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Unemployment insurance claims show crisis continuing

Trump administration still opposed to extending aid for unemployed
By Masao Suzuki |
July 2, 2020
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San José, CA - The latest report by the Labor Department on Thursday, July 2 indicated new claims for aid for unemployed showed no improvement for the third week in a row. While new claims for the regular state unemployment insurance benefits did fall by 50,000 from last week’s report, to 1.43 million, new claims for the Federal Pandemic Unemployment Assistance or PUA actually rose by 110,000 from last week’s report, to 840,000. Taken together, new claims for the two main programs to aid the unemployed totaled 2.27 million for the week ending June 27, slighting more than the previous week and the same as two weeks ago.

The broadest measure of all the programs, including the state UI, the federal PUA, as well as the federal Pandemic Emergency Unemployment Compensation or PEUC, and other smaller programs, showed that the number of people receiving benefits on June 13 rose by 900,000 from a week earlier to 31.5 million. This came to 19.7% of the total labor force, much higher than the official unemployment report.

The Labor Department’s report on the unemployment rate for June also came out on Thursday, July 2. This report showed a much lower 11.1% official unemployment rate, down from 13.3% in May. This is still one of the three highest rates, along with April and May, since the Great Depression of the 1930s. But the details of the report show that millions of people who are not working were not counted as unemployed: some 2 million more people “employed but not at work for other reasons,” more than 3 million more were not counted as unemployed but wanted to work, and another 2 million left the labor force.

One problem is that the official unemployment rate is based on a survey held during the week of June 8-12, which was also the low point for the spread of the COVID-19 virus, with about 21,000 new infections per day. But since then the pandemic has sped up, with the last five days averaging about 44,000 new infections, more than double the rate just three weeks ago. Thirty-eight states show the rate of new infections rising and only one state and the District of Columbia show them dropping.

During the last three weeks there are more signs of the economy going into reverse as businesses close down or cut hours, and spending falls. Apple is closing another 30 stores as of Thursday, July 2, on top of the 16 already closed because of the growing pandemic. The country’s biggest states, including California, Texas, New York, and Florida are re-imposing restrictions on business, or postponing plans to reopen as the virus spreads.

More than 4 million workers have already had their wages cut - twice as many as during the last recession in 2008. The typical cut was 10%. This is again the worst since the Great Depression of the 1930s, as businesses largely did not cut pay in recessions since then. Millions more workers have had their hours cut, a trend that accelerated during the 2008 recession.

A major factor preventing the economy from a collapse like the Great Depression has been federal aid to the unemployed. But the $600 per week addition to unemployment insurance benefits is going to end before July 31. The Trump administration used the drop in the official unemployment rate to say that extending the aid is not needed, and doubled down on the prediction that the COVID-19 virus would “go away” soon.

Another aid to those hit by the recession is the number of state and local moratoriums on evictions of renters. But these were all temporary measures, many of which also expire at the end of July. A new wave of evictions will hit African American and other oppressed nationality communities, mainly Chicano, Latino, and Asian American, the hardest. A recent study showed that before the state and local bans went into effect, up to three-quarters of the eviction were in oppressed nationality communities.

Another source of federal aid, the Paycheck Protection Program or PPP, has been troubled as federally-backed loans meant for smaller businesses went to big corporations while many small businesses were not able to apply. While it is likely that this program will be extended past the June 30 deadline, it is only supposed to supply eight weeks of help. More and more businesses that got the aid have used it up, forcing them to close and lay off their workers, adding to the continuing high numbers of people applying for unemployment insurance.

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