The Lay of the Land: U.S. Unemployment

Newest initial jobless claims numbers, its potential impact on stimulus bill negotiations, and the essential worker's plight

Today, initial jobless claims have dropped below 1 million to 963,000, seasonally adjusted for the week ending August 8. This is the first time that initial jobless claims fell below the one million level since the beginning of the pandemic in March. For the week ending August 1, continuing claims, seasonally adjusted, fell to 15.5 million from 16.1 million. 

Real Vision - Table: Unemployment Insurance Data for Regular State Programs
Credit: Department of Labor

Both of these data points beat economists’ expectations for initial claims of 1.1 million and continuing claims of 15.8 million. 

Real Vision Blog - Chart: Initial and Continuing Claims
Credit: Bloomberg

This data together with the most recent jobs report for July, which stated that non-farm payrolls increased 1.8 million for a combined 9.3 million jobs added in the past three months, the unemployment rate fell to 10.2%.

Real Vision Blog - Chart: Nonfarm Payrolls
U.S. Nonfarm Payrolls

This is all occurring as the total number of coronavirus cases in the US is receding from its highest levels last month and the effect of fiscal aid for Americans is fading. The labor market’s recovery could further drive a wedge between the two parties in Congress over coming to an agreement on a new stimulus bill should they resume negotiations – if at all. Overall, it demonstrates the duress in the labor market is currently easing as hiring is picking up, even though unemployment is still historically high.

Despite progress, there is still a long way to go as the employment gains experienced in the past few months still have not restored half of the jobs that were lost because of the pandemic. With millions of people seeking work and many essential workers with low morale and under immense pressure, the US labor market is still showing significant weakness.

Many large retailers have discontinued hazard pay for essential workers in the past several weeks, even as their risk of infection remains high and daily coronavirus cases are still at higher levels than in the early days of the pandemic. With the politicization of masks, many customers have retaliated when retail workers attempt to enforce mask policies within stores. Some of those altercations have even been violent.

With added responsibilities which include increased sanitization procedures, reduced hours for workers, hostile customers, and general fear for their health, many essential workers are cracking under it all and quitting. Turnover during the pandemic has generally been high, but in the most recent data, which is for June this year, the Bureau of Labor Statistics shows that the number and rate of people quitting their jobs is increasing.

Real Vision Blog - Chart:Jolts Data Quits Level and Rates Retail Trade
JOLTS - Quits Levels and Rates (Retail Trade)

While today’s job report demonstrates promise, we cannot forget about the intricacies of how the US labor market is currently faring.