Back on the Rise: Jobless Claims See First Rise Since Early Pandemic

Corporate graffiti adorns the boarded up Hard Rock Café, a popular tourist destination at the 16th Street Mall in downtown Denver, Colorado, on June 22. (Courthouse News photo/Amanda Pampuro)

(CN) — U.S. unemployment numbers rose for the first time in months Thursday with 1.4 million joining the ranks of Americans filing initial claims for unemployment benefits last week.

Representing a 100,000-person increase from last week’s numbers, the surge is the country’s first since April 16, which marked the start of steady declines from a peak of 6.6 million filing initial jobless claims.

This week’s report from the U.S. Department of Labor also shows that 1.7 million Americans claimed benefits from federal programs extending insurance eligibility to gig workers and the self-employed.

A total of 31 million Americans — roughly the size of the population of Malaysia — received unemployment insurance benefits in the week ending July 4. The number includes the 16 million workers eligible for traditional unemployment benefits (some 11% of the workforce), the 13.1 million individuals who claimed Pandemic Unemployment Assistance benefits, and the 940,113 individuals in 45 states who claimed Pandemic Emergency Unemployment Compensation.

These workers will see their checks shrink by $600 a week come July’s end with the end of a bonus that has been available since March under the $2 trillion CARES Act, short for Coronavirus Aid, Relief, and Economic Security, which otherwise expanded eligibility for unemployment benefits.

Jimmy John’s sandwich shop in downtown Denver’s 16th Street Mall evokes storm troopers to encourage customer to don masks in the store on June 22. (Courthouse News photo/Amanda Pampuro)

Although Congress is debating new financial aid packages, it is unlikely to pass anything until August.

Some fiscal conservatives worry that over-generous benefits may deincentivize Americans from looking for work.

“You should never be putting individuals in a position where they have to choose between being financially better in the short term — potentially thousands of dollars more per month — versus the consequences that that has in the long term for them,” said Rachel Greszler, a research fellow at the Heritage Foundation in Washington, D.C.

“We know that the longer that people are unemployed, the lower their incomes and opportunities will be in the future and there also significant physical and mental consequences that can come with unemployment,” Grezler added. Instead of renewing the federal contribution of $600 per week per person on unemployment, she suggested the federal government match whatever states pay out to individuals.

As the country counts its 145,000th death and 4 millionth case of Covid-19, Greszler acknowledged that the country’s economic hardships are far from over, and that aid may be needed, particularly for sectors of the economy that remain closed, like schools. 

“Going forward, unemployment is still going to be high and I don’t think that cutting off all federal support right at July 31 makes sense,” she said. “Some of those jobs are going to go away for good. They’re not just going to bounce back once people are willing to come back to work because a number of businesses are going to shut their doors for good.”

New York Federal Reserve economist Joseph Briggs projected 75% of jobs would return by the year’s end. Given today’s reported unemployment, that would leave 7.7 million people out of work during Christmas. 

According to the Department of Labor, Puerto Rico continues to experience the highest insured unemployment rate in the country at 26%, followed by Nevada and Hawaii, both above 20%. With 65,890 new claims for benefits, Florida saw the highest increase in claims last week, followed by Georgia and California.

“There are 14 million more unemployed workers than job openings, meaning millions will remain jobless no matter what they do,” Heidi Shierholz, senior economist for the Economic Policy Institute, estimated in an analysis. “Cutting off the $600 cannot incentivize people to get jobs that aren’t there.”

Meanwhile, unemployment insurance has been a lifeline for millions of Americans put out of work by the pandemic.

“The extra $600 was really nice — that’s like double what I normally make,” said Patrick, who asked that his last name not be used. He works at a coffee chain in Denver that closed in April, putting him out of work and onto unemployment for two months. In May, Patrick began working at a different store with a new manager.

“You shouldn’t be getting mad at people for getting paid what they should be getting paid,” he said. “You should be mad at the way capitalism works. They really wanted to open up everything so fast because they were worried about the economy, but the economy is going to fall apart if we let people die.”

Even as he works, Patrick said he worries about spreading the virus to his roommates and family.

“I don’t think anyone should be working now, if I’m being honest,” Patrick added through a black mask embellished with a daisy. “That way people aren’t dying or getting super sick.”

While many businesses have reopened, the information booth remains boarded up at the 16th Street Mall in downtown Denver on June 22. (Courthouse News photo/Amanda Pampuro)

Since March, 52 million Americans have applied for unemployment benefits. About one third of that are currently receiving benefits. In May, nonprofit organization One Fair Wage found only 56% of initial applications for benefits nationwide were being approved. Countless workers still continue to slip through the cracks 

“I didn’t get unemployment. My boss did, my co-workers did,” said Ryan Sausedo, who manages a nonprofit organization in Denver focused on ending poverty. Sausedo went on unpaid furlough through July and has been back at work for two weeks.

Although Sausedo said he met age and work requirements for traditional unemployment insurance, the state denied his application. Without wages, his family has fallen $8,000 behind on rent. After losing two family members to Covid-19, Sausedo is walking the 16thStreet Mall with a pink mask, fundraising for his job. 

“I’m out here providing for my family,” said the father of two young boys. 

“We didn’t expect this. When we heard Covid-19 was coming, we thought it was going to be like some other H1N1. Then before we knew it, we shut down,” Saucedo continued. “At the end of the day we’re going to be OK as long as we have food, water, shelter. The main thing I’m learning from all of this is that family is everything. You never know when things are going to change.”

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