50-year low in jobless claims not just from few layoffs
Washington – The fewest people in nearly 50 years sought unemployment benefits last week, a sign of a strong job market and an unusually low level of layoffs.
Yet the sinking pace of layoffs isn’t due solely to a tight employment picture. Many states have imposed stricter rules on their unemployment insurance programs, from making it harder to qualify to reducing the duration of benefits to cutting payouts.
The combined effect has been to reduce the number of unemployed people who apply for and receive aid, economists say. Nationwide, just 30% of people out of work now receive unemployment insurance, down from about 40% before the Great Recession.
Weekly applications for unemployment benefits dropped 8,000 to a seasonally adjusted 196,000 last week, the Labor Department said Thursday . That is the lowest level since 1969. The four-week average, a less volatile measure, fell to 207,000, the also lowest point in 50 years.
The decline is all the more remarkable once you take into account population growth. The size of America’s workforce, excluding government workers who typically aren’t eligible, has more than doubled since the late 1960s to 128 million.
Still, the dwindling pace of unemployment claims is sending a signal of strength about the job market and the economy. Applications for jobless aid closely track the pace of layoffs. So the continuing decline – applications have tumbled for four straight weeks – shows that most businesses are confident enough about future customer demand to keep their staffs intact.
That confidence is spurring more hiring, too: Job growth rebounded last month after a sharp slowdown in February, suggesting that the economy remains resilient in its 10th year of expansion.
Early this year, many analysts were concerned that growth was stalling, with the global economy weakening, the Trump administration and China locked in a trade war, and consumers reining in their spending, as the benefits of the Trump administration’s tax cut have faded. Most Americans got a financial boost last year from the tax cut, but it was a one-time bump.
But the historically low level of applications for unemployment benefits indicates that few employers foresee a slowdown anytime soon.
At the same time, nine states – Florida, Michigan, Kansas, Georgia, North Carolina, South Carolina, Idaho, Missouri, and Arkansas – have cut the number of weeks recipients can receive aid. Florida and North Carolina have reduced it to as low as 12 weeks. Before the Great Recession, every state provided at least 26 weeks.
The historically low figures “tell us we have a strong labor market, and that we’ve made policy changes that mean fewer people can qualify for benefits,” said Martha Gimbel, research director at job listings website Indeed.
Another factor is that long-term unemployment remains much higher now than in previous periods when the unemployment rate fell as low as last month’s figure of 3.8%. People who have been out of work for 27 weeks or more aren’t eligible for unemployment aid.
In March, 21% of people out of work had been unemployed for 27 weeks or more. The last time the unemployment rate fell below 4%, in 2000, the proportion was about half that. And in 1969, less than 5% of those out of work were long-term unemployed.