In the 71st week of an employment crisis, initial claims for unemployment benefits dropped again by 24,000 to 400,000 first-time claims for the week ending July 24.
In the months ahead, we expect jobless claims to continue their approach to traditional levels of 210,000 per week.
There remain 13.1 million people who are receiving some form of unemployment benefits. Of those, 3.2 million—or 25%—are receiving traditional unemployment benefits while 9.8 million—or 75%—are receiving some form of pandemic assistance set to expire on Sept. 5.
That leaves about five weeks for those 9.8 million people to figure out how to keep food on the table. Expectations are that a substantial number of them will be able to return to previous work when their children are back in school.
But that assumes that reservation wages—or the minimum amount someone will accept to do a job—will drop if alternative employment is unavailable and if those businesses remain open.
Estimates from Opportunity Insights of Harvard and Brown universities suggest that while high-income employment is 7.4% higher than pre-pandemic levels, low-income employment remains down by 21%. That contrasts with job postings for minimally educated workers that are up by 37% compared to pre-pandemic levels, and by 16% for workers with some education.
In the months ahead, we expect jobless claims to continue their approach to traditional levels of 210,000 per week. Once schools and businesses are fully open, families should be better able to balance child care costs and salary requirements. We also anticipate employment and wages to reach new equilibrium levels as employers and the public absorb the total cost of keeping working families afloat.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.