Last week’s total declined from 812,000 the prior week, according to the Labor Department on Thursday. That figure was revised increased from the previously-reported figure of 779,000. Before the virus erupted within the United States back in March of 2020, weekly applications for jobless assistance had by no means topped 700,000, even throughout the Great Recession.
The job market’s improvement slowed by the fall and in the last two months has basically stalled. Over the previous two months combined, employers have reduced jobs by 178,000. Nearly 10 million jobs remain lost to the pandemic.
Though the unemployment rate fell in January to 6.3% from 6.7%, that was primarily as a result of many individuals who had lost jobs and stopped searching for one. The government doesn’t count folks as unemployed except if they’re actively looking for work.
All told, 20.4 million people had been receiving unemployment aid in the week that ended on January 23, the most recent period for which information can be found. That’s up from 17.8 million from the week prior.
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The job market’s persistent weak spot is fueling President Joe Biden’s push for a $1.9 trillion economic rescue package deal. Biden’s proposal would extend, through August, two federal unemployment aid programs which are set to expire in mid-March. His proposal would additionally increase the federal unemployment benefit to $400 per week from the current $300.
Some economists, including former Treasury Secretary Larry Summers, have raised concerns that such an enormous spending package would threaten to ignite inflation by fueling a burst of consumer spending later this year because the virus is steadily brought under control.
Yet on Wednesday, Federal Reserve Chair Jerome Powell highlighted the struggling job market and stated he thought that any worrisome surge in inflation would be unlikely. If it did come up, Powell mentioned, the Fed has the financial tools it needs to quell inflation. For now, inflation is under the Fed’s target rate.
“We are still very far from a strong labor market whose benefits are broadly shared,” Powell said.
A driving force behind the Biden administration’s push for more assistance is the approaching expiration of the extended jobless benefits in just more than a month from now. More than 11 million people would lose benefits because of this, a report by the Century Foundation reads. Unlike the previous expiration of extended unemployment support, which occurred on December 26, the cut-off could be phased in between March 14 and April 11.
The job market growth should seemingly be close to completely recovering by then. Many economists count on a burst of growth and hiring later this year after vaccines are more widely administered, particularly if Congress gives considerably more aid to households, small companies, states, and cities. But that isn’t likely for many months.
Once vaccinations grow to be more widely distributed and administered within the coming months, economists anticipate growth and hiring to pick up, notably if Congress gives significantly extra monetary assistance to households, small companies, states, and cities.
The job market is sputtering for now. About 4 million people who find themselves out of work have stopped trying to find jobs and so they aren’t counted as unemployed. Powell stated that if these folks had been counted among the many officially jobless, the unemployment rate would be practically 10%.
In his remarks to the Economic Club of New York, the Fed chair also highlighted the uneven nature of the layoffs in this pandemic. Job losses among the highest-earning one-quarter of Americans have been only 4%, whereas job losses among the poorest one-quarter have been “a staggering 17%,” Powell stated.
Layoffs have additionally fallen disproportionately on Black employees. In December, 18% of people that sought unemployment aid had been black, despite the fact that African Americans make up 13.5% of the workforce, the Federal Reserve Bank of Atlanta noted. By contrast, almost 50% of the applicants have been white, even though 77% of employees are white.
Kyle James Lee – The AEGIS Alliance – This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.