Home ECONOMY Nearly 3.5 million workers remain on jobless benefits

Nearly 3.5 million workers remain on jobless benefits

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The Fed said Thursday that nearly 3.5 million Americans are still on traditional state unemployment benefits, even as the number of people seeking new claims fell last week.

According to data released Thursday by the Labor Department, the continuous claims increased by 56,000 from about 3.4 million a week ago. The figure stood at about 19 million at the same time last year, which was hit by the pandemic.

Consistent claims have declined significantly since reaching their peak in 2020, but the figure is almost double the pre-pandemic level.

The Fed said new weekly filings for jobless claims, which are seen as a proxy for layoffs, reached 364,000 last week, down from last week’s revised level of 415,000.

Economists surveyed by the Dow Jones had expected initial unemployment claims totaling 390,000 last week.

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Business owners, Republicans and economists have attributed the additional unemployment benefits to a labor shortage that is stalling the US economic recovery.
AFP via Getty Images

Weekly new claims fell steadily during May and June, even touching a low of 375,000 before surprising economists and shooting above 400,000. The country was making an average of over 200,000 new claims per week in 2019.

The unemployment figures come ahead of Friday’s closely watched June jobs report. Economists expect the US to add 683,000 jobs in June, according to a Dow Jones survey.

Payroll firm ADP said on Wednesday that US companies added 692,000 employees on private payroll in June, more than the 600,000 expected by analysts.

New employment data is rolling out as a handful of states cut unemployed people from pandemic-enhanced federal unemployment benefits, which give unemployed workers an additional $300 per week.

Many business owners, Republicans and economists have blamed the additional benefits for creating the labor shortage that is stalling the US economic recovery, saying unemployment payments keep workers at home while businesses make sense.

The US added 559,000 jobs in May, less than the 671,000 expected by economists, with some seeing the figure as a sign of progress and others saying US hiring is disappointing.

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The White House has defended the additional benefits, saying businesses should pay people more.
AFP via Getty Images

The data came as a new record for US job openings of 9.3 million in April, according to Labor Department data.

Economists say that in addition to the federal unemployment program, other causes of the labor crisis include fears of COVID-19 and school closures that keep parents at home.

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

The other eight states ended the program on June 19.

In total, at least 25 states are moving away from the federal program to try to get workers back into the labor market.

President Biden confirmed last month that he would allow the federal unemployment benefit program to end after Labor Day.

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

But many economists are concerned about further increases in prices for wage inflation. Companies have started raising prices, blaming high labor and supply costs.

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The US added 559,000 jobs in May, less than the 671,000 expected by economists.
AFP via Getty Images

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

With the cost of everything from apparel and cars to bacon and milk spiking, shoppers are bearing the brunt of rising prices.

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