Unemployment Claims Skyrocket Over Past Week

According to a recently released report from the Labor Department, the number of new applications from individuals seeking unemployment benefits increased by 37,000 last week, with the complete number of applications totaling 412,000.

The increased number of new claims for jobless benefits illuminates the total number of individuals who have filed for unemployment benefits in the past week. Forecasters had been expecting 359,000 new jobless claims, but the new figure surpassed these expectations significantly. In addition, this number also represents an increase over the previous week, which witnessed 375,000 total filings.

As the American economy continues its post-pandemic recovery, the total number of new applications for unemployment is being closely watched, especially since recent jobs reports have been far less than optimal. Some have raised fears of a labor shortage across the country.

Last month, the overall economic performance also fell below expectations. While the critical consensus was for 650,000 new jobs to be added, only 559,000 new jobs were ultimately added during that month. However, May represented an improvement over the preceding month, April, when only 278,000 new jobs were added to the economy, which was drastically below the anticipated 1 million new jobs.

The data regarding this week’s applications for unemployment benefits is also interesting because various states have already started phasing out the $300 weekly unemployment insurance program provided by the federal government. Various critics attest that this program has been disincentivizing individuals from working, provided that they can keep collecting benefits.

Some of the first states to end the federal government’s weekly unemployment benefits program include Missouri, Mississippi, Iowa, and Alaska, which collectively have a population of approximately 13 million. Moreover, roughly half of the states are expected to phase out the federal program over the next several weeks, or well before the sunset date of September 6. Currently, the expanded federal benefits, combined with average state benefits, totals more than double the amount of the federal minimum wage on average.

Though the exact influence that the unemployment payments have exerted on the labor market remains nebulous, a recently publicized study by Indeed, an employment website, determined that job search activity began increasing, relative to the overall national trends, in states that began phasing out unemployment benefits. For instance, a state’s overall share of national clicks, on average, had increased between 3 and 4 percent from the first day of the announcement to up to three days later, as found by the study.