Thursday, October 15, 2020

Unemployment claims stay high, and high COVID and lower temps will keep them up

Today's new report on unemployment claims in America was alarming, both in the main headline and in the deeper stats below them. We are clearly hitting a wall as the weather turns colder and COVID-19 continues to be an anchor on everyday life.

First, the topline numbers.
The number of people filing for unemployment benefits increased last week to 898,000, a worrying sign that the job market's recovery from the pandemic-induced recession is slowing. The figure, released Thursday by the Labor Department, is an increase of 53,000 from the previous week, and is the highest level since mid-August. Claims have stagnated between 800,000 and 900,000 for the past seven weeks after falling from a peak of nearly 7 million in March. The levels are historically high – the pre-pandemic record for weekly claims sat just shy of 700,000. An additional 373,000 people applied for jobless aid through the Pandemic Unemployment Assistance program, which was created by Congress earlier this year to help workers who would not otherwise qualify for unemployment.
So 1.25 million new claims a week continue to be filed, but the news report does say there is some good news with unemployment claims.
There are encouraging signs that employers are hiring and rehiring workers, however. The number of people receiving unemployment benefits on a continuous basis fell notably during the week ending Oct. 3, down to roughly 10 million from nearly 11.2 million the week prior.
But even that positive number is misleading. If you dig down into the numbers in the actual DOL report, you'll see that the drop in continuing unemployment claims is actually a transfer of what unemployment program these people are in.

Because when people have their 26 weeks on the regular unemployment program run out, they move to the extended claims program. In the last week of September (the last week where both programs have reported numbers), regular claims went down by 800,000, but extended claims went up by that same 800,000. This type of offset has become the pattern since the start of September, which (not coincidentally) was 6 months after COVID lockdowns started to hit throughout America.
Also noteworthy with continuing unemployment claims is that the previous week of September 26 was revised up by 207,000, so it makes me wonder if there are claims getting backlogged again, which masks just how bad things are.

Even with the information we currently are going on, there are a lot of people out of work in America. As September ended, we were going on 23 straight weeks of at least 25 million continuing claims.

And now that the weather is getting colder at the same time that Wisconsin has become the COVID Capital of the Country, we’re seeing a still-depressed restaurant industry get into an even worse situation. Isthmus had a saddening piece which described the looming demise of one Madison brewpub, along with other places in town.
Nate Warnke of Madison’s Rockhound Brewing Company announced this morning that he will be closing “his little dream.”

Warnke, a former business analyst, says in a composed but emotional Facebook message that if he were one of his own former clients, he would have to advise that it was time for this project to end. “I can see no logical path forward.”

Rockhound joins other Madison businesses that have decided it was impossible to continue in the face of COVID-19, among them The Tin Fox, Hungry Badger, Common Ground, Vientiane Palace, Captain Bill’s, Manna Cafe and Bakery, Doolittle’s Woodfire Grill, Graft, and the Good Food Low-Carb Cafe.

“[The] COVID downturn is the main reason. The numbers just don’t make sense and it would be too difficult to reconcile long-term,” says Warnke in an email to Isthmus.
WisGOPs can try to blame recent restrictions on capacity that Gov Evers put on, but the real culprit is the virus itself, which has made a lot of people unwilling to eat in an enclosed building around strangers. And a whole lot of others that might risk it are already sick, and in no condition to go out.

Wisconsin saw its number of new claims jump by more than 2,900 in the most recent unemployment report, and had extended claims jump by 10,000. And if these restaurant stories from Madison are any indication of what's coming statewide, it won't take long before those closings ripple over into more parts of the state's larger economy. Which would put another headwind onto a jobs market that already seemed to be plateauing in September both in Wisconsin, and in America.

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