U.S. Jobless Claims Rose to 1.1 Million in Latest Week

Unemployed Kentucky residents entered a state career center in June as hundreds more waited in long lines outside.

Photo: John Sommers II/Getty Images

New applications for unemployment benefits rose last week after a series of declines, another sign the labor market’s recovery is cooling amid continuing disruptions because of the coronavirus pandemic.

Weekly initial claims for jobless benefits rose by 135,000 to a seasonally adjusted 1.1 million in the week ended Aug. 15, the Labor Department said Thursday.

The report followed others from the government and private firms showing that job gains slowed in July from June, job postings fell this week for the first time since April and several companies are planning more layoffs.

Still, the data show the job market is improving, though more slowly than in the spring.The number of people collecting unemployment benefits through regular state programs, which cover most workers, fell to about 14.8 million for the week ended Aug. 8. That marked the lowest number on benefit rolls since April. And nationally, new hiring is more than offsetting job cuts.

“The labor market isn’t bouncing back—it’s clawing back in fits and starts,” said Michelle Holder, a labor economist at John Jay College in New York.

The number of new claims rising last week shows that fresh layoffs are occurring even as the economy broadly is showing signs of recovering from the deep economic downturn caused by the pandemic and the shutdowns aimed at curbing it.

Aerospace giant Boeing Co. said this week it plans more job cuts in response to a drop in jetliner demand that it expects to continue for at least three years. Clothing retailer Rent the Runway Inc. said last week it would permanently close its five retail locations, adding to a list of store closures during the health crisis. And many municipalities have warned of layoffs in response to falling tax revenues.

Maggie Brown, 24 years old, had a public-relations job lined up this spring at New York City’s Metropolitan Museum of Art, but her start date was delayed until July. Then she was informed last month that her position was eliminated.

Ms. Brown, who previously worked as a freelance costume designer, is trying to sublease her apartment so she can move across the country to live with her parents in California. She said she was able to subsist with an extra $600-a-week federally funded payment that expired July 31, but without it her weekly unemployment benefit fell to $125 a week after taxes.

There is little costume-design work with Broadway theaters closed, and because of limited seating, even bar and restaurant jobs are hard to find.

“I’m one of the lucky ones because at least I know I can move back in with my parents and they’ll support me,” the New York University graduate said. “But it’s still hard. The old adage is that if you can make it here, you can make it anywhere. I feel like I’ve failed.”

Thursday’s report showed a mixed picture of claims across states last week. Texas, Florida, Kansas, New Jersey and New York all had notable increases in applications. Meanwhile, California, Georgia, Nevada and Pennsylvania saw fewer applications.

Claims levels have moved up and down in recent weeks, ending what had been a consistent decline from a peak of nearly seven million in late March to about one million in mid-July. The uneven pattern has played out similarly across states, and isn’t necessarily tied to the surges in coronavirus infections this summer in certain states, such as Florida and California, said Gus Faucher, economist at PNC Financial Services.

“Initially businesses were recalling a lot of workers as state restrictions were lifted,” he said. “Now businesses are dealing with the reality that there’s a lot lower demand than there was at the start of the year.”

Still, layoffs in recent months have been more than offset by businesses hiring and recalling old workers.

U.S. employers added nearly 9.3 million jobs in the past three months, separate Labor Department data showed. While that is a strong pace of hiring, it hasn’t yet replaced half of the 22 million jobs lost in March and April. And as hiring slows, it becomes more likely that many Americans will be unemployed for a longer period. The unemployment rate was 10.2% in July.

Some businesses haven’t been able to weather the economic downturn. Seth Brewer said he would be closing his Lexington, Ky., bar permanently at the end of August, which means laying off two of the six employees he had brought back to work in May. A local chef and his assistant, who have operated out of the bar’s kitchen in recent months, will also be out of work.

Mr. Brewer said the bar wasn’t breaking even in recent months, with revenue around 20% of what it was during the same period last year. Although the place, called Best Friend Bar, was able to provide sit-down service through most of July, a surge in reported Covid-19 cases in Kentucky forced it to switch back to takeout only in late July.

“We’ve been watching our numbers throughout all of this,” Mr. Brewer said of the decision to close permanently. “We didn’t have any reason to assume the picture would get rosier.”

In addition to regular state claims, Thursday’s report showed the number of people applying for special federal pandemic assistance also rose in the week that ended Aug. 15. That program is open to self-employed and other workers who aren’t eligible for state programs. In early August, more than 11 million people were receiving benefits through that program.

The July 31 expiration of the separate federally funded $600-a-week enhanced unemployment aid meant payments to those receiving support through regular state programs fell to levels approved by their states, which average a little more than $300 a week, according to the Labor Department.

Ms. Holder, the labor economist, said last week’s increase in jobless claims shows the enhanced benefit’s expiration didn’t significantly afffect the number of new applications being filed. She said she is concerned that reduced government assistance could slow the pace of the economic recovery.

President Trump signed an executive order Aug. 8 allowing states to tap disaster-relief funds to pay for a reduced $300 a week in enhanced aid on top of state benefits. Several states said this week they are moving to make such payments, but it will take weeks before workers receive the extra amount.

Eleven states have received federal approval to distribute the $300-a-week enhanced benefit, and eight more are awaiting permission to do so, federal officials said Thursday. A Federal Emergency Management Agency administrator said in a news briefing Thursday the agency expects most states to apply to participate, though a few have indicated they might not.

The disaster money is expected to provide about six weeks of enhanced payments, a Labor Department official said, depending on how many states apply.

Related Video

The economy added 1.8 million jobs in July and the unemployment rate lowered to 10.2%, but the economic recovery from the coronavirus pandemic has slowed compared with previous months. WSJ’s Eric Morath explains. Photo: Marco Bello/Reuters

Despite increased jobless-assistance applications, some businesses say they are struggling to find workers to fill open jobs.

The Express Employment Professionals office in Grand Rapids, Mich., a temporary-staffing firm, noted an uptick in job seekers in recent weeks, said owner Janis Petrini. But the increase was modest relative to the number of open jobs she has to fill in manufacturing and warehousing, she said. Those jobs in western Michigan are paying more than $15 an hour and don’t require previous experience, she said.

Ms. Petrini said some would-be job seekers remain concerned about safety, and others lack child care, an issue likely to persist this fall with many area schools not returning to full-time, in-person instruction.

“Who would have ever thought with the unemployment numbers we’re seeing right now that we’d have a harder time finding workers than before Covid[-19]?” she said, referring to the period when the jobless rate had touched a 50-year low.

By submitting your response to this questionnaire, you consent to Dow Jones processing your special categories of personal information and are indicating that your answers may be investigated and published by The Wall Street Journal and you are willing to be contacted by a Journal reporter to discuss your answers further. In an article on this subject, the Journal will not attribute your answers to you by name unless a reporter contacts you and you provide that consent.

Write to Eric Morath at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

tinyurlis.gdv.gdv.htclck.ruulvis.netshrtco.detny.im