By Manuel Gutierrez, Consulting Economist to NKBA
Key Takeaways:
- Latest week saw claims of 373,000.
- Claims have fallen by 134,000 in past 10 weeks.
- Last year ended at a considerably higher 823,000.
Unemployment claims rose a negligible 2,000 in the latest weekly jobs report — only the second time in 10 weeks in which an uptick was registered. The latest week’s total of 373,000, however, still far exceeds the pre-pandemic weekly average of 244,000, maintained over the five years from 2015 through 2019.
During that 10-week period beginning May 1, weekly claims overall have fallen by 134,000.
The question remains as to whether the number will continue to fall or, as suggested by the trend line in the bottom panel of Figure 1, the country has reached a plateau.
The top panel of Figure 1 shows that claims had been relatively stable over the last five months of 2020, declining modestly. At the end of last year, weekly claims of 823,000 were just 43,000 fewer than five months earlier, suggesting that claims had flattened.
Unemployment claims totaled 373,000 in the latest weekly report, down by 134,000 over the past 10 weeks.
However, once the new year began, claims started to decline sharply, falling by about half a million. In early January, that figure stood at just under 900,000 (bottom panel, Figure 1), significantly above the 373,000 reported in the latest week.
The Bureau of Labor Statistics also provides data on unemployment claims by state which, of course, can vary greatly. State numbers can be influenced by a number of factors, including the state’s current economic situation, its government policies, or even a change in the status of a major industry supporting employment. States like Texas and Florida have much lower tax rates than Massachusetts or California, which can also lead to different economic results.
Additionally, there are differences in states’ rules regarding unemployment benefits, with some instituting a much higher bar for an individual to collect.
This is supported by data from a recent Pew Research Center survey, which showed a wide discrepancy in the percentage of unemployed eligible for benefits. The range was from a high of nearly 70% in Massachusetts to a low of just 8% in Florida.
Nonetheless, states can be analyzed for relative ranking. This is accomplished by comparing the ratio of unemployed to total employed, rather than the absolute number that are not employed. The ratio of benefits to employment is displayed in Figure 2.
The BLS groups data into four quartiles, ranked from high to low, using the same scale in all four charts for a valid comparison.
The bars of each chart are the arithmetic ratio of the latest week’s total claims to the latest monthly employment figures.
The resulting ratio is the number of claims per 1,000 workers.
An outlier is Rhode Island, with an extremely high ratio of 17 claims per 1,000 employees, shown partially in the “Top Quartile” chart. The bar has been trimmed to allow more visual differentiation among the other states.
The ratio of the other 49 states ranges widely from 5.7 claims per 1,000 in Oklahoma, to a low of fewer than one per 1,000 in the states of Kansas, Florida, South Carolina and South Dakota. Although visually the bars appear to be fairly even by state, the highest ones, such as Oklahoma and Alaska, have ratios that are nearly six times larger than the states with the lowest ratios.
Charts:
