Typically, unemployment claims going down is a good thing. But as the coronavirus pandemic continues to linger, there may be reason to suspect other factors at play. According to U.S. Labor Department figures issued this week, the number of workers receiving and applying for unemployment benefits dropped significantly.
While some people are returning to work, the numbers most likely don’t give a true big-picture view. American workers filing unemployment claims dropped by more than 1 million this week from the previous week. The number looks good initially, but digging a little deeper you find that state unemployment figures don’t account for workers who shift into different benefit programs for longer-term unemployment.
One of the programs unemployed individuals can enroll in, Pandemic Emergency Unemployment Compensation, saw its numbers grow by more than 500,000 this past week. The PEUC program was created as part of the CARES Act and gave workers an additional 13 weeks of unemployment benefits on top of the traditional six months that most states offer. There was a pretty significant correlation between the unemployment numbers going down just as the PEUC program’s numbers went up.
There is also the chance that unemployment numbers can decrease as people just drop out of the labor force altogether.
Initial claims are also continuing to come in, with about 750,000 workers filing an initial claim for unemployment benefits last week. The number was about a 9% drop from the previous week.
Currently, approximately 23 million Americans are receiving some form of unemployment benefits
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