Job Picture Worsens: Millions More File For Unemployment, In Reversal

Jul 23, 2020
Originally published on July 23, 2020 2:35 pm

Updated at 11:34 a.m. ET

New claims for unemployment benefits rose last week for the first time in four months — since March 28 — as states began reimposing lockdown restrictions in an effort to reverse a surge of coronavirus cases.

More than 1.4 million new claims were filed during the week ending July 18, an increase of more than 100,000 over the week before, the Labor Department reported Thursday.

In addition, claims for Pandemic Unemployment Assistance, which helps people who are self-employed or who don't qualify for regular benefits, went up nearly 20,000 to about 975,000.

The number of new claims had been steadily ticking downward since March, when nearly 7 million people filed for unemployment insurance in a single week. Last week's numbers marked the first reversal of that trend.

The increases are evidence that the labor market is deteriorating as businesses around the country close their doors again in response to an intensified coronavirus pandemic.

"The labor market remains in a precarious place, as COVID-19 cases surge in some parts of the country and fresh lockdown measures are adopted in response," said Nancy Vanden Houten, lead economist at Oxford Economics.

Nearly 4 million cases of the virus have been reported in the U.S. with dozens of states reporting an uptick in cases — especially in Sunbelt states such as Arizona, Florida and Texas — and some states have begun reimposing lockdowns.

California had been slowly allowing businesses to reopen, only to reverse itself last week. Malls, restaurants and hair salons in the largest counties were ordered to stop serving customers indoors as cases spiked.

The upticks in filings come as Congress debates whether to extend federal unemployment insurance related to the pandemic, which expires in days.

"The combination of the resurgence of COVID-19, especially across the Sun Belt, bankruptcies, and secondary layoffs finally stopped the decline," said Robert Frick, corporate economist at Navy Federal Credit Union.

The 109,000 increase in first-time regular claims came even as continued claims dropped by 1.1 million, to 16.2 million.

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RACHEL MARTIN, HOST:

And NPR's Jim Zarroli is with us because there are new jobs numbers out. And Jim, I do feel badly that...

JIM ZARROLI, BYLINE: (Laughter).

MARTIN: ...You are so often the bearer of bad news. But that's...

ZARROLI: Right.

MARTIN: ...Sort of just what we've got. And that's what we've got today, right?

ZARROLI: Yeah, yeah. We do have more bad news. I mean, the Labor Department says 1.4 million people filed unemployment claims for the first time during the week ending July 18, which is an increase of more than 100,000 over the week before. You know, in March, we saw this real historic spike in people filing for unemployment. One week, there were nearly 7 million new claims. Since then, we've seen the number of unemployed people falling for four months...

MARTIN: Right.

ZARROLI: ...Because states were relaxing their coronavirus restrictions and people were going back to work. This is the first time we've seen a reversal and an increase in the number of claims filed.

MARTIN: So is that it? It's just because, you know, people are realizing that maybe some of those reopenings happened too quick and they're shutting back down again?

ZARROLI: Yeah, I think it has everything to do with a recent spike in coronavirus cases. And one of the things that's been happening for months is that states were slowly relaxing their lockdown rules. But recently, we've seen, you know, cases increase in dozens of states across the country, especially in the Sunbelt - in places like Arizona, Florida, Texas, California.

So states have been forced to reimpose a lot of these restrictions. And a lot of the kinds of businesses that attract crowds of people, like restaurants and bars and retail stores, have been closing again to try to slow the spread of the virus. California, in particular, has gone back into lockdown. And it really saw a spike in claims last week. They were also up in Alabama, Tennessee, Louisiana - all states that are seeing more cases of the virus.

MARTIN: So I mean, I know, it's impossible to predict the future.

ZARROLI: Yeah.

MARTIN: But what do we take away from this? I mean, does this tell us anything about the jobs market going forward?

ZARROLI: Well, it is one week. And you know, maybe we shouldn't draw too many conclusions from it. It certainly suggests that the Labor Department has at least - you know, labor market recovery has at least stalled. And that's not a good sign. We're also seeing evidence that more and more businesses that had closed temporarily since March expect they're not going to reopen, and that's really worrisome. It means the slowdown that we've seen could be a lot harder to get out of and last much longer than we thought.

You know, what appears to have been a temporary slowdown could be much worse. We've seen - you know, look at what we've seen. We've seen big retail chains like J.C. Penney shut down. Today we saw Ann Taylor's parent company file for bankruptcy. Big airlines are warning they're going to have to furlough tens of thousands of people. Even the tech companies like LinkedIn are cutting jobs. And they've, you know, largely been protected and - before now.

MARTIN: Wow. So Congress is debating a fifth stimulus bill to deal...

ZARROLI: Yeah.

MARTIN: ...With all the effects of the coronavirus. And we're covering this elsewhere in the show, just what's going to go in that bill. But I imagine these new jobs numbers - I mean, this has got to be putting pressure on lawmakers to extend unemployment benefits, right?

ZARROLI: Yeah. I mean, one of the items of contention is this additional $600 a week that unemployed people get from the federal government. It's supposed to end on July 31. Republicans have said this encourages people not to work because they make more money on unemployment than if they had a job. But there's a lot of evidence it's kept families going. You know, there's research it's really kept poverty at bay. And...

MARTIN: Yeah.

ZARROLI: ...This is going to put pressure on Congress to consider extending them.

MARTIN: NPR's Jim Zarroli. Thanks, Jim.

ZARROLI: You're welcome.

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