Jobless claims fell to a new pandemic low last week,
suggesting the labor market continues to heal even as the Delta variant causes
uncertainty.
First-time applications for benefits, a proxy for layoffs,
fell by 29,000 to a seasonally adjusted 348,000 in the week ended Aug. 14, the
Labor Department said Thursday. That was the lowest level of claims since the
pandemic took hold in the U.S. in March 2020.
The four-week moving average, which smooths often volatile
data, fell to 377,750 last week, also a fresh pandemic low. New jobless claims
have fallen for four straight weeks and are down more than 50% since January.
The Delta variant has caused recent increases in new
Covid-19 cases and hospitalizations throughout the country. But while that
might cause the pace of growth to ease, some economists say the dynamic between
Covid-19 and economic activity has evolved over the past year.
“We shouldn’t necessarily assume that rising cases are going
to translate to rising jobless claims,” said Robert Rosener, senior U.S.
economist at Morgan Stanley. “The data we’re seeing shows that while certain
consumer areas may be starting to cool, activity does remain solid and labor
demand remains extremely strong.”
Claims data was mixed across the country. On a
non-seasonally adjusted basis, new applications fell from the prior week in
Texas, Illinois, Michigan and Florida, but rose in several other states,
including Virginia, New Mexico and California.
Continuing claims for regular state programs, a proxy for
the number of people receiving benefits, fell to a seasonally adjusted 2.8
million for the week ended Aug. 7, the Labor Department said. That was also the
lowest since March 2020.
The latest claims data is consistent with other data showing
a strong labor market. Employers added 943,000 jobs in July, the best gain in
11 months, according to the Labor Department, which also said job openings
reached a record level at the end of June. Both are signs of a strong labor
market.
However, there are some indications that the economic
expansion is cooling. Retail sales fell 1.1% in July from June, though remain
well above pre-pandemic levels, according to the Commerce Department. The
University of Michigan’s survey of consumer sentiment fell sharply in the first
half of August, as many respondents cited concerns about the Delta variant.
The variant might jeopardize job growth in the short run,
according to Lynn Reaser, an economist at Point Loma Nazarene University in San
Diego.
“We are seeing some slowing and reluctance of consumers in
restaurants, entertainment and then travel,” Ms. Reaser said. “For
manufacturers, the Delta variant is exacerbating parts shortages. Increased
worker absenteeism also is disrupting operations.”
As a result, some companies are focusing on maintaining
operations rather than looking to expand, she said.
Concerns about the Delta variant’s impact on the labor
market prompted the Biden administration on Thursday to reaffirm that federal
funds can be used to allow some workers to remain on unemployment assistance.
Federal programs enacted to respond to the pandemic provided
an extra $300 a week on top of state payments, provided recipients assistance
longer than the six months most states allow and provided aid to gig workers
and others not typically eligible for benefits.
Those programs are set to expire nationwide Sept. 6. Already
19 states ended their participation in those programs, and five more removed
only the $300 weekly enhancement, according to the National Conference of State
Legislatures. Governors in those states cited reports of worker shortages for
reducing and cutting off benefits.
Treasury Secretary Janet Yellen and Labor Secretary Marty
Walsh said that while the extra weekly payments should expire next month,
states that want to continue other pandemic benefit programs may use state aid
they received as part of the $1.9 trillion Covid-19 relief package Congress
enacted in March.
“As the economy continues to recover and robust job growth
continues, there are some states where it may make sense for unemployed workers
to continue receiving additional assistance for a longer period of time,
allowing residents of those states more time to find a job in areas where
unemployment remains high,” they wrote in a letter to Congress on Thursday.
“The Delta variant may also pose short-term challenges to local economies and
labor markets.”
The Labor Department will communicate with states about how
to divert some of the $350 billion in pandemic aid to support additional
jobless benefits through their state unemployment insurance programs, Ms.
Yellen and Mr. Walsh said. The Labor Departments also announced $47 million in
new grants for re-employment services.
The economy has steadily added jobs this year, but employers
still had 5.7 million fewer positions on payrolls in July than in February
2020, before the coronavirus caused swaths of the economy to shut down. For
some, re-entry into the workforce has been bumpy.
Delfina Federico, 57 years old, recently lost a job for the
third time in two years. A few weeks ago, a plastics manufacturer let her go
from a job as human-resources generalist that she started on July 1. The
company told her that her Spanish wasn’t proficient enough for the role, she
said. In the fall of 2019, she was laid off from a home-improvement company
that went out of business. Last year, she held a short-term job at a nonprofit
that served the homeless.
“It’s frustrating,” Ms. Federico said. The Anaheim, Calif.,
resident said she recently applied again for unemployment benefits, but hopes
to find a job quickly.
“I’m not going to sit and wait,” she said. “I’m already
applying for work.”
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