By Ryan McMaken*
The labor department released new data today on initial unemployment claims, and the claims total remains stubbornly high at 1.3 million for the week ending July 4.
This was down slightly from the previous week’s total of 1.4 million new unemployment claims.
Total new claims is way down from the peak of 6.8 million for the week ending March 28. This may seem like a big improvement, but at the peak of the Great Recession, initial claims reached “only” 660,000. In other words, current unemployment claims total are still far, far above what we would call “normal” even in a recessionary period.
If initial claims continue to hover around 1 million to 1.5 million, as they did through all of July, the promise of a v-shaped recovery will grow all the more distant:
Meanwhile, continuing claims, as of the week ending June 27, remains above 18 million.
None of this should be surprising given that state governments are now forcing business closures again, and business owners are functioning in an environment of extreme uncertainty. As USAToday reports today:
“Initial state claims have barely budged over the past month, and are only 16% lower than on June 6,” Andrew Stettner, senior fellow at The Century Foundation, said in a statement. “Equally concerning, initial state claims increased in 23 states last week, including those with major virus spikes, such as Texas and Louisiana.”
Now, more layoffs loom. United Airlines warned this week that it may lay off 36,000 employees in the U.S., including flight attendants and customer service agents, if travel doesn’t rebound. Retailers could also shed even more jobs if stores like Bed, Bath & Beyond continue to shutter locations.
And it looks like other layoffs are coming as well. The Observer reports:
On Thursday, Bloomberg Law reported that Wells Fargo, the largest employer in the U.S. banking industry, is mulling a plan to cut thousands of jobs from its 263,000 people workforce starting later this year. A management order to dramatically reduce costs is coming to a top executive inside the bank, according to people with knowledge of the confidential discussion.
What’s worse, if the layoff is materialized, it will likely have a seismic effect on the entire banking industry and could prematurely end other large banks’ pledges to provide job security for employees through at least the end of 2020.
Last month, a number of observers suggested white-collar layoffs would soon materialize.
And as Jack Kelly at Forbes concluded in mid-June , white-collar hiring had declined substantially year-over-year. Naturally, this will lead to more unemployment in those sectors over time:
According to Jed Kolko, chief economist at the Indeed Hiring Lab (which is part of Indeed.com, the large job aggregation site), his study concluded that the current trend in job postings was 34% lower than in 2019. This was an improvement compared to when new listings turned down about 45% from the same time last year. White-collar roles, such as software development postings, are 36.3% below last year’s trend. Banking and financing job postings are down 51.3%.
Regime uncertainty continues to be a significant problem for employers. Under current conditions, with many consumers reducing consumption over COVID-19-related concerns, businesses already must scramble to deal with the changing landscape. But the situation is made far worse as policymakers (specifically state governors and big-city mayors) continue to hint that they could impose forced closures on countless businesses yet again. Under these conditions, employers are far less likely to expand their businesses, and with it, total employment.
*About the author: Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and The Austrian, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado and was a housing economist for the State of Colorado. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.
Source: This article was published by the MISES Institute