New claims for unemployment benefits remained remarkably high at 1.3 million last week, just 10 thousand fewer than a week earlier, the Department of Labor reported Thursday.
Economists surveyed by Econoday had been expecting 1.25 million claims.
This was the 16th consecutive week with initial claims above one million.
The estimate for ongoing unemployment claims, those made after the initial filing, during the week ending July 4, was 17,338,000, 422,000 below the previous week’s revised level. (These are reported with a one week lag compared to initial claims.) The four-week moving average of continuing claims is 18,272,250, a decrease of 737,750 from the previous week’s revised average.
Jobless claims are a proxy for layoffs. The extremely high level of weekly claims demonstrates that the economy is still reeling from the pandemic, government shutdowns, and a combination of voluntary and mandatory social distancing. Prior to the pandemic, weekly claims had never exceeded one million.
The federal government has been chipping in an extra $600 a week to state unemployment benefits, making the program much more generous. Many workers can now earn more on unemployment than they did when they had a job. An analysis done by Isabel Soto of the American Action Forum found that the maximum unemployment benefit amount is greater than median wage in all states except the District of Columbia. That may be discouraging some workers from seeking work and leaving the unemployment rolls.
“Using 2019 wage and unemployment data, an upper–bound estimate of 92.8 million workers (or 63 percent of the workforce) typically make below the maximum weekly unemployment benefits under the CARES Act,” Soto wrote.
These super-sized benefits, however, are set to run out at the end of the month.
In addition to claims for regular unemployment benefits, the government now offers two new forms of unemployment benefits to business owners, self-employed, gig-workers, and independent contractors who would not ordinarily qualify for unemployment benefits.
The highest insured unemployment rates—meaning the areas worst hit by the rise in joblessness—in the week ending June 27 were in Puerto Rico (26.8), Nevada (20.9), Hawaii (19.9), New York (17.0), Louisiana (16.6), California (15.9), Massachusetts (15.6), Connecticut (15.2), Georgia (14.1), and Rhode Island (14.0). The insured unemployment rate tracks but does not match the broader unemployment rate reported each month in the government’s employment situation data, which includes all those looking for work regardless of whether they are covered by unemployment insurance.
The largest increases in initial claims for the week ending July 4 were in Texas (+20,506), New Jersey (+19,410), Maryland (+10,568), Louisiana (+9,441), and New York (+3,906). The largest decreases were in Indiana (-22,725), Florida (-17,429), California (-12,571), Georgia (-12,325), and Oklahoma (-8,982).