New Jobless Claims Dip Below 1 Million For 1st Time Since March

Aug 13, 2020
Originally published on August 13, 2020 5:32 pm

First-time claims for state unemployment benefits dropped below 1 million last week for the first time since the pandemic hit the economy in March. Claims under a special pandemic program for gig workers and others who are typically not eligible for unemployment also fell.

The drop may signal an improvement in the job market. Jobless benefits have also become less valuable, since a $600 per week federal supplement expired at the end of July.

President Trump on Saturday ordered a temporary payment of $300 per week using redirected FEMA money. But it could take some time before unemployed people are able to collect that cash.

Initial claims for state benefits last week totaled 963,000 — a drop of 228,000 from the previous week — breaking a 20-week streak of claims above 1 million. Jobless claims under the federal pandemic program dropped to 488,622 — down 167,377 from the prior week.

As of July 25, a total of 28.3 million people were receiving some form of unemployment relief. That's a drop of more than 3 million from the week before.

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ARI SHAPIRO, HOST:

You wouldn't ordinarily celebrate the fact that more than 900,000 people applied for unemployment benefits in a single week. But in the COVID-19 era, that is what passes for good news. It's the first time since the pandemic took off in March that weekly claims for unemployment fell below the million mark. Policymakers in Washington can't agree on how much additional help might be needed for the tens of millions of people who are still out of work. NPR's Scott Horsley is here with us now. Hi, Scott.

SCOTT HORSLEY, BYLINE: Hi, Ari.

SHAPIRO: How encouraging is this drop in new unemployment claims?

HORSLEY: It is a good sign that claims are coming down. But as you mentioned, the numbers are still really high. I mean, to put this in perspective, during the worst month of the Great Recession, the whole country lost 800,000 jobs. Last week, alone 963,000 applied for state unemployment benefits. So, you know, months into this pandemic, a lot of people are still losing jobs. The numbers have come down significantly from the previous week. And that does suggest some improvement in the job market - fewer people getting laid off. There could also be another factor at play, though, which is the value of unemployment benefits has diminished since the extra federal benefits that Congress authorized early on during the pandemic expired at the end of last month.

SHAPIRO: That's the extra $600 a week that the federal government had been paying for the last few months. Where do things stand on renewing those benefits?

HORSLEY: There is still no agreement between Congress and the White House to renew them. So on Saturday after last week's jobless claims had been tallied, the president called for a new federal supplement that would boost jobless benefits by $300 a week, so half of what people had been getting a few weeks ago but better than nothing. Trump is also encouraging states to boost their own jobless benefits by $100 per week. Although after some states balked, the White House says that won't be a requirement, that the feds will still pay the $300 in any case. It could take a while, though, before unemployed folks actually see any of that extra cash. And what's more, because the president acted on his own without Congress, he's having to redirect FEMA money to cover the extra unemployment benefits. Some have questioned the wisdom of tapping FEMA money in the middle of a hurricane season. And with more than 28 million people collecting unemployment, the FEMA money will last only about five weeks.

SHAPIRO: Congress, of course, could step in and authorize additional money, but there has been a stalemate. Where do the negotiations stand right now?

HORSLEY: It's still a stalemate. The treasury secretary, Steven Mnuchin, and the House speaker, Nancy Pelosi, did talk by telephone yesterday, but they both came away from that conversation saying they're still far apart, and each one blamed the other for being unwilling to compromise. There was a lot of finger pointing today but no additional talks. And the disagreement right now seems to be less about direct aid to families or businesses and more about things like money for the postal service and to safeguard the November election.

SHAPIRO: And we are going to have more coverage of the postal service elsewhere in the program. Today, the White House issued a sort of report card on the moves that the government has made so far to prop up the pandemic economy. What does it say?

HORSLEY: This was a report from the president's Council of Economic Advisers. And it outlines, first of all, just how big a hole the pandemic has punched in the U.S. economy. It's deeper and steeper than anything we've seen before. But the report card also says the aggressive government response really did help to cushion that blow. And we know that's true. You know, as painful as this recession has been, we haven't seen the level of absolute hardship that many people were predicting back in the spring with mass bankruptcies and evictions and loan defaults. And that's largely because of the trillions of dollars in relief money that both Congress and the Federal Reserve pushed out the door to prop businesses and families up. But this report only goes up through mid-July, and since that time, big chunks of that government aid have run out. What's curious is the report seems to be making the case that those earlier rounds of government relief, you know, really worked to keep people and the economy afloat during the spring and summer. So they're saying the aid, it was right on just as that aid is drying up, and the two sides seem very far apart on how to provide more of it.

SHAPIRO: That's NPR's Scott Horsley. Thanks, as always, Scott.

HORSLEY: Good to be with you, Ari. Transcript provided by NPR, Copyright NPR.