Economic Policy Institute
- Mark Zandi, Chief Economist, Moody’s Analytics
Heather Long, Economics Correspondent at the Washington Post, was the moderator and she asked each economist: “if you had 30 seconds in an elevator with a Republican lawmaker to try to convince them why we need state and local aid now, what would you say?”
Here’s what they said.
Gbenga Ajilore’s elevator pitch: “I’m going to start with a meme. I’m going to say that the best time to pass state and local aid was three months ago, when we saw millions of jobs being lost. The second best time is right now. And the reason why is that there was $150 billion given to states, $30 billion given to localities, in the CARES Act, but a lot of that was restricted.
“And the other thing was that rural areas were left out of it. The $30 billion only went to places that have 500,000 people or more. And so for rural areas, we need state and local aid now so that they get the money, especially given what’s coming up in the fall between schools and further cases.”
How important is it to specify what the aid would be used for?
Glenn Hubbard’s elevator pitch: “I actually do spend time with Republican lawmakers, not on an elevator anymore, but on Zoom, about this issue, and I make three points. One, we should have learned from the Great Recession, from the financial crisis, the very large cost of failing to come through enough for state and local governments.
“Second is about payroll. There’s recent research suggesting that every dollar of additional state aid would support at least $0.30 more payroll from state and local workers, including essential workers.
“And the third is, [in order] to get from here to there—meaning to where the economy is going to be after the pandemic—we need to focus on education and training, and a lot of that is done in public universities and community colleges. This is not the time to be cutting support for those organizations. All in, I think support of at least $500 billion in a block grant is needed.”
What if significant aid for states and local governments doesn’t materialize?
Jason Furman’s elevator pitch: “So I would just say listen to Glenn. That’s two seconds. For every dollar we spend on state and local assistance, it adds probably $1.70 to the size of the overall economy. There’s nothing that economists have studied better and more carefully when it comes to fiscal policy multipliers, probably, than state and local assistance.
“And finally, if we want to have an economy, we need to have the best shot at doing the best we can with schools. That’s going to cost money. You don’t spend that money, you don’t have kids in school, you don’t have parents working, you don’t have any of the things that all of us want to have economically and otherwise.”
Should there be restrictions on how the aid is used?
Josh Bivens’ elevator pitch: “We should learn the lesson of what happened after the Great Recession, when state and local governments—once the Recovery Act aid to states ran out—their spending became a tremendous drag on growth, made that recovery take far longer than it should have.
“If you look at the second quarter of this year, sales taxes for state and local governments fell at a 16 percent annualized rate. We’ve probably seen Medicaid enrollments rise by about five million between February and July. The budget crunch is already happening for state and local governments. They’re making plans for next year about what they’re going to do with their budgets. We should give them aid so part of those plans are not just cutting everything in sight in order to make their budgets balance.”
Why are states facing this crisis, and how much in aid is needed?
Mark Zandi’s elevator pitch: “So after that, I think everyone should be convinced in that elevator. Clearly, the economy is struggling. We have double-digit unemployment. We’re still down 13 million jobs from the pre-pandemic peak. State and local governments are hemorrhaging red ink, and it’s coast to coast, it’s politically ecumenical. Every state, municipality, is struggling and responding by slashing payrolls. We’re down 1.3 million state and local government jobs since February, slashing programs.
“There’s no more effective way to help the economy and to help these states and support these jobs than providing federal government aid to state and local governments. And this is not anything that’s unusual. This is tried and true economic support. This is what we do every time we get into a recession, particularly in one like this one, and it’s pretty much a slam dunk, pretty straightforward kind of economic policy.”
How much aid is needed?
UI claims remain historically high and the president’s sham executive memorandum is doing next to nothing: Congress must reinstate the $600
Last week 1.4 million workers applied for unemployment insurance (UI) benefits. Breaking that down: 892,000 applied for regular state unemployment insurance (not seasonally adjusted), and 543,000 applied for Pandemic Unemployment Assistance (PUA). Some headlines this morning are saying there were 1.1 million UI claims last week, but that’s not the right number to use. For one thing, it ignores PUA, the federal program that is serving millions of workers who are not eligible for regular UI, like the self-employed. It also uses seasonally adjusted data, which is distorted right now because of the way Department of Labor (DOL) does seasonal adjustments.
Republicans in the Senate allowed the across-the-board $600 increase in weekly UI benefits to expire. Last week was the third week of unemployment in this pandemic for which recipients did not get the extra $600. That means people on UI are now are forced to get by on the meager benefits which are in place without the extra payment, which are typically around 40% of their pre-virus earnings. It goes without saying that most folks can’t exist on 40% of prior earnings without experiencing a sharp drop in living standards and enormous pain.
