For the second week in a row, jobless claims disappointed.
411,000 Americans filed for unemployment benefits last week (figure below), more than the 380,000 economists forecast.
The previous week’s headline initial claims print, which showed an unexpected surge of 37,000, was revised higher, to 418,000.
The four-week moving average is now rising again. It sits at 397,750.
Although initial claims fell WoW, almost all of the decline (7,000) was attributable to the upward revision (6,000) to the previous week (figure below). That hardly counts as good “analysis,” but the point is just to suggest momentum may have stalled.
Continuing claims, meanwhile, were 3.39 million for the week ended June 12. That was lower than consensus (3.46 million).
Pandemic Unemployment Assistance claims rose almost 7,000, while ongoing PUA and PEUC claims stood at 5,950,167 and 5,273,180, respectively, as of June 5.
Meanwhile, durable goods orders rose 2.3% in May. That was lower than the 2.8% the market wanted to see, although this is a volatile series and the headline was in the middle of the range (1.3% to 5%). It’s probably a wash: April’s 1.3% decline in headline durables was revised to a 0.8% decline, helping to cushion any disappointment from May’s “miss.”
Getting back to claims, Indeed (the job site) found that some states which ended enhanced federal unemployment assistance prior to its official cutoff in September haven’t seen an uptick in job search activity.
“Search activity fell below [the] national trend in states cutting off federal UI imminently (June 12 and 19),” the site’s chief economist, Jed Kolko, said. “That’s not what you’d expect if people were upping their searches ahead of UI ending,” he added, noting that “if anything, it looks like relative search activity rises in states roughly one month before federal UI benefits are scheduled to end, and then falls.”
“You’d think they’d be searching more,” AnnElizabeth Konkel, another Indeed economist, said Wednesday. “At least right now, this does push back on the idea that federal unemployment benefits are the main reason there are labor market frictions.”
That’s correct. But the GOP (among whom that narrative is pervasive) isn’t a party that’s known for being swayed by empirical evidence when it comes to the economy (or anything else, really). Republican lawmakers will continue to insist that enhanced unemployment benefits are in part responsible for the record gap between vacancies and hires (figure below). And, frankly, they’re almost surely right if the claim is that the benefits are a contributing factor.
The question is whether, on net, the enhanced benefits were a good idea.
I think the answer to that is pretty clearly that they were. It’s just a matter of figuring out the “right” time to roll them back.
The Indeed study suggests there isn’t a “right” time. I think, increasingly, the benefits are neither helpful nor harmful. Sure, some people may be leaning on them as an excuse not to return to work, but I doubt that’s the real issue.
If I had to guess, we’ll discover later this year that the pandemic forced an across-the-board rethink among services sector workers when it comes to what’s “fair” vis-à-vis wages and benefits.
Cutting them off from an extra $300 (or eliminating other pandemic programs) may have an impact at the margins, but I don’t think that’s the deciding factor for many sidelined services sector workers right now. They’re not going to accept the same jobs at the same pay rate and for the same meager benefits packages as they did pre-pandemic. They’ll either be paid more, or they won’t work.
As I’ve put it previously, it’s no longer clear to millions of American workers that being employed and poor is more dignified that being unemployed and destitute.
“if anything, it looks like relative search activity rises in states roughly one month before federal UI benefits are scheduled to end, and then falls.”
“if anything, it looks like relative search activity rises in states roughly one month before federal UI benefits are scheduled to end, and then falls.”
“if anything, it looks like relative search activity rises in states roughly one month before federal UI benefits are scheduled to end, and then falls.”
Possibly, persons on UE/PUA increase searching before the benefit cutoff, then searches decline because some find jobs.
No doubt higher pay would cause ,more to leave UE/PUA early. But in a couple months, they will leave UE/PUA regardless.
Sorry, not sure why I pasted the quote in 3X
Appears to be reasonable speculation though.
yes that is reasonable. its unfortunate though, that the ones who are waiting are missing out on the ability to make 15/hour at subway AND dictate their schedule. in a minute they will still make 15, but they will see their friends walking in asking for jobs, and anyone who’s been slacking…..
Does permanently reduced employment, and therefore reduced consumption, count as evidence of services-sector “scarring?” If low earners decide permanently that they value their dignity more than a small marginal increase in luxury, we could be looking at a structural change in habits.
