The fewest Americans since 1973 will seek new unemployment benefits this year, but that doesn't mean the labor market is back to full health.
In total, less than 15 million American will make first-time requests for government assistance this year—about half as many claims as were made in 2009—and far fewer than the number filed during the 1980s and 90s when the economy was expanding at a stronger clip.
But "the labor market is certainly not the healthiest it's been since 1973," said Goldman Sachs economist Zach Pandl. "Broader measures of slack in the economy have not improved as much as jobless claims."
The greatest concern in the labor market now aren't those who recently lost their jobs, but the persistently large number out of work for months or years, and those stuck in low-paying and part-time jobs. At the same time, a larger portion of those newly laid off isn't seeking benefits.
Initial claims are seen as a proxy for layoffs, but other separation measures show that layoffs have plateaued, or even increased this year. The Labor Department recorded 17.4 million layoffs and discharges during the first 10 months of the year, nearly unchanged from the same period in 2014.
Outplacement consultants Challenger, Gray & Christmas report the number of layoffs announced by typically large companies through November was 28% higher than through the first 11 months of last year, partly reflecting cutbacks in the energy industry.
Economists usually expect hiring to strengthen when new claims decline. But that hasn't happened this year. Through November, employers added a monthly average of 210,000 jobs to payrolls. For all of last year, the average was 260,000. The average level of weekly claims was about 10% higher in 2014.
Claims readings could be distorted because a smaller share of those potentially eligible for benefits are applying. The share of recently unemployed workers seeking benefits has fallen this year to just above 50%, according to the National Employment Law Project, a group that advocates for the unemployed.
The rate is down from record high of almost 80% just after the recession ended.
The application rate typically declines as expansions age, but the current pace is the lowest in 15 years. NELP Policy Analyst Claire McKenna said the low rate reflects a vastly different labor market for those who recently lost their jobs versus the long-term unemployed.
The unemployment rate for those out of work for five weeks or less fell below prerecession levels this year. The rate for those out of work for six months or more is well down from 2009, but it remains about double the rate recorded in mid-2007.
"This late into a very slow recovery you have a sizable population of unemployed people that are less likely to establish eligibility for benefits," Ms. McKenna said. In past cycles, even those workers who didn't find long-term jobs would have landed shorter-term work that subsequently allowed them to again seek for benefits.
Benefits typically expire in 26 week or less, depending on state laws. Finding new employment, even if it is temporary, can make a worker eligible to file a new claim.
Elevated numbers of long-term unemployed and workers stuck in part-time jobs, but who want full-time work, is a factor that has restrained wage growth during the six-and-half year old expansion. Even with the unemployment rate at 5% last month, employers may not have to raise wages because there are many Americans on the sidelines of the workforce, but who would take the right opportunity.
Confusion over eligibility is the top reason laid-off workers don't seek benefits, Ms. McKenna said. But a lower take up rate recently could suggest reluctance toward accepting government aid, which had faded somewhat during the recession. It might also indicate less of a focus on the part of employers, unions and governments to inform laid-off workers about the benefit application process.
Moreover, many workers are confident they will find new jobs.
Eric Jonke, 57, was laid off in September from an executive position at a sports-marketing firm in suburban Chicago. He has yet to seek unemployment benefits. He said he is more focused on searching for a new job and is unsure if the amount he would receive in benefits would make a significant difference in his budget. Instead, he is drawing down savings.
"Something will come up," said Mr. Jonke, who has worked on high-profile projects such as the Maui Invitational basketball tournament and professional golf events. "It just takes time in this industry and at the level I'm at."
Write to Eric Morath at eric.morath@wsj.com
No comments:
Post a Comment