Earlier this month, President Trump issued a sham of an executive memorandum. It was purported to give recipients an additional $300 in benefits. But in reality, even this drastically reduced benefit is only available to recipients in a handful of small states, and only for a few weeks. The executive memorandum is a false promise that actually does more harm than good because it diverts attention from the desperate need for the real relief that can only come through legislation.
This is cruel, and terrible economics. The extra $600 was supporting a huge amount of spending by people who now have to make drastic cuts. The spending made possible by the $600 was supporting 5.1 million 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 many jobs will be lost by state now that the $600 unemployment benefit has been allowed to expire. We remain 12.9 million jobs below where we were before the virus hit, and the unemployment rate is higher than it ever was during the Great Recession. Now isn’t the time to cut benefits that support jobs.Read more
Cuts to unemployment benefits harm millions of workers across the country: See updated state unemployment data
The most recent unemployment insurance (UI) claims data released on Thursday show that another 1.3 million people filed for UI benefits during the week ending August 8. Huge swaths of workers in every state are relying on UI for food, rent, and basic necessities. In the face of this economic crisis, Senate Republicans let the extra $600 in weekly UI benefits expire, and now the Trump administration, in a largely unserious stunt, is proposing slashing the benefit in half to $300 through executive order. If implemented, this cut would cause such a huge drop in spending that it would cost 2.6 million jobs over the next year.
Figure A shows the share of workers in each state who either made it through at least the first round of state UI processing (these are known as “continued” claims) or filed initial UI claims in the following weeks. The map includes separate totals for regular UI and Pandemic Unemployment Assistance (PUA), the new program for workers who aren’t eligible for regular UI, such as gig workers.
The map also includes an estimated “grand total,” which includes other programs such as Pandemic Emergency Unemployment Compensation (PEUC), Extended Benefits (EB), and Short-Time Compensation (STC). The vast majority of states are reporting that more than one in 10 workers are claiming UI. Ten states and the District of Columbia report that more than one in five of their pre-pandemic labor force is now claiming UI under any of these programs. The components of this total are listed in Table 1.1
Three states had more than 1 million workers either receiving regular UI benefits or waiting for their claim to be approved: California (3.2 million), New York (1.5 million), and Texas (1.3 million). Five additional states had more than half a million workers receiving or awaiting benefits.
Millions of workers are relying on unemployment insurance benefits that are being stalled and slashed
Last week 1.3 million workers applied for unemployment insurance (UI) benefits. More specifically, 832,000 applied for regular state unemployment insurance (not seasonally adjusted), and 489,000 applied for Pandemic Unemployment Assistance (PUA). Some headlines this morning are saying there were 963,000 UI claims last week, but that’s not the right number to use. Instead, our measure includes PUA, the federal program that is supporting millions of workers who are not eligible for regular UI, such as the self-employed. We also use not seasonally adjusted data, because the way Department of Labor (DOL) does seasonal adjustments (which is useful in normal times) distorts the data right now.
Astonishingly high numbers of workers continue to claim UI, and we are still 12.9 million jobs short of February employment levels. And yet, Senate Republicans allowed the across-the-board $600 increase in weekly UI benefits—the most effective economic policy crisis response so far—to expire.
In an unserious move of political theater, the Trump administration has proposed starting up an entirely new system of restoring wages to laid-off workers through executive order (EO). But even in their EO wishlist, the Trump administration would slash the federal contribution to enhanced unemployment benefits in half, to $300. This inaction and ongoing uncertainty is causing significant economic pain for workers who have lost their job during the pandemic and their families. It also causes an administrative hassle for state agencies that have already struggled immensely to process the huge number of claims early in the pandemic and implement the new UI protections in the CARES Act. Since the states with the least stable UI systems also have the highest populations of Black and Latinx people, existing inequalities will likely deepen even further by both the cutoff of supplementary benefits and the increased chaos introduced by having presidential EOs pretend to stand in for the legislative action that is needed.
Black women workers are essential during the crisis and for the recovery but still are greatly underpaid
Black Women’s Equal Pay Day, August 13, is a day to call attention to the fact that Black women deserve equal pay but are still severely underpaid. It marks how far into 2020—seven and a half months—that the average Black woman must work to make the same amount as the average non-Hispanic white man was paid in 2019. On an average hourly basis, Black women are paid just 66 cents on the dollar, relative to non-Hispanic white men with the same level of education, age (a proxy for work experience), and geographic location.
