The number of new applications for unemployment benefits dropped 34,000 last week to 440,000, the Labor Department reported on Thursday, as several Republican states prepare to leave the expanded federal program early.
The figure, which represents the number of people who filed for unemployment in the previous week, was below forecasters’ expectations of 450,000 new claims. The number is also lower than the week prior, when the Labor Department reported that 478,000 people filed for unemployment, the lowest level since the start of the pandemic.
“Economic momentum is now sufficiently robust as to be the source of reopening strains, compared to the pandemic-caused loss of activity experienced a year ago,” said Bankrate’s senior economic analyst Mark Hamrick. “Even so, the disappointing April payrolls picture has, at the very least, prompted a reassessment and questioning whether matching millions of available jobs with the unemployed is more difficult than imagined.”
The labor market is being closely watched given that some economists assert there is an emerging labor shortage. April’s jobs report was a major disappointment, with the economy adding just 266,000 jobs, a figure that fell far short of forecasters’ predictions of nearly 1 million new jobs. The unemployment rate also increased slightly, to 6.1%.
Currently, the supplemental pandemic unemployment program provides the unemployed $300 per week in federal payments in addition to whatever amount they already receive as part of state unemployment funds. The national average of statewide unemployment insurance before COVID-19 hit was $387 per week, meaning that unemployed people in America are now netting $687 on average, a figure that equates to a $17.17 hourly wage.
Some economists have warned that even as the economy continues to heat up as more vaccines are delivered, restaurants and stores might have trouble finding affordable labor because, with the expanded benefits, people can make more than double what they would make at a minimum wage job by claiming they can’t find work.
Governors in several states have announced they would be ending the $300 expanded federal payments in the coming weeks in an effort to reinvigorate the jobs market. Montana has additionally said it will offer $1,200 bonuses for residents who return to work.
While this week’s numbers are lower than their pandemic-era peak, when millions of people per week were filing for unemployment, it is still higher than pre-pandemic levels, when weekly claims hovered at about 200,000 per week.
Author: Zachary Halaschak
Source: Washington Examiner: New jobless claims drop to 440,000 as red states opt out of boosted unemployment benefits