Sharp Rise in Jobless Claims as Pandemic Bites Again

Following months of slow recovery amid the Covid-19 pandemic, the U.S. reported a spike in claims for jobless benefits.

(AP Photo/Nam Y. Huh)

(CN) — The number of Americans applying for unemployment insurance benefits surpassed 1 million last week for the first time since August, according to the Department of Labor’s weekly report.

As of last week, states reported dolling out jobless benefits to 5.8 million people — roughly 4.1% of the nation’s 142 million workers eligible to receive benefits.

During the week of Dec. 26, 18.4 million Americans filed claims to continue receiving benefits, including 7.4 million Americans on Pandemic Unemployment Assistance benefits and 4.1 million receiving Pandemic Emergency Unemployment Compensation. These programs cover gig and part-time workers who aren’t normally eligible for unemployment insurance.

During the same week in 2019, only 2.1 million people filed continued claims for jobless benefits.

By the Economic Policy Institute’s count, 26.8 million Americans have lost work or are currently out of work due to Covid-19.

Roughly 246,000 Americans tested positive for the disease in the last week. With 385,000 Americans dead since the pandemic began nearly a year ago, Covid-19 is the third leading cause of death in the country.

As of December, the Department of Labor reported 6.7% of Americans are out of work. The rate peaked at 14.4% in April and has been slowly dropping since.

In processing 1.15 million new applications for benefits, Thursday’s report found the country saw a 25% increase in new claims from the previous week. The Labor Department initially expected to see a 14.3% increase based on seasonal predictable job trends.

An additional 284,000 workers filed claims for Pandemic Unemployment Assistance.

At 6.6%, Pennsylvania reported the highest insured unemployment rate in the country, followed by Alaska and Kansas. Multiple states attributed the recent spikes in benefits claims to layoffs in the service and food industry, as well as retail trade. Louisiana and Kansas reported the highest increases in claims, while Illinois and California reported decreases.

This follows Department of Labor’s report in December tracking 140,000 job losses during the holiday season. December marked the country’s first month of negative job growth since April, though the labor market remains down nearly 10 million jobs compared to last spring.

Most of December’s job losses came in the leisure and hospitality industry, which includes restaurants and bars. Those establishments cut 372,000 positions as the latest uptick in Covid-19 cases kept consumers at home and forced some businesses to shut down again. Hotels cut 24,000 jobs while employment in the amusement, gambling and recreation sector fell by 92,000.

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