While this large pay gap has always been unjust and offensive to the millions of working Black women in this country, it is especially so under the current health and economic crisis. The infographics below take a closer look at average hourly earnings of Black women and non-Hispanic white men employed in major occupations at the center of national efforts to address the public health and economic effects of COVID-19. These occupations include frontline workers in health care and essential businesses like grocery and drug stores, those who have borne the brunt of job losses in the restaurant industry, and the teachers and child care workers who are critical as the economy struggles to reopen and essential to fully reopening the economy when it is safe to do so.Read more
Trump’s war on the Postal Service helps corporate rivals at the expense of working families
- Postal workers are twice as likely to be military veterans as non-postal workers, because veterans benefit from preferential hiring in federal jobs and many have skills sought by the Postal Service. One in five postal workers is Black, nearly double Black workers’ share of the non-postal workforce.
- Postmaster Louis DeJoy’s recent service cuts, such as eliminating overtime and late trips, leaving mail to be delivered the next day, could harm the integrity of the November elections, which will rely heavily on mail voting.
- Rival private services like FedEx and UPS will likely gain customers from these cuts, which affect service. The beneficiaries of DeJoy’s actions will likely include low-wage “worksharing” companies that do work outsourced by the Postal Service, such as presorting and transporting bulk mail closer to its destination.
- Whereas federal law requires federal contractors in the construction and related industries to pay workers the prevailing wage—usually the area’s union wage—nothing prevents the Postal Service from contracting with companies whose only competitive advantage is paying low wages—often as a result of union busting.
- Since the Postal Service is required to rebate the full cost savings from outsourcing to the companies doing the work, “worksharing” doesn’t even benefit the Postal Service—but workers definitely lose out.
On June 15, Trump appointed Louis DeJoy, a North Carolina businessman and Republican fundraiser, as the new Postmaster General. DeJoy has wasted no time in ordering major changes to how the United States Postal Service operates. Many have noted that the service cuts he has implemented, such as eliminating overtime and late trips, leaving mail to be delivered the next day, could harm the integrity of the November elections, which will rely heavily on mail voting, due to the pandemic. The slowdown also seems aimed at pleasing President Trump, who makes no secret of his dislike of the Postal Service, which he believes is undercharging Amazon for deliveries. Trump has also lashed out at the Washington Post, owned by Amazon CEO Jeff Bezos, for its news coverage of his administration.
DeJoy, of course, denies that he’s deliberately sabotaging the Postal Service at the behest of the president, claiming service cuts are necessary to keep the Postal Service afloat. Though social distancing measures have boosted online orders during the pandemic, the crisis has reduced the volume of paper mail, which still accounts for about two-thirds of Postal Service revenues. Since the Postal Service is self-funded and has high fixed costs associated with daily delivery and maintaining post offices, it’s an obvious candidate for the same pandemic relief offered to airlines and other businesses affected by the suspension of much economic activity. But the president and Republican-controlled Senate have resisted helping the Postal Service, not just refusing to agree to relief funds included in a House-passed bill, but even holding hostage a loan to the Postal Service in the CARES Act that was signed into law by the president.Read more
What to watch on jobs day: A stalled recovery
After historically fast job growth in May and June, the jobs report for July is sure to disappoint. Because so many jobs were lost in March and April, the economy remains 14.7 million jobs short of where it was in February, and a full recovery even with rapid growth is many months away. As COVID-19 has spread rapidly throughout the country, various other data released since the reference period in mid-June suggest—at best—a stalled recovery. At worst, we could see job losses in July. Whichever is the case, it is clear that the bounceback in May and June is over and that the mammoth jobs gap will take years to claw back unless policy becomes much better on both the public health and economic fronts.
In this preview post, I’m going to take you on a brief foray into the data that predict a very disappointing economic performance for this week’s jobs report. First, let’s start with the weekly unemployment insurance data. As of mid-July, 34.3 million workers—or about 20% of the pre-pandemic workforce—were either on unemployment benefits or have applied and are waiting to see if they will get benefits. Although the continuation of record high levels of unemployment insurance may include some pent up demand from the difficulty of accessing the system, there has been no measurable improvement in these unemployment insurance numbers in weeks.
Unemployment insurance claims remain historically high: Congress must reinstate the extra $600 immediately
Last week 1.6 million workers applied for unemployment insurance (UI) benefits. Breaking that down: 984,000 applied for regular state unemployment insurance (not seasonally adjusted), and 656,000 applied for Pandemic Unemployment Assistance (PUA). Some headlines this morning are saying there were 1.2 million UI claims last week, but that’s not the right number to use. For one, it ignores PUA, the federal program that is serving millions of workers who are not eligible for regular UI, like the self-employed. It also uses seasonally adjusted data, which is distorted right now because of the way Department of Labor (DOL) does seasonal adjustments.
