UI Claims Make Sluggish Improvements as Stimulus Talk Stall

October 8, 2020

Initial unemployment insurance (UI) claims were essentially unchanged last week, on a non-seasonally adjusted basis. UI claims remained near their lowest level since March, though they remain staggeringly high overall. New UI claims have fallen only 4 percent since the beginning of August, a drastic deceleration in the rate of improvement.

The sluggish improvement in claims over the last few weeks is consistent with last Friday’s jobs report, which showed a marked deceleration in the rate of recovery. Additionally, the apparent end of stimulus negotiations and impending layoffs of tens of thousands workers at major corporations like Disney and the airlines are a specter hanging over the recovery. While some large companies were able to stave off layoffs earlier in the crisis, the effects of the pandemic may now be metastasizing through the economy, resulting in a new wave of layoffs.  

Initial UI claims rose by 5,312, edging up to 804,307 from 798,995, on a non-seasonally adjusted basis, according to the latest figures from the Department of Labor for the week ending October 3. On a seasonally-adjusted basis, 840,000 initial UI claims were filed, a modest decrease from 849,000 in the prior week.

A large caveat to data for the last two weeks is California’s two-week system reset and the Department of Labor’s decision to impute California data at pre-reset levels. Because California accounts for over 1 in 4 weekly initial claims, the claims data should be taken with a grain of salt until the California data is updated.

Pandemic Unemployment Assistance (PUA) claims are falling again, dropping to 464,437. The drop in PUA claims in the last few weeks had been driven by California’s anti-fraud measures, but because California data is being held constant, that downward pull is no longer having an effect. However, downward revisions to previous data and continuing drops in Arizona and Pennsylvania are driving the new decline. UI and PUA claims combined fell to their lowest level since March, though still the 29th week with over 1 million new weekly claims.

Non-seasonally adjusted continuing claims for UI fell to 10.6 million for the week ending September 26. For Americans newly unemployed at the start of the crisis, we are now passing the 26-week mark after the beginning of the crisis. At this point, many unemployed will see their traditional UI benefits exhausted and will instead move over to the Extended Benefits (EB), Pandemic Emergency Unemployment Compensation (PEUC) and PUA programs if they’re eligible. 

Total continuing claims across all programs, however, provides a murky view of the number of unemployed, due to known data quality issues. Additionally, the blown-up stimulus negotiations leaves millions of unemployed in the lurch as the PEUC and PUA programs expire at the end of the year.

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