WASHINGTON -- The number of Americans seeking unemployment benefits dipped last week to a still-high 840,000, evidence that layoffs remain elevated seven months into the pandemic recession.
Yet economists say they are increasingly dubious about the unemployment claims figures, even though there is little doubt that hiring has slowed and employers have continued to lay off workers.
One reason layoffs remain high is that companies often hold on to workers when a recession begins, if they can, in hopes of outlasting the downturn. Yet if the recession drags on, many will eventually give up and cut jobs.
"Some of these new layoffs are coming from firms that didn't want or didn't have to lay people off at first," said Constance Hunter, chief economist at KPMG. Now, "they have no choice but to start reducing their workforce."
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At face value, the Labor Department's report Thursday indicated that more than 800,000 people are still being laid off each week, a historically high number -- more than in any week during the 2008-09 recession. Weekly applications for unemployment benefits have long been considered a proxy for job cuts.
But the flood of layoffs during the pandemic recession and the creation of some new jobless-aid programs have overwhelmed state unemployment agencies. A result is that the jobless claims figures the government has been reporting have become an object of skepticism.
"We can't view it as real-time job separation data," said Elizabeth Pancotti, a policy adviser at Employ America, a left-leaning advocacy group, referring to layoffs. "We're still seeing massive overcounting of initial claims."
Some states are still processing backlogged applications from this summer, Pancotti noted. California, for example, stopped accepting new claims for two weeks so it could clear a backlog of 600,000 applications that are more than 3 weeks old.
In many states, the data for initial jobless claims also includes workers who had been laid off previously, then found temporary work or were recalled temporarily -- only to lose their jobs again and reapply for unemployment benefits.
Thursday's report from the Labor Department said the number of people who are continuing to receive unemployment benefits dropped 1 million to 11 million. The decline suggests that many of the unemployed are finding work. But it also reflects the fact that some have used up the allotted weeks of regular state benefits and have transitioned to extended benefit programs.
OVERLAPPING PROGRAMS
And this spring, Congress created a new program, Pandemic Unemployment Assistance, which made self-employed and gig workers eligible for unemployment aid for the first time. Yet in many states, to qualify for the program, the unemployed must first apply for regular jobless benefits. Only after they have been rejected under that system can they apply for Pandemic Unemployment Assistance.
Last week, more than 464,000 people applied for aid through that program. These figures aren't adjusted for seasonal trends, so the government reports them separately from the traditional jobless claims. Yet the figure may include some people who applied under the traditional benefits program.
Organized fraud has also been a problem, particularly in the Pandemic Unemployment Assistance program, in which it's difficult for states to verify applicants' incomes.
All told, 25.5 million people were receiving some form of unemployment aid in the week that ended Sept. 19, the government said.
Yet those figures are also likely inflated, mostly by double-counting. California and other states have counted retroactive payments under Pandemic Unemployment Assistance as multiple payments to separate individuals.
"Nobody knows exactly how many people are receiving unemployment insurance benefits right now," said Heidi Shierholz, policy director at the Economic Policy Institute and former chief economist at the Labor Department. That is a "reminder that we need to invest heavily in our data infrastructure and technology."
The figures nevertheless point to a flagging recovery and come two days after President Donald Trump cut off talks over a new rescue aid package that economists say is urgently needed. A failure to enact another round of government aid would crimp household income and spending, and some economists say it would raise the risk of a double-dip recession.
LAYOFFS CONTINUE
In the meantime, the pace of layoffs shows little sign of flagging. Disney said last week that it would cut 28,000 jobs. And American Airlines and United Airlines combined furloughed 32,000 employees last week. Airlines had been barred from cutting jobs as long as they were receiving federal aid, which expired this month. The American Hotel & Lodging Association has said that nearly three-quarters of hotels say they'll have to lay off more workers without further financial aid.
Congress is still considering extending the airline aid in stand-alone legislation, but there is little sign that a deal will be reached with the White House.
Separate data from the Census Bureau on Wednesday showed that 8.3 million Americans reported being behind on rent in mid-September, and 3.8 million reported that they were likely to be evicted in the next two months. Both figures have changed little since August.
"It seems increasingly unlikely that we'll have a deal before the election, and bills are due now," said Daniel Zhao, senior economist at the career site Glassdoor. "Every week that passes puts extra pressure on workers' households and small businesses, so any delay in the stimulus is going to have a meaningful impact on Americans."
Information for this article was contributed by Joyce M. Rosenberg of The Associated Press and by Ben Casselman of The New York Times.
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