Republicans in the Senate allowed the across-the-board $600 increase in weekly UI benefits to expire. Last week is the first week of unemployment in this pandemic that recipients will not get the extra $600 payment. That means people on UI benefits who lost their job during a global pandemic are now are forced to get by on around 40% of their pre-virus earnings, causing enormous pain.
Republicans in the Senate are proposing to (essentially) replace the $600 with a $200 weekly payment. That $400 cut in benefits is not just cruel, it’s terrible economics. These benefits are supporting a huge amount of spending by people who would otherwise have to cut back dramatically. The spending made possible by the $400 that the Senate wants to cut is supporting 3.4 million jobs. If you cut the $400, you cut those jobs. The map in Figure A shows the number of jobs that will be lost in each state if the extra $600 unemployment benefit is cut to $200.Read more
UI claims and GDP growth are historically bad: Now is not the time to cut benefits that are supporting jobs
Last week 2 million workers applied for unemployment insurance (UI) benefits. Breaking that down: 1.2 million applied for regular state unemployment insurance (not seasonally adjusted) and 830,000 applied for Pandemic Unemployment Assistance (PUA). Many headlines this morning are saying there were 1.4 million UI claims last week, but that’s not the right number to use. For one, it ignores PUA, the federal program that is serving millions of workers who are not eligible for regular UI, like the self-employed. It also uses seasonally adjusted data, which is distorted right now because of the way the Department of Labor (DOL) does seasonal adjustments.
Last week was the 19th week in a row that unemployment claims have been more than twice the worst week of the Great Recession. If you restrict this comparison just to regular state claims—because we didn’t have PUA during the Great Recession—this is the 19th week in a row that claims are more than 1.25 times the worst week of the Great Recession.
Republicans in the Senate just allowed the across-the-board $600 increase in weekly UI benefits to expire. They are proposing to (essentially) replace it with a $200 weekly payment. That $400 cut in benefits is not just cruel, it’s terrible economics. These benefits are supporting a huge amount of spending by people who would otherwise have to cut back dramatically. The spending made possible by the $400 that the Senate wants to cut is supporting 3.4 million jobs. If you cut the $400, you cut those jobs. This map shows the number of jobs that will be lost in each state if the extra $600 unemployment benefit is cut to $200.
State and local governments have lost 1.5 million jobs since February: Federal aid to states and localities is necessary for a strong economic recovery
June’s national jobs report from the Bureau of Labor Statistics (BLS) showed that there was a 4.8 million increase in jobs, after many states reopened their economies prematurely and accelerated the spread of COVID-19. Despite this uptick in employment, there are still 14.7 million fewer jobs than before the pandemic hit. Of these losses, 1.5 million were in state and local government—a sector that disproportionately employs women and Black workers. In mid-July, BLS released their June state-level jobs report, allowing us to take a closer look at these public-sector losses across the country.
Figure A displays the percent and level change in state and local government employment and private-sector jobs over the course of this recession. In every state and the District of Columbia, with the exception of Tennessee, state and local government employment has fallen since the pandemic took hold. In nine states, more than one in 10 state and local government jobs have been lost since February: Wisconsin (-12.3%), Massachusetts (-11.9%), Connecticut (-11.4%), South Dakota (-11.3%), Hawaii (-10.8%), Minnesota (-10.6%), Illinois (-10.5%), Maine (-10.5%), and Kentucky (-10.2%). Meanwhile, California and Texas have experienced the most public-sector job losses since February: 229,000 (-9.6%) and 112,100 (-6.3%), respectively. Table 1, at the end of this post, displays the state and local employment changes from this map as well as the employment levels in February and June 2020.
These devastating job losses follow a slow and weak recovery for the state and local public sector in the aftermath of the Great Recession. Because of the pursuit of austerity at all levels of government, state and local government employment at the national level only reached its July 2008 level (the prior peak) in November 2019. Just before the pandemic, 21 states and the District of Columbia still had fewer state and local government jobs than in July 2008.
Protecting workers through publicity during the pandemic
The COVID-19 pandemic has been devastating for many low-wage workers and their families. Workers are risking their health and lives, including in meatpacking plants, grocery stores, restaurants, mass transit, and health care. Black workers, in particular, are experiencing retaliation for raising COVID-19 workplace safety concerns. Millions of workers are struggling to make ends meet after being laid off and need unemployment insurance. Other workers have been deemed essential, but their employers have not provided them living wages or critical benefits like paid sick days. While federal and state laws are in place to protect and support workers during the pandemic in various ways, many workers don’t know about these laws or programs. Similarly, employers may not realize their legal obligations. Using media and strategic communication was a critical tool for labor enforcement agencies before the pandemic—and it is of even greater urgency now.
