Recovery Stalls As Number of Americans Claiming Unemployment Surges Last Week

The latest figures on new workers claiming unemployment insurance (UI) cast a dark cloud over the nation’s slow economic recovery. 885,885 new claims for unemployment were filed in the latest week ending October 10th, which is 76,670 higher than the previous week on a non-seasonally adjusted basis. For context, that’s more than four times higher than the pace of workers filing for unemployment a year ago and comparable to the worst weeks of the Great Recession in 2009 — a sign that COVID-19 continues to deal heavy blows to the nation’s labor market.

The worsening of the pace of UI claims this week reinforces the message from the latest September jobs report, which showed the economy’s pace of recovery slowing amid the ongoing COVID-19 crisis, as new outbreaks plague efforts to reopen businesses, schools, public transportation and more, and are still keeping millions of Americans working from home. 

America is unlikely to see a full economic recovery and a return to low unemployment until the pace of weekly UI claims dials back dramatically. Often today’s UI claims don’t show up in the official unemployment rate until weeks or months later. For example, during the worst of the Great Recession in early 2009, UI claims averaged 730,000 - 960,000 per week — similar to today’s levels — and the nation’s unemployment rate continued to rise for roughly 10 months following that period. Today’s elevated claims raise concerns about the fate of the U.S. labor market in the next half year. 

Despite well-documented problems with treating weekly UI claims as a reliable economic indicator — including widespread reports of fraud, administrative misreporting and inconsistencies by states — they remain one of the only near-real-time indicators economists have from the federal government on the health of the labor market. 

Meanwhile, Glassdoor’s Job Market Report shows hiring similarly flattening out as the economic recovery runs into a stalemate of an untamed virus and holdout on new stimulus talks. In September, job openings grew less than 1 percent from the previous month to 5.15 million on Glassdoor as 40 percent of employers reduced or paused all job openings.

California's Big Data Problem

A big caveat to how much we rely on information on UI claims data for the last three weeks is California's two-week system reset and the Department of Labor's decision to simply keep reporting California’s previous weekly unemployment claims figures as “new” — a widely debated decision that significantly weakens the value of the weekly UI claims data as a measure of real economic activity. California alone accounts for one quarter of all weekly initial claims in the U.S. The decision by the Department of Labor to report past week’s figures as though they are new data raises serious questions about the value of UI claims data, and suggest they may be offering a misleading view of national trends in layoffs and hiring. 

To speak with Dr. Andrew Chamberlain about today’s report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow  @adchamberlain on Twitter and subscribe to Glassdoor Economic Research.