Thousands lining up outside a temporary unemployment office in Frankfort, Ky., on Wednesday.
Photo: bryan woolston/ReutersA historically high number of workers continue to seek unemployment benefits each week, but applications have decreased substantially since an early spring peak amid signs the labor market and broader economy are recovering from the coronavirus-induced shock.
New jobless claims have eased as states allowed businesses to reopen and employers recalled workers. Others signs of economic growth have emerged, including a May rebound in retail spending. But with the economy having slipped into recession this year, many firms have remained cautious about rehiring, leaving millions of people out of work since the pandemic hit.
Employers added to payrolls in May but only offset about one in 10 jobs lost in April and March. Recent data indicate a higher volume of workers are moving in and out of jobs, said Roiana Reid, an economist at Berenberg Capital Markets.
“You’re going to see elevated levels of layoffs because some businesses will permanently close,” she said. “But hiring and rehiring will outweigh that this summer, especially as you see big cities, such as New York, reopen.”
The level of new jobless claims fell below 2 million in recent weeks from a peak of 6.9 million in late March, according to the Labor Department. Last week’s total was 1.5 million claims. Economists expect initial claims will continue to trend lower, though the recent level is still well above the highest week on record before this year: 695,000 in 1982.
The number of Americans receiving ongoing unemployment benefits has plateaued near 20 million in recent weeks and is down from a peak of nearly 25 million in early May, according to the Labor Department. The leveling of those on unemployment rolls, also known as continuing claims, suggests new layoffs are largely being offset by hiring and recalling of workers.
But joblessness remains at historically high levels. Before this year, the most Americans receiving unemployment benefits in a single week was 6.6 million in 2009, according to Labor Department records back to 1967.
Unemployment benefits have been expanded to those who were previously ineligible for such aid, including self-employed and gig-economy workers. About 10 million workers were receiving those benefits in late May, according to the Labor Department, which are accounted for separately from the regular unemployment insurance program.
The federal government is paying $600 in additional unemployment benefits on top of amounts approved by states, allowing many workers to earn more than they did at their jobs. The extra payment is set to expire at the end of July, though Congress is debating whether to extend them or provide other aid.
The enhanced benefits have attracted some who might not have otherwise applied for aid. Not all initial benefits applications are approved, and it is likely that some Americans have applied more than once since mid-March. Rules for applying in some states have changed, and some workers have been recalled to jobs and subsequently laid off again.
Many Americans remain frustrated with the unemployment system which was overwhelmed with claims this spring, creating backlogs of applicants.
Elizabeth Dunn, of Waukesha, Wis., applied for unemployment benefits in March after losing her job at a movie theater. The 53-year old received a single payment, but nothing else the past three months. A spokesman for the state labor department said Ms. Dunn’s claim is under review because she voluntarily quit a job earlier this year. Workers who leave jobs voluntarily are generally ineligible for unemployment benefits.
Ms. Dunn said she did briefly hold a job as an elder-care assistant but quit in February before the pandemic. She didn’t feel comfortable working with older adults with significant medical problems, and she had the movie theater job she liked better. The state won’t pay Ms. Dunn benefits while her case is under investigation, leaving her in limbo.
Without jobless assistance or work, Ms. Dunn said she is struggling to pay rent and other bills. She was told the theater hopes to reopen later this month, but hasn’t set a definite date.
“It’s frustrating because I’d still have a job if the theater wasn’t shut down due to Covid,” she said.
Vacant storefronts for lease on June 11 in San Francisco.
Photo: Justin Sullivan/Getty ImagesSHARE YOUR THOUGHTS
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Write to Eric Morath at eric.morath@wsj.com
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