Rise in jobless claims reflects a U.S. economy struggling to recover

Protesters called on the government to help unemployed immigrants amid the pandemic, New York, N.Y., May 19, 2020. (Evelien de Vogel via Storyful)

The coronavirus recession struck swiftly and violently. Now, with the economy still in the grip of the pandemic five months later, the recovery looks fitful and uneven — and painfully slow.

The latest evidence came Thursday with the government's report that the number of workers seeking U.S. unemployment benefits rose back above 1 million last week after two weeks of declines. 

At the same time, a regional manufacturing index grew more slowly in August than in July. Employers are advertising fewer job openings with unemployment still in double digits. And many businesses and consumers remain paralyzed by uncertainty and restricted by lockdowns.

Until the pandemic can defeated, most experts agree, any recovery is destined to remain weak.

The latest figures, released Thursday by the Labor Department, suggest that employers are still slashing jobs despite recent gains as some businesses reopen and some sectors like housing and manufacturing have rebounded. Jobless claims had fallen last week below 1 million for the first time since March, to 971,000. A rising number of people who have lost jobs say they consider their loss to be permanent.

 "Getting the virus in check dictates when there'll be relief from this economic nightmare, and it doesn't look like it will be soon," said AnnElizabeth Konkel, an economist at Indeed, a job listings website.

Other data suggest that job gains are slowing from the rapid bounce-backs of May and June, when millions of restaurant and retail workers were rehired. The number of open jobs posted on Indeed fell last week for the first time since April. Even if employers add as many workers this month as economists predict, well over half the jobs that vanished in the pandemic will remain lost.

Kronos, a company that makes time tracking software for small businesses, said the number of shifts worked by its clients is barely growing after rising steadily in the previous three months. Shifts worked are stuck at about 10% below their pre-pandemic level. 

"It's increasingly clear that the last 10% of the recovery will be the most challenging," said Dave Gilbertson, a vice president at Kronos. 

The total number of people receiving unemployment aid declined last week from 15.5 million to 14.8 million. Those recipients are now receiving far less aid because a $600-a-week federal benefit has expired, which means the unemployed must now get by solely on much smaller benefits from their states. The loss of the federal aid has deepened the struggles for many, including a higher risk of eviction from their homes.

President Donald Trump has signed an executive order to provide $300 a week in federal unemployment aid, with money drawn from a disaster relief fund. Twenty-five states have said they will apply for the federal money, though they would need to revamp their computer systems to do so. Other states are still considering whether to take that step; two have said they won't. 

Some states may be hesitating to overhaul their unemployment systems because they expect Congress to eventually pass a new rescue package with an enhanced jobless benefit that might not require any changes. 

In states that decide to pay out the $300, the government estimates it would take three weeks, on average, for the states to send the money to the unemployed. And initially only enough money is being allotted to cover three weeks of payments. Even with subsequent grants, analysts estimate that there would be enough money to last only five or six weeks. 

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The continuing stream of layoffs comes against the backdrop of the still-sluggish recovery. Home construction and sales have bounced back. So have auto purchases. But spending on travel, entertainment and many other services remains weak. Small businesses are struggling. And unemployment, at 10.2%, remains elevated.

More Americans are eating at restaurants, but the level of seated dining is still 54% below pre-pandemic levels, according to OpenTable. And though some employers are hiring, economists suspect that the pace is weakening.

Daniel Zhao, an economist at Glassdoor, an employment website, said the industries with the largest increase in job openings are health care and e-commerce and delivery services. But those gains reflect mainly responses to the pandemic rather than economic growth. 

Thursday's jobless claims report showed that in addition to people who applied last week for state benefits, roughly 540,000 others sought aid under a new program that has made self-employed and gig workers eligible for the first time. That figure isn't adjusted for seasonal variations, so it's reported separately from the state figures. 

Including the self-employed and gig workers already receiving benefits, 28 million people are receiving some form of jobless aid, though that figure may include double-counting in some states. That figure is little changed from a week earlier. 

Having lost the $600-a-week federal benefit, laid-off workers are having to get by solely on the much smaller state-provided checks. In June, the average state benefit was $308 a week. 

In some states, the payouts are much smaller. Louisiana pays the nation's lowest average jobless benefit: $183. Mississippi is next-lowest, at $187. The largest average is in Hawaii, at $456, followed by North Dakota and Massachusetts at $426.

For John Williams, a former cabdriver in Slidell, Louisiana, just outside New Orleans, the loss of the $600 landed him in a food bank line this week, waiting for groceries. He now receives just $107 in state unemployment aid, which is all that he qualifies for based on his previous income. 

Before the coronavirus dried up most of his business, Williams, 77, used to pick up fares at the New Orleans airport. Now, besides his jobless aid, he receives about $300 a month from Social Security and a small pension from a previous job as a maintenance man in the city's school system. He can barely cover his mortgage. 

Williams has gone two days without taking his blood pressure medication because when he went to have it refilled, the cost had doubled. 

"I'm hanging in there, doing the best I can," he said.

AP Writer Rebecca Santana contributed to this report from New Orleans.