New jobless claims fall, but unemployment rolls keep growing

The sudden shutdown of entire sectors of the economy due to the coronavirus has led to unprecedented spikes in new jobless claims. While those have started to drop, the numbers of people on unemployment continues to rise. (Photo by Elvert Barns/Creative Commons)

WASHINGTON – The number of new jobless claims fell for a second straight week, but the number of unemployed continued to rise in Arizona and the nation in what one expert calls a shock to workers and a “huge shock” to the system.

Nationwide, 3.8 million people filed new unemployment claims last week, down from a peak of 6.6 million. Arizonans filed 52,350 new claims, down from 132,000 a month earlier. But continuing claims – the number collecting an unemployment check each week – rose to 250,507 in Arizona and just shy of 18 million in the U.S.

Some economists fear those numbers may be underreported due to processing issues at state unemployment agencies, but said they are still historically high regardless.

“It’s starting to seem like the new normal,” said Julia Wolfe, an analyst at the Economic Policy Institute. “But I think it’s important to ground ourselves in that this is still a huge shock to a lot of workers and their families and also represents a huge strain on the unemployment insurance system.”

University of Arizona economist George Hammond said the state jobless numbers are the natural result of businesses that have been hit, or ordered shut down, as a result of COVID-19.

“When you shut down major sectors of the economy like travel and tourism, it’s also significantly affected health care, social services, retail trade, it just generates huge job losses,” Hammond said. “We won’t hit the turning point until those initial claims get back to before the outbreak.”

But experts said the economy is not there yet.

“We are still seeing huge amounts of people continuing to be laid off,” Wolfe said. “It’s not like we’ve plateaued or leveled out and no more workers are being laid off, they’re just continuing their laid-off status.”

But as initial claims decline, the number of people continuing to get unemployment assistance will rise or stay steady until the economy can recover, Wolfe said.

“As we see these initial claims, they’re going to be turning into continued claims and very few of those continued claims are going to drop off, because if you’re a restaurant worker who is laid off from your job you can’t go to another restaurant because they’re closed as well,” she said.

Bart Hobijn, an economist at Arizona State University, said that while not everyone will succeed in finding a job, however, there are jobs out there.

“What really matters for the recovery and for how well people are doing is how quickly they flow off unemployment insurance and actually find alternative employment,” Hobijn said. “There’s still job opportunities out there, maybe not for everyone because there are so many people on unemployment, but at least for some people.”

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But Wolfe said there are other challenges for some of those who have been laid off: Just getting a chance to successfully collect unemployment benefits has been difficult in some states because of long-term underfunding of the unemployment insurance system.

“These are agencies and these are public services that have been systematically undercut over the years,” she said.

Based on an online survey of 24,607 people, EPI estimates that the Labor Department is undercounting the number of unemployed because people get discouraged after unsuccessful attempts to get benefits. For every 10 people who successfully applied for jobless benefits, “three to four additional people tried to apply but could not get through the system to make a claim,” according to the survey conducted from April 14 to April 24.

The agency tasked with processing state unemployment filings , the Arizona Department of Economic Security, said it has brought on more than 300 new employees in recent weeks to handle the surging coronavirus-driven caseload and is in the process of hiring at least 200 more.

“As we continue to receive an unprecedented number of initial and continued claims, we have been adding additional staff across Unemployment Insurance to process applications, make determinations, and issue benefits,” said a DES spokesman in an emailed statement.

Health Reporter, Washington, D.C.