California Unemployment Claims Surge To Highest Level In 3 Months As Pandemic Pounds Economy
SACRAMENTO (CBS SF/AP) -- California unemployment claims have climbed to their highest levels in nearly three months as surging coronavirus cases halt plans to reopen the economy, and an extra $600 in weekly federal unemployment benefits is set to expire at the end of the week.
There were 292,673 initial unemployment claims filed in California for the week ending July 18, a 2.7 percent increase from the prior week. according to the state Employment Development Department. Since the middle of March, there have been nearly seven million first-time jobless claims in California.
Last week's jobless claims are at the highest level since the week ending May 2, when 316,300 initial claims were filed.
Nationwide, more than 1.4 million people applied for jobless benefits last week, the Labor Department said, up from 1.3 million the previous week. The national increase is the first since March and the 18th straight week that it has topped 1 million. Before the pandemic, applications had never exceeded 700,000. An additional 975,000 people applied for aid under a separate program that has made self-employed and gig workers eligible for the first time.
The new unemployment numbers come a day after two state senators called on Governor Gavin Newsom to issue an executive order to keep EDD phone lines and operations staffed 24 hours a day, 7 day a week to handle a backlog in claims. The EDD has been plagued with technology problems, web site glitches and unanswered phone lines since the surge of people applying for unemployment began.
In a letter to the governor, state Senators Melissa Hurtado (D-Fresno) and Scott Wilk (R-Santa Clarita) said the latest business shutdowns after a briefly resuming operations will send even more people to seek help from a system overwhelmed with applications.
"The COVID pandemic has created unprecedented unemployment throughout the state. While the statewide average sits around 15%, parts of the southern central valley is upward of 24%," said Hurtado. "To address this extraordinary time in the pandemic we have no choice but to provide unfettered access to help process claims."
"When our constituents can't feed their families or keep roofs over their heads because EDD has failed to process months old unemployment claims, it is not a political issue – it is a crisis," said Wilk. "California is in a crisis and without drastic actions the situation at EDD will only continue to deteriorate; especially if the state continues on the trajectory of opening and closing businesses in response to the pandemic. If EDD doesn't clear this up quickly people will end up out of their homes and in the streets."
Across the U.S., an extra $600 in weekly unemployment benefits, provided by the federal government on top of whatever assistance states provide, is set to expire at the end of the week. It 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.
With the count of U.S. infections passing 4 million and the aid ending, nearly 30 million unemployed people could struggle to pay rent, utilities, or other bills and economists worry that overall consumer spending will drop, adding another economic blow.
The weakening of the labor market has raised fears the economy will shed jobs again in July, after two sharp hiring gains in May and June.
"The labor market remains in a precarious place as COVID-19 cases surge in some parts of the country and fresh lockdown measures are adopted in response," said Nancy Vanden Houten, lead economist at Oxford Economics, a consulting firm.
Analysts say the economy can't improve until authorities can control the spread of the virus, a need that is complicating the reopening of businesses and schools.
Adm. Brett Giroir, assistant secretary of health and a member of the Trump Administration's coronavirus task force, even suggested another shutdown might be necessary. He noted that nearly universal mask wearing, sharp restrictions on restaurant occupancy, and shutting down bars were nearly as effective in controlling the virus as another shutdown of all non-essential businesses.
"Now, if you don't do that, and people don't achieve those goals, particularly mask-wearing, there may be no alternative," Giroir said on MSNBC.
Congress is negotiating another aid package that could extend the extra unemployment support, though likely at less than $600. With the extra $600, 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.
On Thursday, Senate Republicans unveiled a $1 trillion package that would replace the $600 with an amount that would bring a laid-off worker's jobless benefits to 70% of their previous income. Both parties have agreed on another $1,200 stimulus check.
Democrats in the House approved a $3.5 trillion package last month that would extend the $600 through January. Given the limited time available, Treasury Secretary Steven Mnuchin proposed Thursday that a bill dealing with jobless benefits aid to schools be considered next week.
Democrats say the Republican plans are not enough.