New jobless claims fall below 400K for first time since March 2020
The number of Americans seeking new unemployment benefits dropped below 400,000 for the first time since March of last year — marking a new pandemic low, the feds said Thursday.
Initial worker filings for jobless claims, seen as a signal of layoffs, reached 385,000 last week, down from a revised total of 405,000 reported the prior week, according to data released Thursday by the Labor Department.
It’s the fifth consecutive week of steady declines, but initial claims still remain substantially higher than pre-pandemic levels. The country was averaging just over 200,000 new claims per week in 2019.
“The seasonally adjusted headline number is now below 400,000, which has often been seen as psychologically important during past economic downturns,” Mark Hamrick, senior economic analyst at Bankrate.
The downward trend of new claims is an indication of a labor market that appears to be healing, albeit slower than some economists expected earlier this year.
Still, the labor market has a ways to go before it hits pre-pandemic levels. More than 15.4 million Americans were still on some form of government assistance through all unemployment programs, according to Thursday’s data.
“That’s still historically elevated but coming down,” Hamrick said.
Millions of those Americans could also soon see their benefits slashed, as at least 25 states are now looking to lure workers back into the labor market by withdrawing from the federal program that provides an extra $300 in additional unemployment benefits every week. That program is set to expire after Labor Day.
Companies have reported struggles to recruit new workers amid the reopening, with many citing the pandemic-boosted federal unemployment benefits as a cause. Other reasons for the labor crunch include fear of getting COVID-19 and school closures keeping parents at home, economists say.
Some economists have warned that the labor shortage could hold back the US economic recovery, while others have urged patience as businesses grapple with temporary issues in the hiring pool.
“The realignment of employment and the economy more broadly will require more time to normalize to something new as spending increases on services and more Americans resume activities freed by vaccinations and lifting of COVID-19 restrictions,” Hamrick said.
With consumer demand now generally picking up heading into what’s expected to be a bustling summer season, some business owners told The Post they’re missing out on sales because they don’t have the workers to operate at full capacity.
Mark Hoplamazian, CEO of Hyatt Hotels, told CNBC last week that the company is seeing demand rise again, but is struggling to hire enough new workers to keep up. He added that the company is seeing hiring rise in states that have announced plans to end the extra benefits.
“We have seen increases in the number of applicants for jobs in states where the governors and the state legislatures have actually suspended the additional unemployment benefits that the federal government had mandated,” he said.
Other companies have announced wage increases and other perks to lure new workers. One McDonald’s in Illinois is even offering new workers a free iPhone if they work there for at least six months.
Some companies, politicians and economists have said the extra benefits add up to more than what businesses can afford to pay people, particularly for entry level jobs.
The White House, in turn, has defended the extra benefits, saying that businesses should pay people more.
President Biden has added that, “If you’re receiving unemployment benefits and you’re offered a suitable job, you can’t refuse that job and just keep getting the unemployment benefits.”
Rather than cutting the federal benefits, some states have sought to incentivize returning to the workforce through new programs.
New Hampshire, for example, is offering a $1,000 hiring bonus to full-time workers, and $500 for part-timers, who earn less than $25 per hour and stay on the job for at least two months. Other states have sought to pair incentives like that with cutting the federal benefits.
