Bulk of jobless claims are as a consequence of repeat pandemic layoffs, say researchers
Airline industry workers hold signs during a protest in Federal Plaza in Chicago, Illinois, on September 9, 2020.
KAMIL KRZACZYNSKI | AFP | Getty Images
Most new claims for unemployment benefits are coming from repeat layoffs, according to new research, hinting at unstable work prospects for a broad swath of Americans and signaling another dimension of pain in the labor market nearly a year into the pandemic.
Almost 2 in 3 workers who began receiving benefits in October had collected them at least one other time since April, according to a paper by economists at the University of Chicago and JPMorgan Chase Institute.
That might happen, for instance, if a restaurant closed, re-opened, then closed again — translating to fresh layoffs with each closure.
More from Personal Finance:
This tax pitfall could affect millions due to Covid
President Biden has long-term plans to bring back jobs
Why the 401(k) won’t fix the U.S. retirement crisis
The report offers the first national glimpse at how many workers have had to rely to the social safety net multiple times amid elevated Covid infections and regional business shutdowns to contain the outbreak.
“Repeat unemployment is a serious issue,” said Peter Ganong, an economist at the University of Chicago and a co-author of the report. “There’s deep distress in the labor market.”
The stop-and-start nature of the job loss is playing out alongside swelling long-term unemployment, a continuous spell of unemployment that lasts at least six months. It’s an especially dangerous period for workers from a financial perspective and may lead to other negative side effects like skill depreciation.
A near-record 40% of jobless workers last month were long-term unemployed, according to the Bureau of Labor Statistics.
The share of workers who’ve suffered many layoffs — and drew more than once from unemployment funds — grew steadily last year through October, according to Ganong and his co-authors. The share was 61% in October.
Together, the high prevalence of long-term unemployment and repeat job loss points to more instability in the labor market than may be apparent from federal economic data, they said.
The Labor Department, which updates data on unemployment benefits every week, doesn’t provide a detailed breakdown of the workers who collect benefits, for example.
“Among those who have not been continuously unemployed, the typical experience has been one of repeated unemployment,” they wrote. “Many of the workers who were recalled in the summer were laid off again in the fall.”
Findings in the paper generally track with granular data at the state level.
In California, for instance, 77% of all new benefit claims the last week of November were from “additional claims,” according to the California Policy Lab.
An additional claim is triggered by a repeat pandemic layoff, after a worker returns to work and subsequently needs to re-open an old claim.
In some hard-hit industries, almost all new claims are from repeat layoffs.
In the accommodation and food services industries (restaurants and hotels, for example) and arts, entertainment and recreation, 96% of new unemployment claims in the Golden State were due to repeat layoffs, according to the Policy Lab analysis, which was published in late December.
“The high rate of additional claims suggests that many prior claimants in this industry who had found re-employment are finding that employment to be especially unstable, and many eventually return to (unemployment insurance),” according to the report.