Bulk of jobless claims resulting from repeat pandemic layoffs, say researchers

Aviation industry workers hold signs during a protest in the Federal Plaza in Chicago, Illinois on September 9, 2020.


Most of the new unemployment benefit claims, according to new research, stem from repeated layoffs, which indicate unstable job prospects for a broad group of Americans and signal another dimension of labor pain almost a year into the pandemic.

Nearly two out of three workers who received benefits in October had earned them at least one more time since April, according to an article by economists at the University of Chicago and the JPMorgan Chase Institute.

This can happen, for example, when a restaurant is closed, reopened and then closed again. This leads to new layoffs each time it closes.

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The report provides the first national insight into how many workers have had to rely on the social safety net multiple times to contain the outbreak, with increased Covid infections and regional shutdowns.

“Recurrent unemployment is a serious problem,” said Peter Ganong, an economist at the University of Chicago and co-author of the report. “There is deep distress in the job market.”

The stop-and-start nature of job loss plays out together with increasing long-term unemployment, an uninterrupted period of at least six months of unemployment. From a financial perspective, this is an especially dangerous time for workers, which can lead to other negative side effects such as skill devaluation.

According to the Bureau of Labor Statistics, almost 40% of the unemployed were long-term unemployed last month.

“Particularly unstable”

According to Ganong and his co-authors, the proportion of workers who have suffered many layoffs and been pulled out of unemployment benefits more than once rose steadily through October last year. The share was 61% in October.

Taken together, the high prevalence of long-term unemployment and repeated job losses indicate greater instability in the labor market than the federal economic data suggests.

The Department of Labor, which updates unemployment benefit data on a weekly basis, does not provide a detailed breakdown of workers receiving benefits, for example.

“Among those who have not been continuously unemployed, the typical experience has been repeated unemployment,” they wrote. “Many of the workers who were called off in the summer were made redundant in the fall.”

The results in the paper are generally followed up with detailed data at the state level.

For example, in California, 77% of all new benefit entitlements in the last week of November came from “additional entitlements,” according to the California Policy Lab.

An additional entitlement is triggered by a repeated dismissal from the pandemic after an employee returns to work and then has to reopen an old entitlement.

In some heavily impacted industries, almost all new claims stem from repeated layoffs.

In the lodging and catering industries (e.g. restaurants and hotels), as well as the arts, entertainment and leisure, 96% of new jobless claims in the Golden State were due to recurring layoffs, according to the Policy Lab analysis, which was released late December.

“The high rate of additional entitlements suggests that many previous applicants in this industry who have found re-employment find that employment particularly unstable and many eventually return [unemployment insurance], “according to the message.

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