To help agencies with this aspect of their work, the Center for Law and Social Policy (CLASP) and the Harvard Law School Labor and Worklife Program released a toolkit earlier this month, Protecting Workers Through Publicity: Promoting Workplace Law Compliance Through Strategic Communication. The toolkit shares research showing that media coverage and public disclosure improves policy outcomes, in labor and other contexts. The toolkit can be used by labor enforcement agencies, as well as policymakers who care about worker issues, to help them use media effectively. It will also benefit worker advocates, who can share it with enforcers and policymakers as part of an effort to press for greater use of this underutilized vehicle for driving compliance.
The Senate’s failure to act on federal aid to state and local governments jeopardizes veterans’ jobs
Yesterday, the Republican-controlled Senate and White House rolled out the HEALS Act, which not only guts Pandemic Unemployment Assistance benefits for millions of unemployed workers, but also completely overlooks critical federal aid to state and local governments. This intentional oversight threatens vital public services just when they are needed most and could result in an additional 5.3 million public- and private-sector service workers losing their jobs by the end of 2021. More than one million veterans—13.2% of all veterans—work for state and local governments and could be severely impacted by the Senate’s failure to provide timely federal aid. Because state and local governments are extremely restricted in how they can borrow, congressional authorization for state and local fiscal support is vital to prevent deep cuts in health care and education.
Black workers, who are heavily represented in the overall public-sector workforce, are even more heavily represented in the share of state and local government workers who are veterans. While Black workers make up 12% of the private-sector and 14% of the public-sector workforces, they make up 17% of public-sector workers who are also veterans.
The map in Figure A provides a state-by-state overview of the number of veterans serving in state and local governments around the country. Table 1 provides a list of the top 10 states with the highest numbers of veterans employed by state and local governments. Table 2 provides the list of the top 10 states with the highest shares of veterans employed by state and local governments. California has the largest number of veterans working in state and local governments, while Montana has the largest share.
Congress has failed to extend additional unemployment benefits as millions of workers across the country file new UI claims
The U.S. Department of Labor (DOL) released the most recent unemployment insurance (UI) claims data last Thursday, showing that another 2.3 million people filed for UI benefits during the week ending July 18. Huge swaths of workers in every state are relying on UI for food, rent, and basic necessities. There are 14 million more unemployed workers than jobs. In the face of this economic crisis, Congress has let the extra $600 in weekly UI benefits expire, and now Senate Republicans are proposing reducing the increase to $200, which would cause such a huge drop in spending that it would cost 3.4 million jobs. These benefit cuts will directly harm the workers and their families who need these benefits to weather the pandemic and will cause further economic harm over the next year.
Figure A shows the share of workers in each state who either made it through at least the first round of state UI processing (these are known as “continued” claims) or filed initial UI claims in the following weeks. The map includes separate totals for regular UI and Pandemic Unemployment Assistance (PUA), the new program for workers who aren’t eligible for regular UI, such as gig workers.
The map also includes an estimated “grand total,” which includes other programs such as Pandemic Emergency Unemployment Compensation (PEUC) and Short-Time Compensation (STC). The vast majority of states are reporting that more than one in 10 workers are claiming UI. Thirteen states and the District of Columbia report that more than one in five of their pre-pandemic labor force is now claiming UI under any of these programs. The components of this total are listed in Table 1.1
What can we learn from the CFPB’s Spring 2020 Unified Agenda entries?
The week, Director Kathleen Kraninger of the Consumer Financial Protection Bureau (CFPB) is slated to appear before the Senate Banking Committee and the House Financial Services Committee in connection with the CFPB’s semiannual report. As we go into these hearings, it’s worth reviewing what we know about the CFPB’s current regulatory agenda. As a reminder, the CFPB is the regulator that oversees all of the consumer financial regulations in the marketplace—everything from credit cards to payday loans to mortgages to debt collection to credit reporting. If you have a bank account, a credit card, a student loan, or a mortgage, the CFPB’s rules impact you.
At the end of June, the CFPB, along with all of the other federal agencies, released its rulemaking agenda on the rulemaking that the agency plans to undertake through April 2021. As we at the Consumer Rights Regulatory Engagement and Advocacy Project (CRREA Project) discuss in Decoding the Unified Agenda, everything is in the Unified Agenda—what an agency is working on, what it plans to do next, and when it anticipates taking that next step. Rules are characterized as significant or nonsignificant, the agency contact for the rule is listed (in the CFPB’s case, this is almost always the attorney designated as the team lead on the rulemaking), and the history of the rulemaking project are all laid out.
