Jobs are coming back. Businesses reopened. But a year after the pandemic shocked the economy, applications for unemployment benefits remain stubbornly, shockingly high – weekly higher than at any point in any previous recession, according to some measures.
And progress has stalled: initial weekly demands under regular and emergency programs, collectively, have stalled at just over one million since last fall, and last week was no exception, the Department of Labor reported Thursday.
“It’s going up a bit, it’s going down, but we really have not seen much progress,” said AnnElizabeth Konkel, an economist at career website Indeed. ” A year later I start to wonder, what will it take to solve the greatness problem? How is it actually going to end? ”
The persistently high number of applications for unemployment was a mystery to many economists. As the pandemic continues to suppress activity in many sectors, it makes sense that unemployment will remain high. But businesses are reopening in much of the country, and employment and spending trends are generally improving. So shouldn’t work files drop?
New evidence from California may provide a partial explanation: According to a report released Thursday by the California Policy Lab, a research organization affiliated with the University of California, nearly 80 percent of unemployment applications were in the state last month filed, of people who were fired earlier in the pandemic, jumped back to work and then fired again.
Such recurring claims were particularly common in the information sector – which in California includes many film and television employees killed by the pandemic – and in the hard-hit hotel and restaurant industry, as well as in construction.
The Policy Lab researchers had access to detailed information from the state that enables them to track down individual workers through the system, something that is not possible with federal data.
The California economy differs in many ways from the rest of the country, and the pandemic has played out differently there than in many other places. But if the same patterns apply elsewhere, it suggests that the ups and downs of the pandemic – closures and reopening, restrictions that increase and ease as virus cases rise and fall – have left many workers in a kind of limbo.
A restaurant may remind some workers when indoor meals are allowed, only to drop them off again a few weeks later when restrictions are set again. A worker can find a temporary job in a warehouse, or upload a few hours job in a delivery program, but can not find a more stable job.
“It shows the oscillation of the unemployed, the unemployed, the working, the unemployed – people driving back into the system,” said Elizabeth Pancotti, policy director of Employ America, a group in Washington that was an advocate for the unemployed. “We have not seen it in previous recessions.”
What that instability will mean for the long-term prospects of employees remains unclear. Economic research has found that long periods of unemployment can permanently disadvantage workers in the labor market. But there are few precedents for a period of such long instability.
“We do not know what happens if you are out of work for two months, you come to work again for two months, you are out of work for two months, you keep going back and forth,” she said. Pancotti said.
The California data show how the economic consequences of the pandemic are concentrated among certain industries and demographic groups – and how the consequences are growing for the workers most affected, even if the crisis is eased for many others.
Nearly 90 percent of black workers in the state, according to the Policy Lab analysis, at one point in the pandemic claimed unemployment benefits, compared to about 40 percent of whites. Younger and less trained workers were particularly hard hit.
The totals include the submission of the federal unemployment benefit program, which includes people living outside the regular unemployment system, a group that includes black workers out of proportion. The record keeping for the program has been plagued by excessive and fraudulent claims. But even a look at the state’s regular unemployment insurance program, which is not experiencing the same problems, reveals remarkable numbers: nearly three in ten California employees claimed benefits during the crisis and more than four in ten black employees.
“The degree of inequality is astonishing,” said Till von Wachter of the University of California, Los Angeles, one of the authors of the report.
Many of those who lost their jobs early in the crisis have since returned to work. But millions have not. The Policy Lab found that nearly four million Californians received benefits for more than 26 weeks during the pandemic, a rough measure of long-term unemployment.
“We have firmly moved to a world where a large-scale problem of long-term unemployment is now a reality,” said Dr. Von Wachter said. Black workers, older workers, women and those with less education are likely to lose jobs longer.
Nationally, nearly six million people had enrolled in federal programs since the end of February, with comprehensive benefits covering people who had used up their usual benefits, lasting six months in most states. The aid package signed by President Biden last week ensures that these programs will continue until the fall, but the benefits alone will not prevent the damage that long-term unemployment could do to workers’ careers and mental and physical health.
“The recovery must be on the scale that it is a one-time economic upswing to really draw those people back to the labor market,” Konkel said.
The latest data shows little sign of it. More than 746,000 people first applied for state unemployment benefits last week, which is 24,000 higher than the previous week, according to the Department of Labor. In addition, 282,000 applied for Pandemic Unemployment Assistance.
Most forecasters expect the recovery of the labor market to accelerate in the coming months, as warmer weather and rising vaccination rates reopen more businesses, and as the new injection of government aid encourages Americans to go out and spend. Policy makers at the Federal Reserve said on Wednesday that they expect the unemployment rate to fall to 4.5 percent by the end of the year, a significant improvement from the five percent they predicted three months ago.
“We’re starting to see improvement now, and I think it’s going to start accelerating pretty quickly,” said Daniel Zhao, an economist at career website Glassdoor.
But government aid can do just as much as long as the pandemic continues to curb consumer behavior. The pace of recovery, according to Mr. Zhao, depends on a factor that falls outside the scope of normal economic analysis.
“The predominant factor at the moment is how quickly we can get vaccinations in the arms,” he said.