Labor Market Still Struggling as Trump's Unemployment Aid Runs Out

Labor Market Still Struggling as Trump's Unemployment Aid Runs Out

More than 857,000 workers filed initial jobless claims at the state level last week, the Labor Department announced Thursday, and another 839,000 filed first-time claims in the federal Pandemic Unemployment Assistance program.

State filings have been under 1 million for two weeks in a row, but the combined state and federal number is still well above that level and has been rising for four weeks straight. All told, about 30 million people were receiving unemployment benefits in the week ending August 22.

“The unexpectedly high levels of claims underscore the uneven nature of the labor market’s recovery,” Bloomberg’s Reade Pickert said Thursday. “Many businesses are hiring or bringing back workers, yet millions remain unemployed and others are on the chopping block as more companies announce job cuts and small-business aid runs dry.”

Some economists are raising alarms about the wobbly recovery. “It’s a gut punch to see these numbers every Thursday with no improvement,” Diane Swonk, chief economist at the accounting firm Grant Thornton, told The New York Times. “The numbers are going in the wrong direction.”

AnnElizabeth Konkel, an economist at Indeed Hiring Lab, told The Washington Post that the latest report “really points to mounting damage from the coronavirus.” Bloomberg economist Eliza Winger said that the “labor market recovery appears to be flattening well shy of the pre-pandemic peak.”

Improvements but plenty of pain, too. Job losses are on a long and bumpy downward trend but remain at alarmingly high levels. Good news arrived last week when the Labor Department announced that the unemployment rate had dropped to 8.4% in August. But as with much of the news during the coronavirus crisis, there’s a substantial footnote: About 1.1 million furloughed workers are being counted as employed, and roughly 3.7 million people have left the workforce since March. Factoring in those details, some economists say a more realistic unemployment rate would be closer to 9.9%.

Trump’s unemployment aid running out. The $300 per week in unemployment assistance President Trump made available from disaster relief funds is starting to run out, and the Federal Emergency Management Agency announced Thursday that payments would be restricted to a maximum of six weeks. Officials in several states, including Montana, Texas, Tennessee and New Mexico, said they have been told that funding for their programs would end in the week ending September 5, five weeks after the program’s retroactive start date of August 1.   

At least 20 states have received funds so far through the Lost Wages Assistance program that Trump authorized by executive action on August 8, though more have applied and are awaiting payment. About $30 billion has been paid out from the $44 billion fund, according to Politico.