Amid national rise, Indiana reports big decrease in initial jobless claims

The number of laid-off Americans seeking unemployment benefits rose last week for the first time since the pandemic struck in March, but Indiana saw a big decline in claims.

Weekly U.S. jobless claims reported Thursday morning by the U.S. Labor Department ticked up by 109,000, to 1.42 million, from a revised figure of 1.31 million the previous week.

Unemployment applications topped 1 million for the 18th straight week. Before the pandemic, the number of weekly applications had never exceeded 700,000.

All told, the Labor Department said Thursday that roughly 32 million people are receiving unemployment benefits, though that figure could include double-counting by some states. Some economists say the figure is likely closer to 25 million.

In Indiana, 17,983 people filed initial unemployment claims in the week ended July 18, plummeting from an adjusted number of 28,360 the previous week. Prior to the pandemic, the state was typically seeing fewer than 3,000 claims per week.

After peaking at more than 146,000 initial claims in late March, weekly claims had been declining in Indiana during the pandemic until showing several weekly increases in June. Big spikes in claims late in the month were attributed partly to organized fraud that had previously struck several other states.

Initial claims in Indiana have taken big swings in July. They rose by 6,258 in the week ended July 11 before dropping by 10,422 in the latest week.

A total of 189,816 people were receiving unemployment benefits in Indiana as of July 11, the Labor Department said Thursday. That was down from 190,169 the previous week.

Thursday’s report also showed that an additional 974,999 people applied for jobless benefits nationally last week under the new Pandemic Unemployment Assistance program for self-employed and gig workers. That was up from 955,272 the previous week.

Indiana reported 7,565 new recipients for the PUA program in the week ended July 18 after reporting 41,088 new claims the previous week.

The state reported 267,770 people were receiving continued PUA aid as of July 4, up from 105,809 the prior week. That big increase came after DWD paused some PUA payments while it investigated possible fraud.

Indiana Department of Workforce officials said scammers targeted the PUA program particularly hard in late June. The DWD said it was putting “holds” on, and investigating, many PUA claims before clearing them for payment.

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.

Nationally, the resurgence of confirmed viral cases across the country has forced some businesses to close a second time or to impose tighter restrictions on customers in response to state mandates. The resulting pullback in business activity has hindered job growth and likely forced additional layoffs.

Nationally, the rise in weekly jobless claims comes just when a $600 weekly federal aid payment for the jobless is set to expire at the end of this week.

The federal government’s $600 weekly benefit for laid-off workers—which is in addition to whatever jobless aid a state provides—is the last major source of economic help from the $2 trillion relief package that Congress approved in March. A small business lending program and one-time $1,200 payment have largely run their course.

Members of Congress are negotiating another aid package that might extend the additional benefit, though likely at a lower level. Because of the $600 weekly federal benefit, roughly two-thirds of the unemployed are receiving more in aid than they earned at their former jobs, research has shown—a finding that’s led many to argue that it is discouraging people from returning to work.

Yet the additional money has also been a key source of support for people who lost jobs that no longer exist or who fear being infected by the virus if they return to work.

The federal jobless aid has also helped buttress the overall economy. Unemployment aid accounted for 6% of all U.S. income in May, a greater share than even Social Security. Economists say it’s one reason why retail spending rebounded as quickly as it did in May and June, helping fuel a modest economic rebound.

With confirmed cases of the coronavirus having risen in 46 states compared with two weeks ago, economists say they’re increasingly worried that any recovery is now in jeopardy. Twenty-two states have paused or reversed the re-opening of businesses, according to economists at Bank of America.

Real-time measures of the economy suggest that companies are pulling back on hiring and that more small businesses are closing permanently. Credit card spending has been stuck at about 10% below year-ago levels for nearly a month, according to JPMorgan Chase, after having risen steadily from mid-April to mid-June.

And a weekly survey by the Census Bureau found that the number of people with jobs dropped 6.7 million in mid-July compared with a month earlier, a sign that employers imposed layoffs, suspended hiring or both.

In May and June, businesses had rehired enough to more than offset the wave of layoffs. But the Census data now suggests that the economy is losing jobs again.

Data from the consumer-review website Yelp, which tracks millions of small businesses, shows that more such companies are permanently shutting down. Nearly 73,000 small businesses have closed for good since the pandemic intensified in March, up 28% from mid-June.

“Every time a business closes, that makes the recovery longer and harder, so that worries me,” said Ernie Tedeschi, an economist at the investment bank Evercore ISI.

Many of the unemployed say they fear that a slow and prolonged recovery would be hard to survive without the $600 weekly aid from the federal government. If that payment were eliminated, total unemployment benefits would shrink by one-half to two-thirds, depending on a recipient’s state.

Melissa Bennett has been using the federal jobless benefit to help pay her $1,900 monthly health insurance bill, which she’s paid on her own since losing her employer-sponsored plan in June. That’s when she was laid off from her front desk job at a vacation time-share rental in Myrtle Beach, South Carolina, a beach town that has become a COVID-19 hotspot.

Without the $600, her unemployment benefit will fall to just $200 a week, and she’ll have to decide whether to pay her mortgage or her utilities first.

Many analysts say they worry that the expiration of the federal payments will cause a wave of evictions of renters who won’t be able to afford their monthly payments. Even before the pandemic, spiking rents in most major cities were squeezing the finances of lower-income families.

One in four renters, or 11 million households, were spending more than half their income on rent before the recession, said Priscilla Aldomovar, CEO of Enterprise Community Partners, a not-for-profit group focused on affordable housing.

Enterprise owns 13,000 rental units, and Aldomovar said that so far, the renters have largely kept up with their payments, which she attributes to the federal aid.

“It’s very precarious, but it’s been held together by the stimulus,” she said.