Last week, the number of Americans seeking unemployment benefits sank to 310,000, a pandemic low. Furthermore, a sign that the rise in COVID-19 infections caused by the delta strain has yet to lead to widespread layoffs.
Remarkably, the Labor Department’s report revealed on Thursday that jobless claims fell from a revised total of 345,000 the week before. Meanwhile, the number of applications has declined steadily since exceeding 900,000 in early January. This reflects the steady reopening of the economy after the COVID-19 pandemic collapse.
However, the spread of the delta strain of COVID-19 this summer has put renewed pressure on the economy and the job market. On September 8, the Federal Reserve announced that U.S. economic activity downshifted in July and August. It was caused by a pullback in dining out, travel, and tourism, related to concerns about the delta strain.
In the previous week, the government announced that hiring slowed dramatically in August. Notably, employers added just 235,000 jobs after having added about a million in both June and July. Moreover, hiring fell in industries that require face-to-face contact with the public, notably restaurants, hotels, and retail. However, some jobs were added in other areas, and the unemployment rate sank to 5.2% from 5.4%.
Over 8 million people lost all their unemployment benefits, this week
Meanwhile, this week, over 8 million people lost all their unemployment benefits with the expiration of two federal programs. As we know, it covered gig workers and people who had been jobless for over six months. Emergency programs were created in March 2020, when the COVID-19 pandemic first hit the economy.
A further 2 million people have lost a $300-a-week federal supplement to state unemployment benefits that expired this week. Some business owners had announced that the federal supplement made it more difficult to fill open jobs. This drove governors in around 25 states to cancel the $300 payment early and to shut off the two emergency programs in most of those states as well. However, according to academic research, the early cut-offs in jobless benefits have led to only a small rise in hiring in those states.
Remarkably, reports from the Fed’s districts noted that the August slowdown in job creation may have been driven more by trouble matching workers to positions at a wage they would accept.
Some economists say that the cut-off will cause financial hardship as the resurgence of the COVID-19 infections will make it harder for some of the unemployed to find work.
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