Looking at an agency’s Unified Agenda also tells the reader something about the agency’s current priorities and rulemaking philosophy. The CFPB, in addition to its agency rule list, issues a blog post that updates the Unified Agenda to reflect what the CFPB has done between when it submitted its Unified Agenda entries and when the Unified Agenda was released. It also issues a preamble; the CFPB is unique among agencies in doing this twice a year.
Why we still need the $600 unemployment benefit
One of the most crucial provisions of the last coronavirus relief act was to provide an extra $600 weekly increase in unemployment benefits to the tens of millions of Americans who are currently out of work. Now the White House and many Republican policymakers want to let it expire or reduce it dramatically. But that would be a terrible mistake, and here’s why.
Cutting UI benefits by $400 per week will significantly harm U.S. families, jobs, and growth: 3.4 million fewer jobs will be created over the next year as a result
Last month, we estimated the effect of allowing the $600 supplement to weekly unemployment insurance (UI) benefits to lapse at the end of July, as is currently scheduled. We found that this would strip away enough aggregate demand from the economy to slow growth in gross domestic product (GDP) by 3.7% over the next year. This slower growth would result in 5.1 million fewer jobs created over the next year.
Currently Senate Republicans are offering a proposal to reduce this weekly $600 supplement to closer to $200. This is better than allowing the $600 benefit to go all the way to zero, but this would still lead to GDP that was lower by 2.5% a year from now and would lead to 3.4 million fewer jobs created over the next year.
These are huge numbers—but they are driven by the fact that the support this extra $600 has given tens of millions of working families is huge. The economic shock of COVID-19 was enormous, but the large expansions to the UI system included in the CARES Act of March were incredibly effective in blunting the effect of this shock. The only problem with these expansions was that they begin running out next week—while the job market remains fundamentally damaged.
Joblessness remains at historic levels and there is no evidence UI is disincentivizing work: Congress must extend the extra $600 in UI benefits
Last week 2.3 million workers applied for unemployment insurance (UI) benefits. This is the 18th week in a row that unemployment claims have been more than twice the worst week of the Great Recession. Many headlines this morning are saying there were 1.4 million UI claims last week, but that’s not the right number to use. For one, it ignores Pandemic Unemployment Assistance (PUA), the federal program for workers who are not eligible for regular UI, like the self-employed. It also uses seasonally adjusted data for regular state UI, which is distorted right now because of the way the Department of Labor (DOL) does seasonal adjustments.
Of the 2.3 million workers who applied for UI last week, 1.37 million applied for regular state unemployment insurance (not seasonally adjusted), and 975,000 applied for PUA.
A disaster of Congress’s making is looming for those who have lost their livelihoods during the global pandemic and are now depending on UI to provide for their families. If Congress doesn’t act immediately, the across-the-board $600 increase in weekly unemployment benefits will expire at the end of this week. That would not just be cruel, it would be terrible economics. These benefits are supporting a huge amount of spending by people who would otherwise have to cut back dramatically. That spending is supporting more than 5 million jobs. If Congress kills the $600, they kill those jobs. Figure A shows the number of jobs that will be lost in each state if the $600 is allowed to expire.
Ambitious investments in child and elder care could boost labor supply enough to support 3 million new jobs
Key takeaways:
- Today, the Biden campaign released a plan calling for $775 billion of investments in child and elder care over the next decade, a large increase over current levels.
- Based on our research, such an investment would support 3 million new jobs and substantially help stem the erosion of women’s labor force participation in the United States relative to our advanced country peers.
- These public investments would provide support that makes child and elder care more affordable for families while also providing a needed boost to the pay and training of the care workforce.
It has been apparent for years that the United States could benefit enormously from a large public investment in care work—including early child care education and elder care. A substantial investment in children would lead to a more productive workforce in the future, spurring large income gains. Investments in seniors would ensure that a decent and dignified retirement is available to all, a commitment that the United States has so far failed to sustain.
Crucially, both sorts of investment would greatly expand the opportunities for working-age adults to seek paid employment. It is well documented by now that the employment rate of prime-age (between 25 and 54 years old) U.S. adults (particularly women) has stagnated relative to our advanced country peers, and it is equally as well documented that the failure to invest in child and elder care is a key reason why.
