1.4 million seek jobless aid, first increase since March

WASHINGTON (AP) — The number of laid-off Americans seeking unemployment benefits rose last week for the first time since the pandemic struck in March, evidence of the deepening economic pain the outbreak is causing to the economy.

The rise in weekly jobless claims to 1.4 million underscores the outsize role the unemployment insurance system is playing among the nation’s safety net programs — just when a $600 weekly federal aid payment for the jobless is set to expire at the end of this week.

All told, the Labor Department said Thursday that roughly 32 million people are receiving unemployment benefits, though that figure could include double-counting by some states. Some economists say the figure is likely closer to 25 million.

Last week’s pace of unemployment applications — the 18th straight week it’s topped 1 million — was up from 1.3 million the previous week. Before the pandemic, the number of weekly applications had never exceeded 700,000.

An additional 975,000 applied for jobless aid under a separate program that has made self-employed and gig workers eligible for the first time. That figure isn’t adjusted for seasonal trends, so it’s reported separately.

The resurgence of confirmed viral cases across the country has forced some businesses to close a second time or to impose tighter restrictions on customers in response to state mandates. The resulting pullback in business activity has hindered job growth and likely forced additional layoffs.

The federal government’s $600 weekly benefit for laid-off workers — which is in addition to whatever jobless aid a state provides — is the last major source of economic help from the $2 trillion relief package that Congress approved in March. A small business lending program and one-time $1,200 payment have largely run their course.

Members of Congress are negotiating another aid package that might extend the $600 benefit, though likely at a lower level. Because of the $600 weekly federal benefit, roughly two-thirds of the unemployed are receiving more in aid than they earned at their former jobs, research has shown — a finding that’s led Republicans to argue that it is discouraging people from returning to work.

Yet the additional money has also been a key source of support for people who lost jobs that no longer exist or who fear being infected by the virus if they return to work.

The federal jobless aid has also helped buttress the overall economy. Unemployment aid accounted for 6% of all U.S. income in May, a greater share than even Social Security. Economists say it’s one reason why retail spending rebounded as quickly as it did in May and June, helping fuel a modest economic rebound.

With the nation gripped by an alarming resurgence of coronavirus cases, the U.S. government will provide its latest report Thursday on the layoffs that have remained stuck at an elevated weekly level above 1 million since the pandemic erupted in March.

The pace of applications for unemployment benefits has stalled at roughly double the record high that existed before the virus sent the economy spiraling into a deep recession. Now, as many states and localities reimpose lockdowns in response to the spreading virus, businesses face renewed struggles that are forcing some to impose further job cuts or to shut down permanently.

The latest string of layoffs is occurring just before a $600 weekly federal aid payment for the jobless is set to expire at the end of this week. Members of Congress are negotiating another aid package that might extend that benefit, though likely at a lower level of payment.