New unemployment benefits fell last week, the government reported Thursday, as the labor market slowly recovered from the staggering losses caused by the coronavirus pandemic.
Approximately 487,000 workers first filed for state benefits in the week ending May 8, down from 514,000 the week before. In addition, around 104,000 new applications have been made for Pandemic Unemployment Assistance, a federal program for freelancers, part-time workers, and others who are not routinely eligible for government benefits.
None of the figures are seasonally adjusted. Seasonally adjusted, the new state claims amounted to 473,000.
After more than a year of the pandemic, the economy has shown new life. Restrictions are lifting, businesses are reopening, and job vacancies are on the rise. However, the April attitude was weaker than expected.
Some employers, particularly in the restaurant and hospitality sectors, have complained of problems finding work. The U.S. Chamber of Commerce and several Republican governors have claimed that a temporary $ 300-a-week job bonus has made workers reluctant to return to work.
The U.S. Department of Labor said by Wednesday six states – Iowa, Mississippi, Missouri, Montana, North Dakota, and South Carolina – had notified the department that they would be cutting unemployment benefits next month in connection with a federal pandemic.
The unemployment rate in these states ranged from 3.7 percent in Iowa to 6.3 percent in Mississippi in March, the most recent month for which data is available.
Several other states with Republican governors, including Tennessee, Arkansas, Alabama, Wyoming, and Idaho, have also announced they will be stepping down from the federal program. Tennessee and Alabama are among the states that offer the lowest maximum benefit each week to qualified individuals.
However, economists are skeptical that unemployment benefits play more than a role in the pace of the labor market recovery.
“There is tremendous drainage in this job market,” said Gregory Daco, chief US economist at Oxford Economics. “There are still major supply shortages and unemployment benefits are not the most important. The virus is. “
Many workers have children at home who do not attend school in person. Others are wary of returning to jobs that require face-to-face encounters. Covid-19 infections have declined since September, but there are still 38,000 new cases reported per day and 600 deaths related to Covid. Less than half of the population is fully vaccinated.
Progress must also be halted on the part of employers as companies continuously update their estimates of costs and customer demand. “The hiring pattern will not be smooth,” said Mr Daco. “Companies hire and then re-evaluate them. You have to find the right balance, it is trial and error more than anything. “
The federal unemployment benefit expires in September. Stopping early is “detrimental to the economy,” said Daco. “You are voluntarily violating certain vulnerable tranches of the population.”
Nationwide, the unemployment rate was 6.1 percent, and there are 8.2 million fewer jobs than in February 2020.