U.S. unemployment claims drop below 1M; Indiana claims decline

The number of laid-off workers applying for unemployment aid fell below 1 million last week nationally for the first time since the pandemic intensified five months ago. Claims also dropped in Indiana.

The U.S. Labor Department on Thursday said applications fell to 963,000, the second straight drop, from 1.2 million the previous week. The decline suggests that layoffs are slowing, though last week’s figure still exceeds the pre-pandemic record of just under 700,000.

All told, fewer people are also continuing to receive state jobless aid. That figure dropped to 15.5 million, from 16.1 million the previous week.

In Indiana, 10,549 people filed initial unemployment claims in the week ended Aug. 8, down 16% from an adjusted number of 12,551 the previous week, an decrease of 2,002. Prior to the pandemic, the state was typically seeing fewer than 3,000 claims per week.

A total of 191,613 people were receiving unemployment benefits in Indiana as of July Aug. 1, the Labor Department said Thursday. That was down from 223,895 the previous week.

Thursday’s report also showed that an additional 488,622 people applied for jobless benefits nationally last week under the new Pandemic Unemployment Assistance program for self-employed and gig workers. That was a sizable drop from an adjusted 655,999 the previous week.

Indiana reported 7,373 new applicants for the PUA program in the week ended Aug. 8 after reporting 6,648 new claims the previous week. The state reported 141,990 people were receiving continued PUA aid as of July 25, down from 143,026 the prior week.

PUA provides up to 39 weeks of unemployment benefits to individuals not eligible for regular unemployment compensation or extended benefits. Those include the self-employed, independent contractors, gig economy workers and workers for certain religious entities.

The pandemic, the shutdowns that are meant to fight it and the reluctance or inability of many people to shop, travel or eat out are continuing to weaken the economy and force companies to cut staff. Twenty-three states have paused or reversed their business re-openings. In a hopeful sign, the rate of new confirmed viral cases has declined in the past couple of weeks, though it remains far above the rates that prevailed in May and June.

For months, the unemployed had also been receiving the $600 a week in federal jobless aid on top of their state benefit. But the federal payment has expired, and negotiations in Congress to extend that benefit, likely at a lower level of payment, have collapsed in rancor.

The supplemental federal aid had enabled many jobless Americans to afford rent, food and utilities, and its expiration threatens to weaken consumer spending and further slow the economy. Unemployment benefits have accounted for roughly 5% of national income since April, a larger share than even Social Security. The loss of the $600 has shrunk benefits for the average recipient by one-half to three-quarters.

Michelle Meyer, an economist at Bank of America Merrill Lynch, said that the loss of the additional aid will reduce Americans’ incomes by $18 billion a week.

“That’s a big hit to purchasing power,” she said.

Last week, President Donald Trump issued an executive order that would provide $300 a week in federal aid plus $100 in state aid to the jobless to replace the expired $600-a-week benefit. But experts say it would take weeks for the states to implement that payment.

The Labor Department said 28.2 million people are receiving some form of unemployment benefits, though that figure is inflated by double-counting by some states.

For states to set up systems to distribute a new $300 federal jobless benefit, their labor departments would need more guidance from the federal government, noted Michele Evermore, a senior researcher at the National Employment Law Project. The money, which is supposed to come from a federal disaster relief fund, would likely require states to hire more people and possibly contract with software vendors to establish a system to process the payments, Evermore said.

“I can’t imagine that this goes up in less than a month anywhere,” she said.

After the pandemic hit, Congress approved a $2 trillion aid package. Among other things, it provided the $600-a-week benefit and made self-employed and gig workers newly eligible for unemployment aid.

Both programs required the states to create new processing systems while handling a crush of benefit applications. That influx resulted in huge backlogs and left millions of the unemployed frustrated by their inability to access benefits. Washington state, for one, eventually called in National Guard troops to help process applications.