The number of people seeking new claims fell to a new pandemic low last week, but more than 3.2 million Americans remained on traditional state unemployment benefits, according to the feds.
According to Labor Department data released Thursday, continuing claims fell by 126,000 from just over 3.3 million the week before. At the same time last year, when the pandemic was at its peak, the figure was over 16 million.
Continuing claims have decreased significantly since their peaks in 2020, but they are still roughly twice as high as they were before the pandemic.
The number of new weekly jobless claims, which are used as a proxy for layoffs, fell to 360,000 last week, down from the previous week’s revised level of 386,000, according to the federal government.
Last week, economists polled by Dow Jones expected exactly 360,000 initial unemployment claims.
The peak of about 6.1 million new claims in a single week in 2020 has been significantly reduced. Over the last few months, as hiring has picked up again, the week-over-week numbers have gotten closer to historical averages.
In 2019, the country averaged just over 200,000 new claims per week.
The jobless figures come after the US added 850,000 jobs last month, exceeding economists’ expectations and signalling that the labour market recovery is picking up steam.
Nonetheless, some economists believe the recovery is moving too slowly and may jeopardize the US economy’s overall recovery.
The Labor Department reported last week that job openings in the United States increased again in May, to more than 9.2 million nationwide, indicating that there are plenty of openings.
According to a Morning Consult poll released on Wednesday, more than 1.8 million unemployed Americans have turned down jobs over the course of the pandemic due to the generous unemployment insurance benefits.
A handful of states have moved to cut unemployed people off from pandemic-boosted federal unemployment benefits, which give unemployed workers an extra $300 per week, in order to speed up the job market recovery.
Many business owners, Republicans, and economists blame the extra benefits for the labour shortage, claiming that they keep workers at home while businesses go understaffed.
Other factors contributing to the labour shortage, according to economists, include fear of getting COVID-19 and school closures, which keep parents at home.
On June 12, Alaska, Iowa, Mississippi, and Missouri all ended the federal program, just three months before it was set to expire.
On June 19, another eight states ended the program, though some of the changes were stalled in court.
At least 25 states are considering exiting the federal program to entice workers back into the labour market.
President Biden announced last month that the federal unemployment insurance program would be phased out after Labor Day.
Despite this, the White House has defended the additional benefits, claiming that businesses should pay people more.
However, many economists are becoming increasingly concerned that wage inflation will drive prices even higher. Companies have already begun to raise prices, citing increased labour and supply costs as justifications.
Chipotle, for example, has announced that it will increase menu prices by up to 4% to cover the cost of higher employee wages. Other major corporations, such as General Mills, Unilever, and JM Smucker, have recently issued warnings about rising costs and inflationary pressures.
Consumers are bearing the brunt of rising costs, which include everything from clothing and cars to bacon and milk.