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Wolf Richter: Unemployment Crisis Going in Wrong Direction: Week 25 of U.S. Labor Market Collapse

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Wolf Richter: Unemployment Crisis Going in Wrong Direction: Week 25 of U.S. Labor Market Collapse

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Jerri-Lynn here. More analysis of the ongoing U.S. unemployment crisis, sparked as we are all well aware by the COVID-19 pandemic. I don’t think policy-makers have any idea what to do – or more accurately, what they could do that will be acceptable to their donors. Progressive economists have policy ideas, but alas there is little chance of them being adopted – that is absent much higher levels of social unrest.

By Wolf Richter, editor of Wolf Street. Originally published at Wolf Street.

Continued unemployment claims rise for second week, to 29.6 million, worst since Aug 1, meaning 18.4% of labor force is on unemployment insurance. State & federal initial claims jumped to 1.7 million in the week (not seasonally adjusted).

Total continued claims for unemployment insurance (UI) under all state and federal programs rose by 380,000, to 29.6 million people (not seasonally adjusted), the highest since August 1, according to the Department of Labor this morning. This was the second weekly increase in a row, after the 2.2-million jump last week.

These 29.6 million people who continued to claim UI under all programs translate into 18.4% of the civilian labor force of 161 million:

Wolf Richter: Unemployment Crisis Going in Wrong Direction: Week 25 of U.S. Labor Market Collapse 2

Blue columns – continued claims under state programs: +54k

The number of people who continued claiming UI under state programs rose by 54k to 13.2 million (not seasonally adjusted), the first increase after five decreases in a row.

Red columns – continued claims, federal & other programs: +326k

The number of people on UI under all federal programs established by the CARES Act and some other programs rose by 326k to 16.4 million (not seasonally adjusted):

  • Federal PUA claims jumped by 1.0 million to 14.59 million. The Pandemic Unemployment Assistance program, established under the CARES Act, covers contract workers, the self-employed, gig workers, etc. This was driven by a jump of 1.55 million continued claims in California.
  • Federal PEUC claims rose by 29k to 1.42 million. The Pandemic Emergency Unemployment Compensation program, established under the CARES Act, covers workers not covered by other programs.
  • State Extended Benefits jumped by 72k to 241k.
  • State STC / Workshare claims fell by 16k to 253k.
  • Federal Employees: 13.6k continued claims.
  • Newly Discharged Veterans: 13.0k continued claims.

Newly-laid off workers: state & federal UI initial claims:

Initial claims under the federal PUA program for contract workers jumped to 839k in the week ended September 5, from 748k in the prior week (not seasonally adjusted).

Initial claims under state programs rose by 20k to 857k (not seasonally adjusted) in the week ended September 5, remaining in the same range now for five weeks, and there has been no improvement:

Wolf Richter: Unemployment Crisis Going in Wrong Direction: Week 25 of U.S. Labor Market Collapse 3

State plus federal PUA initial claims combined jumped to 1.70 million (not seasonally adjusted). These are people who’d newly lost their work and filed for UI during the week ended September 5, translating into a monthly rate of over 7 million people who are still losing their work and file for UI.

Labor Department corrected calculations that had gone rogue.

Two weeks ago, the Labor Department announced that it would correct “seasonally adjusted” unemployment-claims calculations because they’d gone rogue during this crisis. I stopped reporting “seasonally adjusted” claims in May for that reason, and reported exclusively “not seasonally adjusted” claims, and continue to do so, and none of the data I have reported since late May was impacted by that correction in calculation methods (here is my explanation of those changes and my chart that shows just how rogue these “seasonally adjusted” claims had gone; in the linked article, scroll down to “Data Chaos, Part 2”) .

The picture that emerges.

That 1.7 million people getting newly laid off and filing for UI in the last week is a deterioration of similar terrible numbers over the four prior weeks. This means that these companies are still shedding massive numbers of people. At the same time, a smaller number of people that had received UI have gotten a job, and continued claims deteriorated further to 29.7 million claims. This is a huge number of people on UI, and it has gone in the wrong direction for the second week in a row.

There is a churn and a shift going on, with some companies and sectors hiring large numbers of people – retailers, ecommerce operations of all kinds including fulfillment and shipping, restaurants, the lodging industry, etc. – while other industries are now shedding jobs. This includes small and medium-size businesses that have received PPP loans whose effective data range has now expired.

And it includes large companies, including tech companies, where wages are higher. After having vowed during the early phases of the crisis not to do so, they’re now laying off staff. It’s a sort of sector rotation of layoffs. Read… The Second Wave of Layoffs is Here, Now Hitting Well-Paid Jobs

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