US layoffs still high, but so is skepticism on jobless data

By Christopher Rugaber | Associated Press

WASHINGTON — The number of Americans seeking unemployment benefits dipped last week to a still-high 840,000, evidence that layoffs remain elevated seven months into the pandemic recession.

Yet economists say they are increasingly dubious about the unemployment claims figures, even though there is little doubt that hiring has slowed and employers have continued to lay off workers.

Disney said last week that it would cut 28,000 jobs. And American Airlines and United Airlines combined furloughed 32,000 employees last week. Airlines had been barred from cutting jobs as long as they were receiving federal aid, which expired this month. The American Hotel & Lodging Association has said that nearly three-quarters of hotels say they’ll have to lay off more workers without further financial aid.

One reason layoffs remain high is that companies often hold on to workers when a recession begins, if they can, in hopes of outlasting the downturn. Yet if the recession drags on, many will eventually give up and cut jobs.

“Some of these new layoffs are coming from firms that didn’t want or didn’t have to lay people off at first,” said Constance Hunter, chief economist at KPMG. Now, “they have no choice but to start reducing their workforce.”

At face value, the Labor Department’s report Thursday indicated that more than 800,000 people are still being laid off each week, a historically huge number — more than in any week during the 2008-2009 Great Recession. Weekly applications for unemployment benefits have long been considered a proxy for job cuts.

But the flood of layoffs during the pandemic recession and the creation of some new jobless-aid programs have overwhelmed state unemployment agencies. A result is that the jobless claims figures the government has been reporting have become an object of skepticism.

“We can’t view it as real-time job separation data,” said Elizabeth Pancotti, a policy adviser at Employ America, a left-leaning advocacy group, referring to layoffs. “We’re still seeing massive overcounting of initial claims.”

Some states are still processing backlogged applications from this summer, Pancotti noted. California, for example, stopped accepting new claims for two weeks so it could clear a backlog of 600,000 applications that are more than three weeks old.

In many states, the data for initial jobless claims also includes workers who had been laid off previously, then found temporary work or were recalled temporarily — only to lose their jobs again and reapply for unemployment benefits. These repeat applicants account for roughly half of jobless claims in California, according to the California Policy Lab.

Till von Wachter, an economist at UCLA and director of the Policy Lab, said that initial applications can also include workers who have used up their 26 weeks of state unemployment and are transitioning to an extended benefits program that provides three additional months of payments.

And this spring, Congress created a new program, Pandemic Unemployment Assistance, or PUA, that made self-employed and gig workers eligible for unemployment aid for the first time. Yet in many states, to qualify for the PUA program, the unemployed must first apply for regular jobless benefits. Only after they have been rejected under that system can they apply for PUA.

Last week, more than 464,000 people applied for aid through PUA. These figures aren’t adjusted for seasonal trends, so the government reports them separately from the traditional jobless claims. Yet the figure may include some people who applied under the traditional benefits program.

Organized fraud has also been a problem, particularly in the PUA program, in which it’s difficult for states to verify applicants’ incomes. Contractors and gig workers, for example, rarely have W-2 tax forms, which employees in traditional jobs receive.

Thursday’s report from the Labor Department said the number of people who are continuing to receive unemployment benefits dropped 1 million to 11 million. The decline suggests that many of the unemployed are finding work. But it also reflects the fact that some have used up the 26 weeks of their regular state benefits and have transitioned to extended benefit programs.

About 2 million people are receiving aid under a federal extended benefit program created this spring, and an additional 11.4 million people are doing so through PUA. All told, 25.5 million people were receiving some form of unemployment aid in the week that ended Sept. 19, the government said.

Yet those figures are also likely inflated, mostly by double-counting. California and other states have counted retroactive payments under PUA as multiple payments to separate individuals.

“Nobody knows exactly how many people are receiving unemployment insurance benefits right now,” said Heidi Shierholz, policy director at the Economic Policy Institute and former chief economist at the Labor Department. That is a “reminder that we need to invest heavily in our data infrastructure and technology.”

The figures nevertheless point to a flagging recovery and come two days after President Donald Trump cut off talks over a new rescue aid package that economists say is urgently needed. A failure to enact another round of government aid would crimp household income and spending, and some economists say it would raise the risk of a double-dip recession.

Congress is still considering extending the airline aid in stand-alone legislation. But there is little sign that a deal will be reached with the White House.

Across the country, hiring has slowed just as federal rescue aid has run out, hampering an economy still climbing out of the deep hole created by the pandemic. Employers added just 661,000 jobs in September, less than half of August’s gain and the third straight monthly decline.

Just over half the 22 million jobs lost to the coronavirus have been recovered, leaving the economy with 10.7 million fewer jobs than in February — a figure that exceeds all the job losses from the Great Recession.

More in News

Crescent School club marks Red Ribbon Week

Movement encourages kids to be drug free

State Parks announces winter camping, day-use schedule

More than 100 parks remain open year round

Washington State Department of Agriculture entomologist Chris Looney looks at two of the dozens of Asian giant hornets he vacuumed from a nest in a nearby tree Saturday, Oct. 24, 2020, in Blaine, Wash. Scientists in Washington state discovered the first nest earlier in the week of so-called murder hornets in the United States and plan to wipe it out Saturday to protect native honeybees, officials said. Workers with the state Agriculture Department spent weeks searching, trapping and using dental floss to tie tracking devices to Asian giant hornets, which can deliver painful stings to people and spit venom but are the biggest threat to honeybees that farmers depend on to pollinate crops. (AP Photo/Elaine Thompson)
Scientists remove 98 ‘murder hornets’ in state

Workers sustain no stings or other injuries

COVID-19 cases rising statewide

Hospitalizations up in western Washington

Center Valley Animal Rescue director Sara Penhallegon, right, along with veterinarian and volunteer Dr. Christine Parker-Graham conduct a medical evaluation on a female cougar that checked itself in to the rescue earlier this month. (Center Valley Animal Rescue)
Starving cougar found at animal rescue center

Staff members rehab lost animal, send to Texas zoo

Sequim to host broadband meeting

The city of Sequim will host a Community Broadband Meeting… Continue reading

Police identify man who succumbed to self-inflicted gunshot

Police have identified the man who died Saturday afternoon… Continue reading

Horticulture class registration opens Nov. 14

Online program offered by Washington State University Clallam County Extension

Peninsula sees high demand for flu vaccinations

Pharmacies report significant uptick

Most Read