(CN) — Insured unemployment dropped half a point to 10.6%, the Labor Department said Thursday, marking a week with 3 million fewer Americans receiving federal jobless benefits.
As of July 25, about 28.3 million Americans put out of work by the pandemic were receiving federal jobless benefits, compared to 32.1 million people the week of July 18. The decline comes as the lapse of Pandemic Unemployment Assistance has reduced benefits for 2.2 million Americans, and 990,000 left regular state unemployment programs.
The Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs covered 11.9 million gig workers and entrepreneurs who also lost work due to Covid-19.
States reported 831,856 people still filed initial claims for jobless benefits last week, continuing a slow decline from peak numbers.
Accounting for “predictable seasonal patterns,"the federal agency adjusted the number of new claims to 963,000 and calculated 10.6% of covered workers who meet age and work requirements are receiving benefits, about 15.8 million people.
Whether the trend is a sign of recovery or recession remains to be seen.
“So much of recovery hinges on the progression of the pandemic itself,” said Lowell Taylor, an economics professor at Carnegie Mellon University's Heinz College in Pittsburgh. “I had hoped our good public health would persist so that we wouldn't have very many cases and we'd be able to open schools in the fall reasonably safely, but now just within the last few weeks, Pittsburgh joined much of the rest of the country with a spike in cases.”
Pennsylvania on average confirmed 652 new Covid-19 cases daily over the last week and since March has lost 7,447 people to the disease.
“So many workplaces are worried that they can’t provide safe employment, or that they can't provide employment because they don't think there'll be demand for their products, a good example being restaurants,” Taylor explained. “So we're really worried that this puts the economy into a permanent state of recession.”
At this time last year, before the breakout of the novel coronavirus, 1.7 million Americans were receiving jobless benefits. To date, the disease has spread to an estimated 5.21 million Americans and claimed the lives of 166,000 people.
With a quarter of its workforce receiving benefits, Nevada reported the highest unemployment rate in the country last week, followed by Puerto Rico and Hawaii, both above 19%.
According to the Bureau of Labor Statistics, overall unemployment dropped nearly a full percentage point in July to 10.2%. While unemployment has significant decreased since April, the rate continues to outrank the Great Recession which hit 10% in October 2009.
Based on household surveys, the Bureau of Labor Statistics classified 16.3 million people as unemployed in July and estimated 1.8 million workers resumed working.
In earlier surveys, government interviewers misclassified a number of workers who were "not at work for other reasons," as "employed on temporary layoff," rather than unemployed. In April, the federal government underestimated the unemployment rate by up to 8.1 million people.
With better questions and hindsight, the Bureau of Labor Statistics estimates it misclassified up to 2.5 million Americans in July, putting the unemployment rate between 16.3 million and 18.5 million people.
By the Bureau of Labor Statistics’ measure, nearly half of the country’s unemployed experienced — or continue to experience — long-term joblessness with 6.5 million Americans out of work from 15 to 26 weeks and 1.5 million Americans unemployed for longer.
“A lot of people who became unemployed a few months ago are still unemployed. This is not good,” said David Slusky, an associate professor of economics at the University of Kansas. “This is what we saw during the Great Recession, where the long spells of unemployment lead to skill atrophy and make it difficult even without any skill atrophy for someone to find a job.”
Between June and July 6.6 million Americans returned to work, according to the Bureau of Labor Statistics’ jobs reports. Largely attributing the change to expanded unemployment benefits under the CARES Act, or the Coronavirus Aid, Relief, and Economic Security Act, Slusky said these job increases are something to celebrate.
Between expanded eligibility for benefits and the $600 weekly increase in payment from the March stimulus package, Slusky said, “People's disposable income was above where it had been when they were working, and that enabled them to maintain their levels of consumption so you didn't get the vicious cycle contraction that you otherwise would get.”
“What we don't want is someone loses their job and then tightens their belt, and then the people they used to buy stuff from start losing their jobs and tighten their belts,” Slusky explained.
Although extended eligibility is set to continue through the end of the year, the $600 benefit expired at the end of July and Congress went on recess without passing a second aid package.
On Saturday, President Donald Trump signed an executive order extending some benefits and giving individuals on unemployment $300 a week from the federal government plus $100 from states.
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