DOL Reports 884,000 New Jobless Claims, Same Number as Last Week

By:
Chris Gaetano
Published Date:
Sep 10, 2020
The U.S. Department of Labor reported that 884,000 new people filed for unemployment insurance last week, the same number that applied in the previous week. While the government initially reported 881,000 for the previous week, later on, this figure was revised upward by 3,000, which makes that week identical to last week in terms of jobless benefit applications. California remains the top source of new claims at 237,516, with Texas as a distant second with 66,330, and New York in third at 65,273. The DOL said that, as of the last week of August, 29,605,064 remain on some form of jobless benefit nationwide.

While the Republican "skinny bill," which the Senate is scheduled to vote on sometime today, contains $300 per week in supplemental unemployment insurance, it is highly unlikely to clear the House or even make its way to a floor vote, given that Democrats have repeatedly assailed the plan as insufficient, according to Bloomberg. Senate Minority Leader Chuck Schumer (D-N.Y.) said that once this bill is defeated, he expects that the Republicans will feel more political pressure to come back to the bargaining table and be more amenable to Democratic items, such as reviving the $600 per week unemployment program.

Such benefits have become a major point of contention between parties. Republicans, according to the New York Times, have said they are a disincentive to returning to work, and have noted that nearly 70 percent of workers make more on unemployment than they did at their jobs. But the Times noted that multiple studies have specifically researched this claim and have concluded that the benefits are not in fact having this effect.

A Yale study found that "workers receiving larger increases in unemployment benefits experienced very similar gains in employment by early May relative to workers with less-generous benefit increases. People with more generously expanded benefits also resumed working at a similar or slightly quicker rate than others did, according to the report." The study added, "If the enhanced benefits had these effects, the researchers said, the data should show a significant drop in employment in the week after the CARES Act took effect; it should also show subsequent decreases in relative employment as workers with more generous unemployment benefits put off returning to work" but this failed to be borne out in the data.

A National Bureau of Economic Research (NBER) study
found that "concerns about moral hazard effects [of the supplemental unemployment insurance] may be overstated, and that labor demand is the more important determinant of employment outcomes thus far." Indeed, it found that "[t]he states with the lowest replacement rates saw the steepest collapse of hours in March and the slowest recovery thereafter. This is the opposite of the pattern one would expect if either were importantly driven by labor supply responses to UI generosity" and, conversely, "both higher [Paycheck Protection Program] volumes and higher UI replacement rates are associated with faster rehiring." The study attributed the persistently low labor replacement rates to a number of other factors, such as businesses collapsing all over the country, and people who'd been laid off expecting to be rehired once their employers reopen.

A joint study among NBER, The Federal Reserve, and Glassdoor found that applications-per-vacancy were actually higher during the COVID-19 crisis than before, as overall job vacancies fell by 64 percent, while the number of job applicants decreased by only 21 percent. What's more, applications decreased before the CARES Act even passed and remained relatively stable until June 2020. Further, "applications per job [were] higher after the CARES Act even in the groups that experience[d] the highest increase in their replacement rate," which "can help explain why higher unemployment benefits had no effect on employment after the CARES Act." Essentially, "[i]n a context of excessive competition for jobs among workers, more generous unemployment insurance reduces wasteful applications and has no effect on employment."

The Times noted that there are numerous other studies that came to the same conclusion.

Meanwhile, the extra benefits the administration authorized in response to the breakdown in talks between congressional leaders has almost completely run out of money, as the funds were taken from Federal Emergency Management Agency (FEMA) (which does lead one to wonder the degree to which FEMA will be able to respond to non-pandemic emergencies in the future). 

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