Unemployment Claims Rise as Rollout of $300 Benefit Lags
Unemployment Claims Rise as Rollout of $300 Benefit Lags
The job market shows signs of softening, even as a move by President Trump to replace lost unemployment benefits is struggling to get off the ground.
The Labor Department reported Thursday that new state unemployment claims jumped to 1.1 million last week, a sign that some employers continue to lay off workers in the face of the coronavirus pandemic while others remain reluctant to hire.
“It definitely suggests that momentum in the recovery is slowing,” said Scott Anderson, chief economist at Bank of the West. “The labor market is in the I.C.U., and it needs a shot of adrenaline in the form of federal aid.”
There are no signs that kind of boost is imminent, however. Nearly 30 million people are drawing unemployment pay in some form, but a $600 weekly supplement to state benefits — credited with keeping millions afloat — expired at the end of July. Democrats and Republicans have been at an impasse on a new round of aid, and no action is expected before September.
President Trump bypassed Capitol Hill this month to provide a $300 weekly supplement, drawn from federal disaster funds, to those receiving unemployment pay. But by Thursday, fewer than a quarter of the states had been approved for the program, and only Arizona had put it into action.
Florida, New York and Texas have held off on applying as they seek guidance on the program’s rules and mull the technological needs for processing payments. Even states that intend to take part, like Pennsylvania, have raised doubts about whether it is workable.
“The president’s convoluted, temporary, half-baked concept has left many states, including Pennsylvania, with more questions than a clear path forward,” said Penny Ickes, a spokeswoman for the Department of Labor and Industry in the state’s Democratic administration.
Mr. Trump’s executive action caps spending on the program at $44 billion, a figure that officials from the Federal Emergency Management Agency and the Labor Department said Thursday should be enough to last four to five weeks. The funds are intended to be retroactive to Aug. 1, so recipients might be paid only through early September.
The previous $600 weekly benefit, in place for four months, contributed $70 billion a month to the economy, or nearly 5 percent of total household income.
“That’s a pretty substantial chunk of gross domestic product,” said Gus Faucher, chief economist at the PNC Financial Services Group. “And the households that get it are in a precarious position and pretty much spend all of it. I’m concerned the expiration of benefits will weigh on the economy in the second half of the year.”
Millions of unemployment recipients are already feeling the loss.
“That extra $600 is what’s been keeping us alive,” said David Leske, a lighting and sound technician in Ridgway, Pa. Without it, he and his wife have been forced to dip into their savings account. “It’s scary,” he said.
This should be a time of keen anticipation for Mr. Leske. He works in local schools to make plays, assemblies and other shows come to life.
But a few weeks before the school year is to begin, the pandemic is still preventing large indoor gatherings. In some cases, schools are sticking to online instruction.
“Our local district has no intention of doing school plays,” Mr. Leske said. “The high school auditorium is now a storage area.”
Mr. Leske, 52, said that work began to dry up in March and that the Pandemic Unemployment Assistance program — an emergency federal program for freelancers and others not eligible for state benefits — had been crucial in keeping him afloat, especially with the $600 weekly federal supplement.
He expects to be out of work through September 2021 as schools hold off on plays and assemblies. But Pandemic Unemployment Assistance expires at the end of this year.
While longer-term federal relief is in unresolved, FEMA has approved Arizona, Colorado, Idaho, Iowa, Louisiana, Maryland, Missouri, Montana, New Mexico, Oklahoma and Utah for access to three weeks of funds for the $300 supplement. Officials from FEMA and the Labor Department said on a conference call with reporters on Thursday that FEMA had approved $2.4 billion in grants so far and that an additional eight states had applied for funds.
Arizona was the first state to make the so-called lost wages payments, sending $96 million to 320,000 people on Monday and Tuesday. But the timeline for payments “will be all over the map,” potentially taking several weeks, said John Pallasch, the assistant secretary for employment and training at the Labor Department.
The challenges include reprogramming antiquated state computer systems to handle the new benefit — a factor that caused weeks of delays with the $600 supplement — and dealing with an additional federal agency, FEMA.
“We have to build a whole new subset system with new rules and new reporting requirements with a department that we’re not really familiar with,” said Bill McCamley, the secretary of the New Mexico Department of Workforce Solutions. “We want to dot all of our i’s and cross all our t’s.”
In a call with reporters on Wednesday, Gov. Andrew M. Cuomo of New York expressed concern about the legality of Mr. Trump’s executive action and said that “if the states need to reinvent their unemployment insurance administration program, it will be weeks or months before anyone gets a check.”
“I’d rather do business with the old-time bookie on the street corner than do business with FEMA,” Mr. Cuomo added.
Mr. Trump’s resort to federal disaster funds for the supplement followed the breakdown on a congressional aid package that would appropriate new funds. Democrats want to reinstitute the $600 weekly supplement; Republicans have called for a lesser amount, saying anything more would dissuade the unemployed from seeking work.
As the stalemate continues, the latest jobless claims numbers cast a further pall. The rise in new state filings last week, from 971,000, followed two weeks of declines that had brought applications for unemployment insurance to under one million for the first time since the pandemic struck.
There were 543,000 new claims last week for Pandemic Unemployment Assistance. That number, unlike the figures for state claims, is not seasonally adjusted.
Despite the discouraging report on jobless claims, Mr. Faucher of PNC Financial pointed to pockets of strength.
“We see continued improvement, with housing starts increasing, consumer spending increasing and industrial production increasing,” he said. “But the pace of improvement is slowing.”
As the pandemic continues to buffet the economy, some workers have been able to find new positions, but not without considerable personal sacrifice.
After spending up to six hours a day submitting more than 600 applications since being furloughed this spring and then laid off in late July, Sonia Vance, 42, finally landed a new job.
In a few weeks, she starts as an eyewear consultant in California, Md., earning $16 an hour. The position pays far less than the dream job she had before — a $48,000-a-year human resources role at a staffing company — but it comes with health insurance.
The cushion is comforting, because Ms. Vance must now go to work each day in an office, despite health issues that she fears could complicate a recovery if she catches the coronavirus.
Reflecting the experience of millions whose careers evaporated in the pandemic, Ms. Vance said the past few months had been “heartbreaking and very emotional.”
This week, she moved from Maryville, Tenn., and will stay temporarily with a friend. She is finishing up bankruptcy paperwork and expects to lose her mobile home.
“You do feel relief that you have a job, but there’s also a sense of shame and embarrassment,” Ms. Vance said. “You’re out there doing everything you can to be a good member of society and to take care of your own, but it just takes a few months to wipe out all of your hard work.”