New data from the Department of Labor released Thursday show another 1.9 million Americans filed for unemployment last week, marking the first time in more than two months new claims fell below 2 million within a seven day period.
Thursday’s new numbers however, still break the previous record for most claims made in a single week set in 1982 with 695,000. Pandemic panic has now pushed more than 42.5 million Americans into unemployment since mid-March lockdowns began. New weekly filings peaked in March with 6.8 million and have consistently declined each week since, causing many to believe the worst of the coronavirus recession to be over as state and businesses begin a slow process of reopening.
Daniel Zhao, a senior economist at the jobs side Glassdoor was to quick to caution on the other hand that the lockdowns under the novel Wuhan coronavirus are still wrecking a severe toll on the nation’s economy.
“Even as state reopen, claims in the millions are an indicator that the economic pain of the COVID-19 crisis is still acute,” Zhao told CNBC.
Still, the fact that new claims for jobless benefits continued its ninth straight week of decline is a good sign.
Torsten Slok, the chief economist at Deutche Bank Securities told the New York Times that the Labor Department’s new data shows the job market “crawling out of the hole now.”
“We do have the worst behind us,” Slok said.
To confront rapidly rising unemployment prompted by pandemic lockdowns put in place to build hospital capacity and slow the virus spread, Congress passed several rounds of economic stimulus including the more than $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act beefing up federal benefits by $600 a week with radically expanded eligibility requirements.
A pair of economists at the conservative Heritage Foundation found however, that in so doing Congress likely inflated nationwide unemployment by nearly 14 million by incentivizing individuals to seek the government handout rather than remain in full-time employment.
According to their report out in April, the median full-time American worker earning $48,000 a year would take home 15 percent more from unemployment than remaining in their full-time job.
Meanwhile, relaxed eligibility rules allowed individuals to make claims for benefits relying on self-verification.
“Congress essentially put the ball in the worker’s side to decide whether they quit,” Rachel Greszler who co-authored the report told The Federalist. Meanwhile, the added incentive to stay on government insurance has made securing forgivable government loans under the Paycheck Protection Program (PPP) for small businesses more difficult, as a key provision for loan forgiveness includes rehiring furloughed staff.
The expanded benefits package is set to expire in July. In their new $3 trillion stimulus bill dubbed the “HEROES Act,” House Democrats passed a clean extension to the program through the rest of year along with a laundry list of other long-sought progressive proposals that has been declared dead in the Republican-controlled Senate.