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New Unemployment Claims Decline, but Remain ‘Alarmingly High’

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The government reported on Thursday that nearly 1.2 million workers filed new claims for state unemployment benefits last week. It was the lowest weekly total since March, but signaled the continuing damage that the pandemic is inflicting on the labor market.

An additional 656,000 claims were filed by freelancers, part-time workers and others who do not qualify for regular state jobless aid but are eligible for benefits under a separate federal unemployment insurance program, the Labor Department announced. Unlike the state figures, that number is not seasonally adjusted.

“Over all, the data was modestly better than we expected, a surprising improvement,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics. There were declines across nearly all the states, even those where the virus is resurgent.

But jobless claims “remain at alarmingly high levels,” she said, and the stubbornly high number of people collecting unemployment — estimated by economists at 30 million — suggests that “temporary layoffs are becoming permanent.”

Although the number of new claims is down from the stratospheric levels reached in the early days of the pandemic, the million-plus tallies that have continued for 20 weeks in a row are still extraordinarily high by historical standards.

And now that emergency federal supplemental benefits have expired, the newest entrants to join the ranks of unemployed will not be receiving the extra $600 a week that has helped jobless workers pay bills through the spring and early summer.

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Credit…Christopher Smith for The New York Times

While the elevated levels of jobless claims show that businesses are still struggling to keep employees on the payroll, there has been some pickup in hiring. After drooping, job postings at the online jobs site ZipRecruiter rose by 7.4 percent in July and are still climbing, said Julia Pollak, the company’s labor economist.

But the latest economic data is mixed, she cautioned. Surveys from the Institute for Supply Management, for instance, showed that business activity in service industries expanded last month, but that the employment index declined, an indication that many companies are still not bringing back workers.

There were steep increases in joblessness related to the performing arts and other live events in July, Ms. Pollak said.

And announcements of impending layoffs continue to pile in. Ms. Pollak has been tracking plant closings and layoffs that the government requires to be announced in advance. “They are showing that new layoffs are still taking place at an alarming rate,” she said. “Plenty of layoffs are scheduled for August, September and October, as well.”

“Many companies are realizing now that the effects will be much longer than expected,” she said.

On Friday morning, the Labor Department will offer another gauge of the pandemic’s impact: the employment report for July. Economists’ forecasts vary widely, with a consensus pointing to a gain of 1.5 million jobs but some expecting a net loss.

In any case, the figure is expected to be far less auspicious than the June gain of 4.8 million. And even an addition of 1.5 million jobs would be a small fraction of the 22 million lost in March and April, when all but essential businesses closed.

There was a burst of hiring after the lockdown orders were lifted, and it seemed as if the economy might rebound sharply in the late spring. But a coronavirus surge in large states like California, Florida and Texas, and the reintroduction of restrictions, has dimmed those hopes.

“There is a lot of uncertainty this time around,” said Lydia Boussour, senior U.S. economist with Oxford Economics, whose firm estimates that employment dropped last month by 280,000. “The labor market has definitely lost momentum in recent weeks.”

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Credit…Joseph Rushmore for The New York Times

With rising concerns that temporary layoffs are turning into permanent job losses, economists worry what this will mean for workers at the bottom rungs of the labor market — those with the fewest skills and the lowest pay.

Workers in low-skill industries like restaurants and bars will need retraining to be hired in sectors like manufacturing, construction or technology, said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

“It’s not easy to switch,” she said. “We are at risk of structural damage to the labor market.”

Ms. Farooqi also warned that the mounting number of school closings would make it difficult for parents — particularly mothers — to re-enter the work force, causing more lasting damage to the labor market.

For Curtis Hoover, the freelance designing gig came just in time. His regular state unemployment benefits had run out, as had the weekly $600 supplement that Congress approved to help jobless workers make it through the pandemic. He was still eligible for payments under an emergency extension of benefits for 13 weeks, but the clock was ticking on that assistance as well.

“It couldn’t have come at a better time,” said Mr. Hoover, who got his first assignment this week. “I’m very grateful that I can work in my safe environment, although it’s odd jumping in as a team member when you have never met the team face to face.”

Mr. Hoover, who is 57 and lives in Reading, Pa., lost his job as a graphic designer last year. His search for new work got off to a slow start. He had an interview the week before the shutdowns — and remembers debating whether he should shake hands at the meeting — but it went nowhere. Two other interviews were canceled in the following weeks.

Last month, as the expiration of the $600 supplement loomed, he prepared for the steep cut in income. He pared his spending, canceling Netflix, ending his gym membership, and shopping more carefully at the supermarket.

“I’m in a fortunate position because I paid off my house several years ago,” Mr. Hoover said. “If I had a mortgage, I’d be in deep trouble by now.”

Nelson D. Schwartz and Ben Casselman contributed reporting.