U.S. workers have filed millions of applications for unemployment benefits each week since disruptions related to the coronavirus pandemic became widespread in mid-March. Here is what we can—and can’t—learn from the Labor Department’s weekly report on jobless claims.
How is a jobless claim counted in the Labor Department’s weekly claims report?
A jobless claim is an application for unemployment benefits that an individual submits by phone or online to a state labor department. Not every person who is laid off applies for benefits, and not every individual who tries to file for unemployment benefits will be counted as filing a claim. About one million Americans tried to apply but were unable to do so in the week ended May 2, according to Alexander Bick, an economics professor at Arizona State University, and Adam Blandin, an economics professor at Virginia Commonwealth University, based on a survey they conducted with about 3,000 individuals. Those individuals were excluded from the 3.2 million jobless claims recorded that week.
Are jobless claims the same thing as layoffs?
Jobless claims are typically viewed as a proxy for layoffs, but they are not an exact measure of weekly layoffs, especially during the pandemic. Many people who were laid off earlier in the coronavirus economic crisis are just now able to submit applications because state systems were overwhelmed by historic numbers of claims and because some states just recently began accepting applications from independent contractors and self-employed people, who became eligible under a federal coronavirus stimulus law. Thus, a jobless claim filed last week could reflect a layoff that occurred in mid-March.
Why does the Labor Department seasonally adjust jobless-claims data?
The Labor Department makes seasonal adjustments to jobless-claims data to strip out volatility that occurs during certain periods of the year. Around Thanksgiving and Christmas, claims can be particularly volatile because of holiday-season job losses, so the Labor Department adjusts the data to make it comparable to other times of the year.
Because of springtime patterns, the seasonally adjusted claims figure during the coronavirus pandemic has run higher than the number that isn’t seasonally adjusted.
How do unemployment claims translate into job losses reported in the Labor Department’s monthly jobs report?
There isn’t a direct translation between unemployment claims and monthly payroll losses because the two numbers derive from different sources and methodologies. State labor departments receive applications for unemployment benefits and report the numbers to the U.S. Labor Department each week. Its nonfarm payrolls figure is based on a survey of businesses asking about the week or pay period including the 12th of the month.
What are continuing claims?
Americans whose applications were approved by a state labor department can begin receiving financial payments by submitting continuing claims. They must file these claims each week to verify that they are jobless and meet certain other state-specific requirements. During the week ended May 2, there were about 23 million continuing claims. By comparison, leading up to the pandemic, there were about two million continuing claims a week.
Does every initial jobless claim become a continuing claim? – No. Initial jobless claims, which are applications for unemployment benefits, don’t always become continuing claims. For one thing, not all applications are approved. One person could also submit multiple claims, with only one of those initial claims becoming a continuing claim.
Moreover, an unemployed person might get a new job or return to work shortly after filing a claim. Such a situation is possible as small businesses tap loans under the Paycheck Protection Program, which requires companies to bring back workers. At this point, it isn’t clear how many such workers have returned to their jobs.
Do applicants have to file separately to get an extra $600 in benefits a week?
No. The $600 a week, which is tacked on to the regular weekly benefit amount, shouldn’t result in workers’ being counted in the claims data twice. This temporary federal program is currently set to expire at the end of July.
How are applications counted under the federal program that makes self-employed individuals and independent contractors newly eligible for benefits?
The Labor Department is publishing separate data on these federally funded claims, called pandemic unemployment assistance claims, in its weekly report. Unemployed people accessing pandemic claims can also receive $600 a week under the program mentioned above.
Some states have asked this subset of workers to apply for pandemic unemployment assistance when they are denied regular unemployment benefits. Other states have asked workers to hold off on applying until the states are ready to process these claims.
The number of people filing for pandemic claims isn’t seasonally adjusted and is excluded from the main claims number. There were nearly two million applications for these federal benefits in the two weeks ended May 9.