Additional 787,000 workers seek unemployment as layoffs continue amid COVID-19 crisis

The job market’s recovery from the coronavirus-induced recession is floundering as the health crisis lingers, employers continue to lay off hundreds of thousands of workers and Congress remains deadlocked over another federal rescue package.

About 787,000 Americans filed initial applications for unemployment insurance – a rough gauge of layoffs across the USA – last week, down about 40,000 from the prior week, the Labor Department said Thursday. The figures are not seasonally adjusted.

There's a caveat. California isn't processing claims for two weeks to reduce its backlog and install fraud prevention technology, Labor said. The pause "will likely result in significant week to week swings in initial claims for California and the nation unrelated to any changes in economic conditions," Labor said.

About 58 million people have sought benefits over the past six months. The weekly figures have trended down since peaking at 6.2 million in early spring but remain historically high. Before the crisis, the record for weekly claims on a nonseasonally adjusted basis was about 1 million during a recession in 1982.

Economists expect Labor to announce on Friday that the USA added about 850,000 jobs in September, down from 1.4 million the previous month. Such a figure would mean the nation has recouped slightly more than half the 22.1 million net jobs lost in early spring as states shut down nonessential businesses to curtail the outbreak. The employment report will be the last before an election that could hinge on how voters view President Donald Trump's handling of the pandemic and its economic fallout.

The claim totals released Thursday will not figure into the September jobs report out Friday but rather the October report, which could reveal a drop in payrolls for the first time since April, according to Ian Shepherdson, Pantheon’s chief economist.

After falling steadily for months, first-time unemployment claims have been elevated since early August, hovering between 800,000 and 900,000 and leading economists to fear the jobs recovery has lost steam.

"Even as jobs are being recovered, job losses are mounting, indicative of continuing strains in the labor market," Rubeela Farooqi, chief U.S. economist of High Frequency Economics, wrote in a note to clients.

Layoffs and furloughs of as many as 50,000 airline employees were set to begin Thursday.

The good news is continuing claims, which represent all Americans receiving unemployment checks with a one-week lag, tumbled by 1 million to 11.4 million the previous week. Economists follow that figure closely because it accounts for all those still unemployed. It should decline if the number of employees returning to work as businesses reopen outpaces layoffs.

Drops in continuing claims may also reflect that some unemployment recipients are no longer eligible for benefits, says J.P. Morgan. Wildfires in California, Washington and Oregon may be temporarily pushing up unemployment and the claim numbers, Barclays says.

Generally, the figures have tracked the course of the virus. The rate of positive COVID-19 tests nationally has stayed high, Pantheon Macroeconomics says. Hospitalizations are up in Mississippi and Alabama, and the positive test rate and hospitalizations have climbed in Massachusetts, apparently because of house parties and college outbreaks, Pantheon says.

Such episodes can prompt states to pause or roll back plans to reopen businesses, slowing the rehiring of idled workers. Many restaurants and other businesses are laying off workers a second time as they exhaust federal loans that were forgivable as long as they kept or rehired employees. Some have met the loan terms but struggle with sharply reduced revenue.

Congress remains at an impasse over a new coronavirus relief package that would provide funds for struggling businesses and extend at least part of a $600 federal supplement to weekly jobless benefits that ended in July.

Many states have struggled to dole out $300 in weekly federal aid authorized by Trump. Other states distributed all their available funds.

Last week, initial claims fell by about 10,000 in Florida, 8,000 in Texas and 6,000 in Georgia. Claims rose by about 3,000 in Maryland and 2,000 and New Jersey.

An additional 650,000 people filed initial claims under a separate program that expands eligibility to the self-employed and independent contractors, among others, during the crisis. About 11.8 million Americans were already receiving benefits under that program, known as Pandemic Unemployment Assistance.

Continuing claims decreased by a whopping 243,000 in New York, 56,000 in Florida, 55,000 in Georgia, 56,000 in Pennsylvania and 49,000 in Texas.

This article originally appeared on USA TODAY: Layoffs 2020: 787K workers file unemployment claims amid job cuts