The number of new claims for unemployment benefits has fallen below a million in a week for the first time since March.
The Labor Department said Thursday that 963,000 people have claimed unemployment benefits for the week ending Aug. 8, down from a revised 1.19 million the week before.
The drop suggests that layoffs are declining, although last week’s figure is still above the pre-pandemic record of just under 700,000.
The number of ongoing claims, including people receiving non-traditional benefits, such as handymen, was 28 million, slightly less than 31 million the week before.
While the declining numbers marked a positive trend for a job market battered by the close of the coronavirus, claims numbers still remain at historically high levels as the country continues to navigate the grim economic fallout from the pandemic.
The Labor Department said Thursday that 963,000 people have claimed unemployment benefits for the week ending August 8. Pictured: A store in Arlington, Virginia on Aug. 4
The pandemic, the shutdowns intended to combat it, and the reluctance or inability of many people to shop, travel, or eat out, continue to weaken the economy, forcing companies to reduce staff.
Twenty-three states have suspended or reversed their reopenings.
It’s a hopeful sign that the number of new confirmed viral cases has declined in recent weeks, although it remains well above the May and June rate.
For months, the unemployed received the $ 600 a week in federal unemployed aid in addition to their benefits.
But the federal payment has passed, and negotiations in Congress to extend that benefit, likely at a lower payment level, have plunged into a rage.
The additional federal aid had enabled many unemployed Americans to pay rent, food, and utilities, and its expiration threatens to weaken consumer spending and further slow the economy.
Unemployment benefits have accounted for about 5% of national income since April, a larger share than even Social Security. The loss of the $ 600 has cut benefits for the average recipient by half to three-quarters.
Michelle Meyer, an economist at Bank of America Merrill Lynch, says the loss of the additional aid will cut Americans’ income by $ 18 billion a week.
“That’s a big hit for purchasing power,” she said.
Last week, President Donald Trump issued an executive order that would provide $ 300 a week in federal aid to the unemployed to replace the $ 600 a week lapsed benefit. But experts say it would take weeks for states to make that payment.
Last week, President Donald Trump issued an executive order that would provide $ 300 a week in federal aid to the unemployed, but experts say it would take weeks for states to implement it
If states want to establish systems to distribute a new $ 300 federal unemployment benefit, their labor departments would need more guidance from the federal government, noted Michele Evermore, a senior researcher with the National Employment Law Project.
The money, believed to come from a federal disaster relief fund, likely requires states to hire more people and possibly contract with software vendors to set up a system to process the payments, Evermore said.
“I can’t imagine this going up anywhere in less than a month,” she said.
After the pandemic hit the US in March, Congress approved a $ 2 trillion aid package. Among other things, it provided the benefit of $ 600 a week and made the self-employed and handyman new eligible for unemployment assistance.
Both programs required states to create new processing systems while handling a large number of benefit claims.
That influx resulted in huge backlogs and left millions of unemployed people frustrated by their inability to access benefits. Washington State, for example, eventually enlisted National Guard troops to help process the requests.
In the meantime, with many virus cases still confirmed, it’s not clear when business owners will be able to reopen or have enough customers to re-hire.
Grace Della is one of them. She opened her food tour business in Miami ten years ago with $ 300 from her mother.
On the weekends, she led the tours herself, eventually building a business of 13 guides, with an average of 10 tours per day of culinary hotspots in South Beach and Little Havana.
But with the risk of infection still high and with sparse customer demand, it has been more than four months since Miami Culinary Tours has taken guests, and Della, 46, says she doesn’t expect to recall her employees anytime soon.
She hopes to reopen later this month, but isn’t sure she can, given the high number of confirmed infections in the state. Della said she tries to stay positive, but confesses moments of paralyzing fear. At one point, hyperventilating with fear, she contacted firefighters.
“No money is coming in,” Della said. “We are all scared.”