Falling Unemployment Numbers May Not Be As Good As They Seem

October 22, 2020

The number of Americans who filed a continuing claim for unemployment benefits fell by more than 1 million during the week ending October 10. This brings the total number to about 8 million, the lowest level since March, when the coronavirus pandemic began. While this is a promising sign for the economic recovery, this doesn’t necessarily mean that 1 million people went back to work.

One possible explanation for the decline is that unemployed workers are shifting to different federal programs for those who are unemployed long-term. One such program, intended to give workers additional weeks of assistance once state programs end, saw its beneficiaries swell by more than half a million in the week ending October 3.

The more worrying option is that workers are dropping out of the workforce altogether. Many states have reimplemented requirements that workers must be actively searching for work to receive benefits. People who can’t meet this requirement, possibly because their children’s school is closed or they are in a high-risk group, are no longer receiving unemployment.

Recent data from the Labor Department found that in the 30 states whose unemployment rate is falling, in 15, the labor force is also shrinking.

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