Continuing Claims for Unemployment Benefits rose by 25,000 this week to 3.719 million. In addition, last week’s level was revised up by 24,000. However, the overall trend is in the right direction. They are down by 700,000 or 15.8% from a year ago.
Regular claims are paid by the state governments, and run out after just 26 weeks. The graph below shows the long-term history of continuing claims for unemployment, as well as the percentage of the covered workforce that is receiving regular state benefits.
It does a good job of showing just how nasty that the Great Recession was for the job market. It also shows how things at the regular state unemployment benefit level have been getting much better over the last year (but still well above the peaks of the last two recessions). Still, we are closing in on being down to half of peak levels.
However, it does seem like the momentum in bringing down regular claims has stalled over the last few months. Note that the insured unemployment rate generally follows the direction of the number of claims, but has been gradually diverging over time. That is a function of the overall growth of the labor force, and of tighter eligibility standards for getting unemployment insurance over time. It also reflects the fact that this time around a very large proportion of those getting unemployment benefits are getting them from the extended Federal programs, not from the regular state programs.
In September, half of all the unemployed had been out of work for 22.2 weeks (down from a record high of 25.5 weeks in June 2010, but up from 21.8 weeks in July), and 44.6% had been out of work for more than 26 weeks. Just for a point of perspective, prior to the Great Recession, the highest the median duration of unemployment had ever reached was 12.3 weeks near the bottom of the 82-83 downturn. Clearly a measure of unemployment that by definition excludes 44.6% of the unemployed paints a very incomplete picture.
The number of short-term unemployed (less than 5 weeks) was actually on the low side, below the average of the last 30 years. The problem in terms of employment is not a lot of firing, but a lack of hiring. This has been the case for some time now.
After the 26 weeks are up, people move over to extended benefits, which are paid for by the Federal government. While regular claims are down, it is in large part due to people aging out of the regular benefits and “graduating” to extended benefits. Unfortunately, the data on extended claims in prior recessions is not available at the St. Louis Fed database. However, given the extraordinary duration of unemployment, it is a safe bet that they are higher than in previous downturns.
The extended claims have also been trending down. The ride down has been a bumpy one, though. They (the two largest programs combined) fell by 68,000 to 3.485 million this week. That puts them1.587 million, or 31.3% below the year-ago level of 5.072 million.
A much better measure is the total number of people getting benefits, regardless of which level of government pays for them. This is particularly true when looking at the longer term, not the week to week changes. Combined, regular claims and extended claims (including a few much smaller programs) fell by 124,000 to 6.697 million on the week and are down 2.200 million or 24.7% below last year.
(The extended claims numbers are not seasonally adjusted, while the initial and continuing claims are, so there is always little bit of apples to oranges. In addition, the continuing claims data are a week behind the initial claims, and extended claims are a week behind the extended claims data.)
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment