Over the past few weeks, we have observed a steady but uneven decline in first-time jobless claims on the way back to what we expect will be a range of 200,000 to 230,000, last seen before the pandemic.
First-time claims inched higher by 2,000, to 373,000, for the week that ended July 3.
To push that process along, 26 states, citing demand for workers, have ended extra unemployment benefits before they expire in September. The latest jobless claims data released by the government on Thursday is instructive and continues to imply that this policy shift has not been decisive in sending people back to work.
The data also shows that ending the benefits was almost surely not part of June’s gain of 850,000 jobs, and we do not think it will play a meaningful role in the robust employment gains we expect this summer.
First-time claims inched higher by 2,000, to 373,000, for the week ending July 3 from an upwardly revised 371,000 for the week ending June 26, according to the Labor Department.
Continuing claims fell to 3.33 million from 3.48 million for the week ending June 26, and there were still 14.2 million people on some form of unemployment compensation through the week ending June 19, a decline from 14.6 million for the week ending June 12.
Inside the claims data, one can observe the beginning of the end of the federal Pandemic Unemployment Assistance program that provided aid to people who would traditionally not have qualified for unemployment insurance benefits.
Through the week ending July 3, only six states—Indiana, Minnesota, Mississippi, Nebraska, Oklahoma and West Virginia—reported no new claims for Pandemic Unemployment Assistance. And only three states—Florida, Georgia and Mississippi—reported no new claims for Pandemic Emergency Unemployment Compensation program, another federal program that extended payments for those whose benefits had expired.
For example, in the former program, Indiana reported a drop from 103,395 for the week ending June 19 to none for the week ending June 26. In the latter, Mississippi reported a decline from 20,953 to none for the same time periods.
We do not expect a material increase in workers returning to the market until schools reopen, child care becomes more widely available and individual reservation wages—the lowest wage a worker is willing to accept to take a job—are met by firms pushing up pay to attract people back into the labor force.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
