The number of American workers filing for unemployment edged up last week following four consecutive weeks of declines, as the labor market continues along its bumpy road to recovery.
First-time filings for unemployment insurance, a proxy for layoffs, came in at 353,000 for the week ending Aug. 21, a rise of 4,000 from the previous week’s revised level of 348,000, the Labor Department said in a statement (pdf).
“Alas, a fifth straight weekly decline was not to be with seasonally adjusted new jobless claims,” Bankrate senior economic analyst Mark Hamrick told The Epoch Times in an emailed statement. “The pandemic has demonstrated that few things move in a straight line and the latest snapshot of jobless claims is consistent with that.”
Weekly claims surged to a record high of 6.2 million in April 2020 when the COVID-19 outbreak triggered lockdowns that shook the economy. For the most part, they have fallen steadily since then, remaining relatively flat at the mid-to-high 300,000 range since June, a historically elevated level. Before the pandemic, weekly unemployment filings averaged around 220,000.
“To the extent that COVID has been a major influence on the economy going back to early last year, the final chapter on this difficult story has yet to be written,” Hamrick said. “Still, the nation’s unemployment rate has dropped significantly from last year’s peak and may be poised to move lower in the forthcoming August snapshot and beyond.”
The national unemployment rate fell by 0.5 percentage points over the month in July, dropping to 5.4 percent, according to the Labor Department. That’s 4.8 percentage points lower than in July 2020 and far lower than the pandemic peak of 14.8 percent in April of last year.
Still, despite the encouraging unemployment rate print last month, the Labor Department’s jobless claims report showed that just over 12 million Americans were receiving some form of unemployment assistance in the week ending Aug. 7, an over-the-week increase of 180,000.
But while the labor market recovery is far from complete, workers have been buoyed by a record high number of available job openings, boosting their bargaining power and forcing businesses to raise wages. The so-called quits rate, which is the proportion of people who voluntarily leave their jobs and is a barometer of worker confidence in being able to find a better job elsewhere, was 2.7 in June, the month for which the latest figures are available, just slightly lower than April’s record high of 2.8.
“Most individuals in the workforce surveyed by Bankrate indicate they expect to look for a new job over the next twelve months,” Hamrick told The Epoch Times. “These individuals are prioritizing work and workplace flexibility as well as higher pay.”
Difficulties hiring and retaining staff have prompted businesses to raise wages.
The National Federation of Independent Business July jobs report found that 49 percent of small business owners reported job openings that couldn’t be filled—a 48-year record high.
“Small business owners struggled to find qualified workers for their open positions, which has impaired business activity in the busy summer months,” NFIB chief economist Bill Dunkelberg said in a statement. “Owners are raising compensation to the highest levels in 48 years to attract needed employees.”
Lack of child care facilities, fears of contracting the virus, and expanded unemployment benefits have been blamed for worker shortages, which are partly contributing to employment remaining 5.7 million jobs below the February 2020 peak.
At least 25 states led by Republican governors have pulled out of federal government-funded unemployment programs, including the $300 weekly top-up, which businesses and GOP leaders claimed were encouraging jobless Americans to stay at home.
So far, there’s no clear evidence that the early termination of federal benefits has led to an increase in hiring in these states, although experts say it will likely take another month or two of labor market data to confirm the policy impact.
By Tom Ozimek
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he’s ever heard is from Roy Peter Clark: ‘Hit your target’ and ‘leave the best for last.’