This morning, the Biden campaign released a plan calling for a broad set of investments in child and elder care. Their plan would invest $775 billion over the next decade, a large increase over current levels. Such an investment would substantially help stem the erosion of women’s labor force participation in the United States relative to our advanced country peers. In 1990, for example, women’s prime-age labor force participation in the United States ranked 7th of 24 among the advanced economies with available data from the Organisation for Economic Co-operation and Development (OECD). By 2000, the United States had slipped to 16th of 35 OECD countries, while in 2019 our ranking was 30th of 35.
Recovering fully from the coronavirus shock will require large increases in federal debt—and there’s nothing wrong with that
The economic shock of the coronavirus has been as sudden and jarring as any in U.S. history. Even if policymakers did nothing to respond to it, the income losses generated by the shock and the automatic expansion of some safety net programs would have led to large increases in the federal budget deficit. But the correct policy response to a shock like the coronavirus is to push deficits even larger than they would go on their own by providing expansions to relief and recovery efforts.
As always, there are some who seem more concerned about the rise in federal budget deficits and public debt than by the rise in joblessness and losses of income generated by the shock. But prioritizing the restraint of debt in coming years over the restoration of pre-crisis unemployment rates is bad economics.
We must prioritize the restoration of pre-crisis unemployment rates over restraint of debt. Anything else is bad economics.
Joblessness and income losses in the wake of the coronavirus shock really are large enough to spark an economic depression that lasts for years. A rising ratio of debt to gross domestic product (GDP), on the other hand, will be mostly meaningless to living standards in the next few years. If baseless fears about the effects of adding to debt block this effective response, then it will cause catastrophic economic losses and human misery. It is often said that economics is about making optimal decisions in the face of scarcity. But we need to be clear what is and what is not scarce in the U.S. economy. The federal government’s fiscal resources—its ability to spend more and finance the spending with either taxes or debt—are not scarce at all. What is scarce is private demand for spending more on goods and services. We need to use policy to address what is scarce—private spending—with what is not.
In this blog post I attempt to answer a few of the many questions I hear about the deficit and debt in light of the current economic crisis. We have created an ongoing web feature here to answer these questions and new questions that come up. A common root to the answers of many questions about the effects of deficits and debt concerns whether the economy’s growth is demand-constrained or whether it is supply-constrained (i.e., at full employment). Because this distinction is so important to so many questions about deficits and debt, we provide this background first.
Joblessness remains at historic levels: The extra $600 in UI benefits expires next week—Congress must extend it
Last week, 2.4 million workers applied for unemployment insurance (UI) benefits. This is the 17th week in a row that unemployment claims have been more than twice the worst week of the Great Recession. Of the 2.4 million workers who applied for UI, 1.5 million applied for regular state unemployment insurance (not seasonally adjusted), and 0.9 million applied for Pandemic Unemployment Assistance (PUA).
Many headlines this morning are saying there were 1.3 million UI claims last week, but that’s not the right number to use. For one, it ignores PUA, the federal program for workers who are not eligible for regular UI, like gig workers. It also uses seasonally adjusted data for regular state UI, which is distorted right now because of the way Department of Labor (DOL) does seasonal adjustments.
Before I cover more of the details of today’s UI release, I want to take a moment to note that the across-the-board $600 increase in weekly unemployment benefits is set to expire next week.
Many are talking about the potential work disincentive of the extra $600, since the additional payment means many people have higher income on unemployment insurance than they did in their prior job. The concern about the disincentive effect has been massively overblown. First, it ignores the realities of the labor market for working people, who will be unlikely to turn down a permanent job—particularly in a time of extended high unemployment—for a temporary boost in benefits.
Extending the $600 weekly unemployment boost would support millions of workers: See updated state unemployment data
The U.S. Department of Labor (DOL) released the most recent unemployment insurance (UI) claims data yesterday, showing that another 1.4 million people filed for regular UI benefits last week (not seasonally adjusted) and 1.0 million for Pandemic Unemployment Assistance (PUA), the new program for workers who aren’t eligible for regular UI, such as gig workers. As of last week, more than 35 million people in the workforce are either receiving or have recently applied for unemployment benefits—regular or PUA.
Figure A and Table 1 show the total number of workers who either made it through at least the first round of regular state UI processing as of June 27 (these are known as “continued” claims) or filed initial regular UI claims during the week ending July 4. Three states had more than one million workers either receiving regular UI benefits or waiting for their claim to be approved: California (3.1 million), New York (1.7 million), and Texas (1.4 million). Seven additional states had more than half a million workers receiving or awaiting benefits.
While the largest U.S. states unsurprisingly have the highest numbers of UI claimants, some smaller states have larger shares of the workforce filing for unemployment. Figure A and Table 1 also show the numbers of workers in each state who are receiving or waiting for regular UI benefits as a share of the pre-pandemic labor force in February 2020. In four states and the District of Columbia, more than one in six workers are receiving regular UI benefits or waiting on their claim to be approved: Hawaii (19.7%), Nevada (19.3%), New York (17.8%), District of Columbia (17.6%), and Oregon (17.0%).
