Last week’s historic jobs report showed a labor market in freefall with over 20 million Americans losing their jobs and the unemployment rate jumping to 14.7 percent. While the level of new weekly unemployment insurance (UI) claims is slowing, the labor market has not yet reached the bottom as employers must navigate reopening amid a continued health crisis.
One in ten Americans have filed initial claims for unemployment insurance (UI) over the last eight weeks. Initial claims for UI fell to just under 3 million on a seasonally-adjusted basis, according to the latest figures from the Department of Labor for the week ending May 9, 2020. UI claims now exceed 36 million on a seasonally-adjusted basis. Claims for the week of May 2 were revised up to 3.18 million from 3.17 million.
Although most will focus on today’s seasonally-adjusted UI claims, the non-seasonally-adjusted (NSA) data may be more accurate. Typically, seasonally-adjusted data smoothes anticipated spikes or declines in the labor market; however, COVID-19 is an unprecedented event, which can cause the multiplicative seasonal adjustments to unintentionally overestimate the number of claims by millions. In fact, the eight-week total for UI claims NSA is 33.5 million, 3 million fewer than the SA figure.
Additionally, last week, the Department of Labor began reporting the number of workers claiming Pandemic Unemployment Assistance (PUA) benefits. PUA benefits are available to workers traditionally not eligible for UI, including gig workers and the self-employed, and adds at least another 2 million claims (NSA) to the eight-week total. While PUA extends benefits to millions more Americans, the expanded eligibility has not reversed the slowdown in initial claims from their peak in late March.
In last week’s jobs report from the Bureau of Labor Statistics, employment dropped 22.7 million according to the household survey. In the weeks covered by the April jobs report, 24.2 million workers filed for UI (NSA). While the statistics are not perfectly comparable, an additional 13.3 million UI claims and 2.9 million PUA claims have been filed in the last four weeks, suggesting that the May jobs report will continue to show a slumping labor market.
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