New Unemployment Claims Soar as COVID-19 Cases Continue to Surge

• Author: Mary Singleton
• Posted: 2024-06-25

After seeing a slight improvement over the last few months, the job market looks to be taking a turn for the worse again as COVID-19 cases continue to soar throughout the nation. These worrisome numbers are coming just as a host of COVID-19 unemployment protections are set to come to an end in a few weeks. Here is what you need to know about the current unemployment picture and what Congress can do to help Americans struggling with job loss during the worsening pandemic.

Unemployment Rates Rising

Unemployment rates hit the highest rate in months last week, as almost 1.4 million American workers filed an initial claim for benefits. This figure marked the highest amount of new filings in the last three months. All of this happens as Congress continues to squabble over the details of a possible COVID-19 relief package.

According to the report from the Labor Department, of the nearly 1.4 million initial claims, 950,000 were for traditional state unemployment insurance with an additional 428,000 people seeking Pandemic Unemployment Assistance. This assistance program established a temporary inclusion of federal aid for self-employed workers traditionally not able to claim unemployment benefits.

Why is Unemployment Surging?

It is no surprise that claims for unemployment are rising sharply along with the surge in positive COVID-19 cases. As cases continue to soar, more and more states are going back to the stricter lockdown measures not seen since last spring. For example, the majority of California is now back under a stay-at-home order as ICU capacity reaches worrisome levels. With the restrictions comes more job losses.

At the end of November, there were approximately 19 million Americans collecting unemployment benefits. The bulk of these unemployment claims are coming from people who have been recently laid off. Many of these people have been laid off from their jobs multiple times over the last nine months.

In addition to the rapidly increasing rate of new unemployment claims, job growth is also slowing to a crawl. According to the new release of federal data concerning this metric, new job creation is at its lowest level since May.

Stimulus Unemployment Help on the Way?

As positive COVID-19 cases climb upward, Congress is racing to pass a new stimulus relief package prior to the scheduled holiday break. While a few bills have been floated over the last few weeks, a $908 billion package put forth by a group of bipartisan Senators has shown the most promise of being put through to fruition. In addition to providing loads of relief for small businesses for the vaccine rollout, the Bipartisan Emergency COVID Relief Act of 2020 would also provide a series of protections for Americans staring down unemployment.

The cornerstone of this unemployment relief is a $300 weekly supplement to the traditional benefits. If passed as part of this bill, the additional money would last up to 16 weeks, however, it would not be retroactive. This money would also be applicable to the self-employed and gig workers.

While the bill has a substantial amount of universal support in the halls of Congress, there has not been the votes to expect the bill to pass as is. Because of this, Congress is looking at splitting the bill into two separate packages. One bill will contain the funding for vaccine distribution, small business money, and unemployment benefits. The other section will cover the state and local benefits. Because it is the state and local funding that is the most contentious, lawmakers are hopeful that the first bill can be pushed through easily, bringing that unemployment relief to millions of workers.

Economists Worried About Unemployment Data

Economists are growing increasingly worried that the weaker than expected jobless claims data could spell doom for the overall economic picture. These numbers point to a weakening economy that may signal a disastrous first quarter. While the stock market has been performing well lately, this has largely been the result of promising news on the vaccine front. However, as these unemployment figures continue to worsen, economists are worried that the stock market and overall economy will follow down the same path.

As with everything related to the pandemic, it is impossible to predict how the job market will look months or just weeks down the road. Understanding what type of unemployment benefits you may qualify for will empower you to act quickly should the unfortunate need arise.