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Unemployment claims have fallen for 3 months, but millions still need jobless benefits

Another 1.5 million Americans filed initial jobless claims last week. First-time claims for unemployment benefits have fallen in every report for the past 12 weeks, but the labor market is still struggling.

Posted: Jun 25, 2020 5:21 PM
Updated: Jun 25, 2020 5:21 PM

First-time claims for unemployment benefits have fallen in every report for the past 12 weeks. Still, the American jobs crisis is far from over: Another 1.5 million Americans filed initial jobless claims last week.

In spite of the decrease from the week before, it was far more claims than the 1.3 million economists polled by Refinitiv had expected.

That's emblematic of how contradictory the current pandemic recession is. Conditions in the US labor market are undoubtedly improving, but the road to recovery is long and littered with obstacles. Next week's June jobs report from the Bureau of Labor Statistics is expected to show another 3 million new jobs were added to the economy, bringing the unemployment rate down to 12.2% -- still higher than at any point during the financial crisis or the recession of the early 1980s.

But the resurgence of Covid-19 infections in parts of the country worry economists.

Since mid-March, a total of 47.3 million workers have filed for first-time unemployment benefits.

And that massive number doesn't include claims filed under the pandemic program that Congress created to provide benefits to more workers who typically aren't eligible for unemployment benefits, including the self-employed. Another 728,000 people in 46 states claimed first-time pandemic unemployment assistance last week, the Department of Labor said Thursday, about 43,000 fewer applications than the week before.

Continued regular jobless claims, which count people who have filed for unemployment benefits for at least two weeks in a row, stood at 19.5 million, down from 20.3 million in the week before. The pace of improvement remains disappointingly slow, stressing that it will take a long time until the labor market is back at its pre-pandemic level.

In Hawaii, the continued jobless claims account for 20% of the pre-pandemic labor force, the highest level in the country. Nevada comes in second with more than 18% of the labor force filing claims for more than two weeks in a row. Both states have been hit hard by the restrictions on the tourism and hospitality industries.

On top of that, continued pandemic claims stood at more than 11 million across 46 states. That's up nearly 1.7 million from the prior week. The pandemic program will expire at the end of the year.

Adding up traditional and pandemic benefits, as well as pandemic emergency unemployment compensation benefits, more than 30.5 million Americans claims jobless aid in the first week of June.

Lawmakers created the latter program to provide those who have exhausted their benefits with an additional 13 weeks of payments. It also expires at the end of 2020.

States are struggling

While millions of people remain reliant on the government's help to make ends meet, states have also been battling rampant imposter fraud, in which criminals file for benefits using other people's identities.

Washington state earlier this month called in the National Guard to help battle its backlog of claims. The state had to pause payments last month because of a massive fraud attack, which forced it to verify the identity of tens of thousands of applications. Washington estimates it's lost $650 million to the scheme but has recovered more than half of the funds.

Maine, meanwhile, reported Thursday that it has canceled nearly 24,000 initial claims and 41,000 weekly certifications that it determined to be fraudulent.

On top of that, states are struggling to fund unemployment benefits in the first place.

Illinois joined the states forced to borrow from the federal government to pay state unemployment benefits, which typically last 26 weeks. It has taken out $46 million so far, according to the US Treasury Department.

New York and California have each borrowed about $2.6 billion, while Texas has taken a $591 million loan and Ohio has borrowed nearly $114 million.

More states are also concerned that their unemployment trust funds will run dry. Thirteen states have asked permission to borrow nearly $45 billion between June and August to pay benefits, according to the Department of Labor.

It's not uncommon for states to turn to the federal government for help paying claims during economic downturns. The jobless are guaranteed to receive their benefits regardless of whether states have the funds on hand to pay.

The tab for Congress' recent historic expansion of the unemployment program, including pandemic benefits and a temporary $600 boost to weekly payments, is being picked up by the federal government.

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