Cuts to the state and local public sector will disproportionately harm women and Black workers
The coronavirus pandemic has created a severe budget crisis for state and local governments, as tax revenue has fallen precipitously at the same time that governments are facing extraordinary demands for public health and welfare supports. Because states are severely limited in how they can borrow, the only way to address this crisis is through Congress authorizing significant additional fiscal support to state and local governments. Without federal aid, many states will likely make devastating cuts to the services and staffing they provide, sending the country into a prolonged depression with 5.3 million jobs both public and private likely lost before the end of next year.
Failing to provide aid to state and local governments would be not only be an act of needless economic self-sabotage, it would also exacerbate racial and gender disparities. If state and local governments are forced to cut personnel, those cuts are likely to fall hardest on women and Black workers.
Historically, the public sector has been a key employer for women and people of color. During the Civil Rights era of the 1960s and 1970s, the federal government—through executive actions and legislation—adopted various anti-discrimination and affirmative action measures that boosted the employment of women and Black workers in government. Now, decades later, all state and local government jobs are subject to the federal regulations requiring equal opportunity, and some states and localities have additional affirmative action programs. Consequently, state and local government has generally achieved a more diverse workplace than the private sector.
Almost four months in, joblessness remains at historic levels: Congress must extend the extra $600 in UI benefits, which expires in a little more than two weeks
Last week, 2.4 million workers applied for unemployment insurance (UI) benefits. This is the 16th week in a row that unemployment claims have been more than twice the worst week of the Great Recession. Of the 2.4 million workers who applied for UI, 1.4 million applied for regular state unemployment insurance (not seasonally adjusted), and 1.0 million applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance (UI), like gig workers. It took some time, but all states except New Hampshire and West Virginia are now reporting PUA claims.
It’s important to note that some initial claims from last week are likely from people who got laid off prior to last week but either waited until last week to file a claim, or applied earlier and their application had been caught in an agency backlog. Why do I think that’s likely? In May, there were more than 8 million initial claims in regular state UI programs, but last week’s Job Opening and Labor Turnover Survey (JOLTS) data show there were only 1.8 million layoffs, which is back to pre-virus levels. This suggests many May UI claims were from earlier layoffs, and that dynamic is likely still in play.
Figure A shows continuing claims in all programs over time (the latest data are for June 20). Continuing claims are more than 31 million above where they were a year ago. The latest figure in “other programs” in Figure A is 1.2 million claims. Most of this (0.9 million) is Pandemic Emergency Unemployment Compensation (PEUC). PEUC is the additional 13 weeks of benefits provided by the CARES Act for people who have exhausted regular state benefits. The number of people on PEUC can be expected to grow dramatically as the crisis drags on and more and more of the nearly 17 million people currently on regular state benefits exhaust their regular benefits and move on to PEUC.
Hires up, layoffs down but more economic pain is on the horizon: Policymakers must act in order to protect workers’ health and economic well-being
Last week, the Bureau of Labor Statistics (BLS) reported that, as of the middle of June, the economy was still 14.7 million jobs below where it was in February. Today’s BLS Job Openings and Labor Turnover Survey (JOLTS) reports that the labor market was down 13.1 million jobs at the end of May. The labor market began picking up in May, and more so in June, as states began relaxing their stay-at-home orders. Congress’s aid to workers and households also helped to boost demand and spending. Unfortunately, what’s clear from the latest coronavirus data is that the relaxed restrictions on social distancing also had the effect of increased cases and subsequent re-shuttering in certain parts of the country.
Today’s data show that at the end of May, the number of hires increased by 2.4 million to a series high of 6.5 million—the largest monthly increase and largest number of hires on record (series began in 2000). The hires rate also rebounded significantly to 4.9%, the highest rate on record. At the same time, layoffs dropped considerably to 1.8 million, consistent with the average number of layoffs in the pre-coronavirus period. This is a significant fall off from previous months. In April and May, layoffs totaled 19.2 million. Further, 1.8 million layoffs is much lower than the initial unemployment insurance (UI) claims we saw in May. In May, there were more than 8 million initial UI claims in regular state programs. This suggests that a significant share of the initial UI claims in May were from layoffs in March or April—people either waited until May to file claims, or state agencies were working through backlogs of claims.
Unfortunately, there are more recent indicators that layoffs are going to pick up again as people are being laid off for the second time, and hires will likely slow as well.