The enhanced benefits were the biggest boon to labor since Reagan started crushing them in the 80’s. It didn’t require any legislation or employer requirements, it simply gave lower class workers the power to stand up to greedy businesses and say “I’m not working for crap wages that I can’t even live on anymore”. Having consulted several restaurants and retail outlets in my area it seems fairly clear that they think this is a bump in the road that they are willing to ‘ride out’ rather than increase wages and benefits to entice candidates to come work for them. The manager/owner of the Leslie’s pool supply told me that he and a kid were working 12 hours days 7 days a week because he ‘can’t afford to pay more than unemployment does right now’. While I think that statement is complete horse shit, I believe it does speak to the unwillingness of these employers to consider that cheap labor is not a guarantee anymore. My hope is that the vacancies will continue until these employers break and can’t take the miserable hours anymore. Maybe then we’ll finally see some progress in restoring labor rights and transfer a marginal percentage of wealth back to the lower and middle classes.
In my state, the average UE benefit including the pandemic boost is equivalent to $16.75/hr. Using a typical 35% employer burden (insurance, benefits, payroll tax, etc) that equates to abouit $23/hr. fully burdened Suppose it takes $20/hr to get someone to leave UE/PUA right now. That’s equivalent to $27/nr fully burdened. Wages are sticky, it is hard to bring them down. If you’re a small business, it may be rational to run short-staffed and/or cut hours of operation for another 2 months rather than get locked into paying $27/hr fully burdened permanently. It is very likely that in 2-3 months the supply of labor will be higher, so why “buy high”?
No value or social judgments here, I’m talking about the financially optional decision from the standpoint of that business.
locked in to paying 27? few states protect workers enough that an employer would just say ‘you make 16 now, or you can leave’; or ‘youre fired’ and have no insurance claims or anything, esp if under 90 days, they all it “Right to work”.
funny, that pool guy values his OWN TIME less than the workers he is not hiring. he chooses to work that extra 24 hours, keeping $360/wk (@15/hr). if he hired someone instead, I am VERY certain his ability to plan, create/enhance some marketing plan, look for ways to streamline his business is worth more than $15/hour.
This is standard for small businesses though. an owner who cant suck it up and make LESS while expanding/hiring…is a business owner who will never grow.
Also wages are sticky, once raised its hard to cut.
“Also wages are sticky, once raised its hard to cut.” That’s what I said.
If a business hires new workers at $27/hr fully burdened cost, it has to raise its existing,workers to more than $27/hr.
After the UE/PUA benefits end, is the business going to lower all its workers’ wages down to the new market level? And lose not only the newly hired ones, but also the experienced ones?
Even for at-will employees, termination is not costless to the employer. The business’ Unemplloyment Insurance premiums go up.
The pool supply guy isn’t going to “expand” by hiring workers right now – he’ll just stay at his current business level.
The new worker is likely to be pretty unproductive for some months, it takes time to learn the ropes even in a basic retail position..
It may well be very rational for the pool supply guy to work longer hours himself for a couple of months, rather than get into all of that.
Am I delusional in thinking that after four years of enhanced harassment and degradation, a significant number of immigrant workers went home when the Covid layoffs happened? If I’m not whacko and they did leave, Mr. Trump should be proud that his voters can now have their shitty jobs back. Reality is hilarious.
indeed it is. djt got everything he implied would happen, just re-watch his inauguration speech. and while they may not have left….very few have come in to do seasonal housekeeping/tomato picking the past 18 months, thus the ‘open jobs’ numbers.
I took your advice and re-watched djt’s inauguration speech. If he had immediately succumbed to terminal bone spurs after the speech and handed the reins to Mike Pence, we would all mourn the loss of a great leader. But great speech writers do not great presidents make. As they say in the Corps – “…bullshit walks”.
number of people in florida on unemployment is 109,000. in southern US total job openings 3.5 million. 132k in GA and 196k in TX. even without basic statistical massage techniques its easy to see and say, continued claims, those who are getting $300/wk ‘extra’….are less than a ticks dk when compared to Openings. ‘those people’ are not the problem with businesses hiring. the problem is that businesses wont pay enough for people to do the work. its as though the businesses are reliant on the workers’ low pay to be profitable (vs a good mix of prices/volume/costs to create profits).
also, i think the usual entrepreneurial (over-) optimism is in its full bloom. locally in swfl, there are more businesses than before, plenty of new brands opening competing for about a 10% population increase (alongside significantly higher rents and home prices competing for that share of pocketbook).
one item I cannot find anywhere….what is the difference in foreign temp and farm workers this year compared to 2019? I’d bet that its much lower while right now at the same time summer businesses are trying to hire for season…..that may explain a large degree of the gap we see in charts.