Jobless claims report points to long-term unemployment problem

This came in via the U.S. Department of Labor early this morning:

In the week ending Feb. 13, the advance figure for seasonally adjusted initial claims was 473,000, an increase of 31,000 from the previous week’s revised figure of 442,000. The 4-week moving average was 467,500, a decrease of 1,500 from the previous week’s revised average of 469,000.

The jobless claims series is the best real time dataset we have – and right now it is pointing to a weak and halting recovery. There are still 5.5 million people on the unemployment roles (4.6 using the seasonally-adjusted data).  However, there are a record 5.8 million people collecting extended unemployment benefits as well.  So, this brings us to a record 11.3 million people collecting some sort of unemployment insurance benefit in the United States.

jobless claims 2010 02 18

The areas marked in red from this past week’s report show continued elevated levels of stress in America’s labor market.  However, compare those figures to the year ago numbers and it is clear that we are losing fewer jobs than at the height of the downturn. So, the labor market, while weak is marginally improved in this regard. 

The most distressing difference however is the last line – EUC 2008. This is the number of individuals on extended benefits – and that number has trebled since the depths of the recession. Translation: long-term unemployment rates have skyrocketed. And since long-term unemployment equals loss of skills and employability, we are looking at statistics that will translate into a human tragedy for many Americans if and when the employment picture brightens.

  1. Michael Jung says

    ‘long-term unemployment’ … thats the reason why we call it Great Recession. One of the many unintended consequences. The competitiveness of US / labor market down and the future earning (=less tax revenue) down.

    Some math genius probably will aggregate the loss + compound rate of lost tax revenue and GDP. And the goal of getting the rate down is doomed for failure; adding jobs for existing workers to join the force again is hard, but there a people joining fresh the labor force. Thus estimates are that the economy has to grow at 3% clip rate to turn net positive. Problem is that optimistic forecast are about 1-2% clip. Means the economy isn’t adding jobs to get unemployment rate faster down then the past 5 or so recessions.

    The charts already show (visually) that we have a deep bottom, and can expect to stay there for a longer period of time.

    Some politicians already in Germany raise the words about companies and banks now adhering to their social responsibility (after tax payers bailed the economy out with future taxes) and hiring substantially more and foregoing profits. That came from Die Linke and SPD.

    But as far as I know, during the Depression, companies did actually, reluctantly, shed jobs. Which hurt profitability and led eventually to bankruptcies. That was a lesson companies learned what to do when there is a downturn. Let people go.

  2. LavrentiBeria says

    And now the filth that govern us have instituted a so-called “bi-partisan” – more like unipartisan – commission to consider a middle class tax increase! These vermin just can’t quit stealing from the people, whether its bailouts to aid their paymasters, or wars to benefit foreign countries that spy on us and ethnically cleanse the territory they occupy. Word just in also that the fed funds rate has jumped a quarter of a percent. Is it a death wish that propels these maggots? With developments like these we’re a good deal closer to the “peoples’ moment” I’ve frequently pictured here than anyone might have guessed.

    1. Marshall Auerback says

      Agreed. If I hear one more of these absurd commissioners talking about
      intergenerational theft…

      In a message dated 2/18/2010 16:06:12 Mountain Standard Time,


  3. Plan B Economics says

    Great post.

    For some reason, the fact that unemployment claims exceeded expectations and PPI was high didn’t seem to phase the markets.

    This combo, to me, spells big trouble ahead.

  4. jimh009 says

    Also, don’t forget about the people who have exhausted ALL unemployment benefits. That number is relatively small now (Calculated Risk had a post on it a while back), but is slated to grow above 5 million by the end of the year.

    1. purple says

      I suspect they will extend unemployment benefits again, but at the last minute – which causes all sorts of inefficiencies and delays.

  5. Jojo says

    Too many people seem to think that most, if not all people who lose their jobs, get to collect unemployment benefits. ‘taint so. The majority of people DO NOT get to collect unemployment. So what are these people doing now?

    I recently emailed the BLS asking what the actual number (percent) of people who collected unemployment benefits was for 2009. Here is the reply I received:

    We received the figure you were looking for. The 2009 annual average for the proportion of unemployed persons receiving regular (not extended) UI benefits was 40.4 percent.

    As I mentioned in an earlier message, the data on the UI program and the total unemployed are from two different data sources. In the Current Population Survey (the source of the official unemployment figures), we don’t regularly ask the unemployed whether they are receiving UI benefits. In the CPS, the unemployed are those who carried out at least one active job search activity in the 4 weeks prior to the survey, plus those who are on layoff from a job and expect to be recalled to that job.

    I hope this information is helpful,

    Sharon Cohany
    Division of Labor Force Statistics, BLS

    1. Edward Harrison says

      JoJo, that’s a good point from the BLS. There are three separate data sets for employment:

      1. Jobless claims which the Employment and Training Administration tracks. They are a separate part of the US Department of Labor from the Bureau of Labor Statistics (BLS).

      2. Household survey which the BLS economist references. That’s where the unemployment number comes from. And it based on a survey of households who self-report whether they have employment and are looking for a job. The unemployment rate is based on the household survey.

      3. Establishment survey which the BLS compiles separately based on businesses reporting their employment levels. The reason the last month’s data showed a drop in the unemployment rate but a loss of jobs is because the unemployment rate is based on the household survey and the number of jobs lost or gained is based on non-farm payrolls which comes from the establishment survey data set. The establishment survey has a large company bias – one reason the notorious birth-death exists.

      There are also data on jobs available via the monthly JOLTS (Job Openings and Labor Turnover Summary)
      See here:

      To get a complete picture of employment, you have to look at all of these data sets unfortunately. The totality is what you point out, namely that there are a lot of long-term unemployed because the number of open positions to job seekers is low. This is the main reason I have stopped reporting on the changes in continuing claims because I don’t think it is an accurate portrayal of the employment situation. Many of the long-term unemployed people do not receive benefits; some never received benefits because they didn’t qualify. That’s the situation.

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