Research
Continuing Claims Fall Slightly as Unsteady Recovery Gets Underway
Daniel Zhao
Chief Economist at Glassdoor | Jun 11, 2020
Continuing claims for unemployment insurance (UI) fell to 21 million as the economy gradually reopens and Americans return to work. Continuing claims fell by 339,000 from 21.3 million on a seasonally adjusted basis, according to the latest figures from the Department of Labor for the week ending May 30, 2020. The modest decline in continuing claims is a sign that the economic recovery may now be underway.
Initial claims for unemployment insurance (UI) for the week ending June 6, 2020 continued their slowing descent, dropping to 1.5 million. Last week's jobs report shows the limitations of narrowly focusing on initial claims data to understand the state of the labor market. Initial claims are only one side of the coin, and don't incorporate information about rehiring of furloughed workers and incremental hiring of new workers.
The initial UI claims were a useful real-time indicator in the immediate wake of COVID-19 as the job market experienced a tidal wave of layoffs. However, we're now entering a new phase in the crisis where it's more important to watch indicators of hiring demand for signs of recovery. In other words, initial claims are now shifting from being a powerful real-time indicator to being a lagging indicator.
Even for the continuing claims data, the past may not be a good guide. Many more workers are applying for UI than in the past because of waived job search requirements, resulting in the insured unemployment rate exceeding the U-3 unemployment rate in May for the first time in their history. Additionally, continuing claims have had data issues in the past few weeks with biweekly surges in claims based on state reporting procedures rather than true changes in layoffs and hiring.
Ultimately, the decline in continuing claims affirms what we saw in last Friday's jobs report: the labor market recovery appears to be underway. However, transition points in the economy are notoriously difficult to predict and the unsteady declines over the last few weeks do not inspire confidence that the recovery is on solid ground. Continuing claims over the last few weeks appear to have at least fallen to a new plateau, but claims could stumble upward on the rocky path to recovery. While the labor market is not up and running yet, it is at least closer to standing on its own two feet.
To speak with Daniel Zhao about today’s report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.
Initial claims for unemployment insurance (UI) for the week ending June 6, 2020 continued their slowing descent, dropping to 1.5 million. Last week's jobs report shows the limitations of narrowly focusing on initial claims data to understand the state of the labor market. Initial claims are only one side of the coin, and don't incorporate information about rehiring of furloughed workers and incremental hiring of new workers.
The initial UI claims were a useful real-time indicator in the immediate wake of COVID-19 as the job market experienced a tidal wave of layoffs. However, we're now entering a new phase in the crisis where it's more important to watch indicators of hiring demand for signs of recovery. In other words, initial claims are now shifting from being a powerful real-time indicator to being a lagging indicator.
Even for the continuing claims data, the past may not be a good guide. Many more workers are applying for UI than in the past because of waived job search requirements, resulting in the insured unemployment rate exceeding the U-3 unemployment rate in May for the first time in their history. Additionally, continuing claims have had data issues in the past few weeks with biweekly surges in claims based on state reporting procedures rather than true changes in layoffs and hiring.
Ultimately, the decline in continuing claims affirms what we saw in last Friday's jobs report: the labor market recovery appears to be underway. However, transition points in the economy are notoriously difficult to predict and the unsteady declines over the last few weeks do not inspire confidence that the recovery is on solid ground. Continuing claims over the last few weeks appear to have at least fallen to a new plateau, but claims could stumble upward on the rocky path to recovery. While the labor market is not up and running yet, it is at least closer to standing on its own two feet.
To speak with Daniel Zhao about today’s report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.Daniel Zhao
Daniel Zhao is Chief Economist at Glassdoor. On Glassdoor's Economic Research team, he has conducted research using Glassdoor's unique data on a variety of topics affecting job seekers and employers ranging from the health of the job market to pay transparency to employee engagement & retention. His work has been cited in publications like the New York Times, the Harvard Business Review and more. Prior to joining the Economic Research team, he also worked on improving the user experience for Glassdoor’s consumer jobs product and mobile app. He holds a bachelor's degree in applied mathematics and economics from Harvard College.
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