For months, millions of Americans have been unemployed due to the COVID-19 pandemic. And the tide of unemployment claims shows no signs of slowing down; today’s numbers show 1.3 million claims filed in the US last week, making this the 15th consecutive week that the country has had over a million claims. Another million claims were filed with the Pandemic Unemployment Assistance Program, or PUA. Businesses in every sector continue to see significantly reduced revenue. Although the monthly jobs data released by the Department of Labor today shows a slight drop in unemployment to 11%, and nearly 5 million jobs added in June, the data obscures several factors. Experts believe the real unemployment rate is probably about 15%, significantly higher than during the Great Recession. Read on to learn about the reality of the US job market, and why the Department of Labor’s monthly report may be inaccurate.
Some People Are Not Categorized As Unemployed Even Though They Have Lost Jobs or Are Receiving Benefits
The Department of Labor’s report shows that there were 17.8 million people unemployed as of June in the US, but the report also shows that 31 million people are receiving benefits, probably due to the expanded eligibility for unemployment benefits under the CARES Act.
Since May, the number of people receiving Pandemic Unemployment Assistance, PUA, has increased by more than 3 million. Some workers who have lost their work as a result of the pandemic were counted as “out of the labor force” rather than unemployed, and others, who were temporarily furloughed, were counted as “employed but not at work,” Axios reports. These factors help explain the gap between unemployed people and those receiving benefits.
If all out-of-work people were counted as unemployed, the unemployment rate would be 15%.
The June Unemployment Data Was Collected Before the New Infections Surge
The monthly jobs data was collected the week of June 12th, before many states began to see rapidly increasing caseloads and slid back into lockdown. Workers are being laid off for the second time in a matter of months, or seeing their jobs disappear entirely rather than returning, but that is not reflected in the Department of Labor report. Millions of Americans are being laid off for the second time, having returned to work only briefly before businesses shut down again. This time, they may not come back.
State unemployment data, which is collected separately from the Department of Labor, indicates that hard-hit areas are not seeing job recovery, and in fact are sliding backwards. In Texas, 117,000 people filed for unemployment last week alone, 20,000 higher than the week before and the highest weekly file count since the end of May.
Some business owners have been able to pay staff even while they are shut down due to PPP loans and other aid, but with the program ending in just a few weeks and no clear word on a second stimulus package, layoffs are likely to continue.
Other Economic Indicators Show A Struggling Job Market
Other indicators besides the Department of Labor report show a weak jobs market. Postings on Indeed are down 24% from last year, and consumer spending is down significantly. Economists are warning that the US could be entering a “double recession”, a period of contraction following a short rebound. Major companies from United Airlines to Bed Bath and Beyond have announced drastic layoffs. Those payroll gains that did occur in June were largely workers who had been temporarily laid off and were rehired, rather than new jobs.
The economy is still struggling, and businesses have not regained the customers that they lost prior to the pandemic. PPP funding has helped some to stay afloat, but even those that received loans are vulnerable. We expect unemployment to continue to rise, especially as COVID-19 case counts surge.
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