(CN) — Set to lose $600 bonuses with their unemployment checks after tomorrow, the federal government reported Thursday that 11.6% of America’s 146,125,989-person workforce is out of a job.
Ostensibly the 1.2 million Americans who filed claims for new jobless benefits last week marks a 12.4% dip from the previous week, according to data published by this morning by the Department of Labor. Accounting for “predictable seasonal patterns” like holidays and temporary work, however, the Department of Labor adjusted the figure to 1.43 million initial claims, reflecting a 2% increase compared to last week’s seasonally adjusted rate.
Last week’s numbers reflected the first increase of jobless claims in three months.
Come August 1, this sector will stop receiving the financial buoy created in by the Coronavirus Aid, Relief, and Economic Security, a $2 trillion congressional aid package that expanded eligibility for unemployment insurance benefit and created a $600 weekly bonus for jobless Americans to support workers who lost their jobs to Covid-19.
While financial aid for jobless Americans will shrink, both the disease and unemployment continue to rattle the country.
Over the last week, an average of 63,416 Americans tested positive for Covid-19, and 171,428 filed initially claims for unemployment insurance each day.
The U.S. lost 7,411 lives in the last seven days from Covid-19, adding up to a total of 153,000 deaths and 4.51 million confirmed cases since March.
Including 12.4 million Americans claiming Pandemic Unemployment Assistance and 1 million claiming Pandemic Emergency Unemployment Compensation, a total of 30.2 million Americans are receiving jobless benefits.
While regular unemployment taps out at 26 weeks in many states, the Pandemic Unemployment Assistance extends benefits through December 31.
At this time last year, the U.S. saw 3.7% unemployment rates. After two years of struggle unemployment during the Great Recession peaked at 10% in October 2009.
Nearing the expiration of CARES Act, Senate Majority Leader Mitch McConnell on Monday unveiled the $1 trillion HEALS Act, for Health, Economic Assistance, Liability Protection and Schools. The proposal would cut the federal unemployment insurance bonus to $200 a week while phasing in a system to pay jobless Americans 70% of their previous wages.
The proposal also provides $1,200 per individual and refills the tank on the Paycheck Protection Program.
Still many have criticized the HEALS Act for being too light to float Americans through the crisis.
“This approach of offering inadequate help for households and states appears to rest on the hope that state reopenings of the economy will lead to a rapid ‘v-shaped’ economic recovery,” said Robert Greenstein, president of the Center on Budget and Policy Priorities, in a statement.
“That strategy has already proven a public health failure it has led to a spike in virus cases and deaths and is now causing a number of states to reverse course,” Greenstein added.
The Washington-based think tank estimated that stimulus checks and bolstered unemployment benefits from the CARES Act buoyed 12 million to 16 million Americans over the poverty line.
By the Economic Policy Institute’s count, the $600 UI benefit also helped the economy retain roughly 5 million jobs.
Although fiscal conservatives worry the unemployment bonus disincentives workers from returning to work, many economists point that the benefits of feeding the economy through the crisis outweigh the negatives.
The Bureau of Labor Statistics surveyed 4.8 million people who returned to work in June, bringing the unemployment rate below 12%. Despite the gains, senior economist for the Economic Policy Institute Heidi Shierholz estimated there remain 14 million more unemployed people than available jobs.
In an analysis for Morning Consult, however, economist John Leer found that the first jobs to resume were the easiest to bring back: mainly furloughed workers who were already receiving pay and part timers.
Now, John Leer told Courthouse News, “People are just dropping out of the workforce.”
“By and large there aren’t any jobs,” Leer explained. “So this idea that unemployment insurance is preventing workers from returning to work doesn’t work in practice. On top of that, I would add that any real assessment of unemployment insurance has to weight the cost of changing the incentive structure with the benefit of shoring up households.”
And in a pandemic, businesses can’t exactly rely on the if-you-build-it, they-will-come mentality.
“Before businesses are going to hire new workers, they need to see that consumers are coming in the front door,” Leer said.
Consumer confidence and spending increased through mid-May and June, but “at the same time … we were laying the foundation for the second wave of the virus,” Leer added.
Moving forward into the fall, Leer said sustainable economic activity must optimize profits without increasing the risks of spreading Covid-19 among consumers and workers.
New York Federal Reserve economist Joseph Briggs optimistically projected 75% of jobs would return by the year’s end. Given today’s reported unemployment, that would leave 7.5 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 25%, followed by Nevada and Hawaii, both above 20%. With 5,728 new claims for benefits, Louisiana saw the highest increase in claims last week, followed by Virginia and California.