First-Time Unemployment Claims Increase For First Time In 16 Weeks

( For the first time in in almost four months, first-time unemployment claims increased last week.

The Department of Labor reported Thursday that 1.4 million people filed for these jobless claims for the week ending July 17, an increase of roughly 100,000 over the week before. It marked the first time in 16 weeks that new unemployment claims increased week-over-week.

While the total number of claims is still significantly lower than it was in the last week of March, when first-time unemployment claims reached its peak of 6.9 million, it’s not a good sign that an increasing number of people are without a job.

As businesses were starting to re-open from coronavirus lockdowns in the spring, people seemed to be returning to work. Recent surges in the coronavirus spread across the country, though, have forced some businesses to shut down again, leading to more layoffs — even if they are temporary.

In addition to the traditional unemployment claims, almost 1 million people have applied for pandemic unemployment assistance. This is a new program that Congress created in response to the coronavirus pandemic. The program provides unemployment benefits to people who normally wouldn’t qualify, including self-employed workers, gig workers and freelancers.

The timing could not be worse for these people. The federal boost to unemployment benefits is scheduled to expire next month unless the government passes an extension. With the passage of the CARES Act earlier this year, people have been receiving $600 per week on top of their state unemployment benefits.

That has been a lifeline for the 52.7 million people who have filed for unemployment benefits for the first time over the last four months.

As Andrew Stettner, a senior fellow at The Century Foundation, said in a statement on Thursday:

“There is one clear takeaway from this morning’s unemployment insurance report — not extending the weekly $600 benefit supplement would be unconscionable. Families will be evicted from their homes, poverty will soar, children will go hungry, businesses will shutter and the economy will tank.”

While some economists and politicians were stressing that a large portion of the people who filed for unemployment would return to work once states re-opened, there is a new concern now. Many people fear this second surge combined with a predicted second wave come the fall or winter will turn some of these projected temporary layoffs into permanent ones.

Last week, economist Dante DeAntonio of Moody’s Analytics wrote in a note:

“In more normal times, a significant share of people on temporary layoff could be expected to return to their previous employers, causing total unemployment to recede quickly. However, given the heightened uncertainty created by COVID-19 and the expansion in classification of temporary layoffs, that assumption is tenuous at best.

“What is certain is that in the coming months, permanent job losses will continue to mount as new layoffs occur and as some workers who were previously classified as temporarily laid off enter a more permanent state of unemployment.”