Nearly 3.4M workers remain on jobless benefits despite drop in weekly claims

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Nearly 3.4 million Americans are still on traditional state unemployment benefits even as the number of Americans seeking new claims ticked modestly down last week after a surprise uptick earlier this month, the feds said Thursday.

Continuing claims fell by 144,000 from over 3.5 million the week before, according to data released Thursday by the Labor Department. That figure stood at nearly 19 million at the same time last year, in the thick of the pandemic.

Continuing claims have fallen significantly since peaks seen in 2020, but the figure remains about twice as high as pre-pandemic levels.

New weekly filings for jobless claims, seen as a proxy for layoffs, reached 411,000 last week, down modestly from last week’s revised level of 418,000, the feds said.

Weekly new claims fell steadily throughout May and June, even touching as low as 375,000 before surprising economists and shooting back up above 400,000. The country was averaging just over 200,000 new claims per week in 2019.

The data released Thursday is the first weekly jobless claims report to include data that reflects states that have ended federal unemployment benefits, which give unemployed workers an extra $300 per week.

Many business owners, Republicans and economists have blamed the extra benefits for causing a labor shortage that’s holding back the US economic recovery, saying that the unemployment payout keeps workers at home while businesses go understaffed.

The US added 559,000 jobs last month, fewer than the 671,000 expected by economists, with some hailing the figure as a sign of progress and others saying US hiring continues to disappoint.

That data comes even as US job openings soared to a new record of 9.3 million in April, according to Labor Department data.

In addition to the federal unemployment program, other reasons for the labor crunch include fear of getting COVID-19 and school closures keeping parents at home, economists say.

Alaska, Iowa, Mississippi and Missouri all ended the federal program on June 12, about three months before it is set to expire.

Another eight states ended the program on June 19.

In total, at least 25 states are looking to lure workers back into the labor market by withdrawing from the federal program.

President Biden confirmed earlier this month that he would let the federal unemployment benefits program expire after Labor Day.

The White House has defended the extra benefits, saying that businesses should pay people more.

But many economists are growing increasingly worried about wage inflation driving prices further up. Companies have already begun raising prices, blaming higher labor and supply costs.

Chipotle, for example, has said it raised its menu prices by up to 4 percent to cover the costs of higher wages for employees. Executives from other major companies, including General Mills, Unilever and JM Smucker, have also warned recently about rising costs and inflationary pressures.

American shoppers are bearing the brunt of rising prices, with the costs of everything from apparel and cars to bacon and milk spiking.

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