More Americans applied for jobless benefits last week, but layoffs remain historically low even as more high-profile companies have announced job cuts this year.
Applications for unemployment benefits rose by 13,000 to 215,000 for the week ending Feb. 24, the Labor Department reported Thursday. Last week’s number was revised up by 1,000 to 202,000.
In total, 1.9 million Americans were collecting jobless benefits during the week that ended Feb. 17, up 45,000 from the previous week and the most since November.
Weekly unemployment claims are broadly viewed as representative of the number of U.S. layoffs in a given week. They have remained at historically low levels since the pandemic purge of millions of jobs in the spring of 2020.
The four-week average of claims, a less volatile measure, fell by 3,000 to 212,500 from the previous week.
The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March of 2022 in an effort to bring down the four-decade high inflation that took hold after the economy roared back from the COVID-19 recession of 2020. Part of the Fed’s goal was to loosen the labor market and cool wage growth, which it believes contributed to persistently high inflation.
Many economists thought the rapid rate hikes could potentially tip the country into recession, but that hasn’t happened. Jobs have remained plentiful and the economy has held up better than expected thanks to strong consumer spending.
U.S. employers delivered a stunning burst of hiring to begin 2024, adding 353,000 jobs in January in the latest sign of the economy’s continuing ability to shrug off the highest interest rates in two decades.
The unemployment rate is 3.7%, and has been below 4% for 24 straight months, the longest such streak since the 1960s.
The Labor Department issues its February jobs report on Friday.
Though layoffs remain at low levels, there has been an uptick in job cuts recently, mostly across technology and media. Google parent company Alphabet, eBay, TikTok, Snap, and Cisco Systems and the Los Angeles Times have all recently announced layoffs.
Outside of tech and media, UPS, Macy’s and Levi’s also recently cut jobs.
Despite layoffs in various industries across the United States, jobless benefits applications have remained historically low in recent months. This trend has puzzled economists and policymakers, who expected to see a surge in unemployment claims as businesses continue to struggle amid the ongoing COVID-19 pandemic.
According to the latest data from the Labor Department, initial jobless claims fell to 199,000 in the week ending October 23, marking the lowest level since November 1969. This unexpected decline comes as a surprise to many experts, who anticipated a rise in unemployment claims as companies in sectors such as hospitality, travel, and retail continue to lay off workers due to decreased consumer demand and supply chain disruptions.
One possible explanation for the low number of jobless benefits applications is the tight labor market, with many employers struggling to find qualified workers to fill open positions. This has created a competitive job market where workers have more bargaining power and are less likely to be laid off. Additionally, the federal government’s stimulus programs, such as extended unemployment benefits and direct payments to individuals, have provided a financial safety net for many Americans, reducing the need to apply for jobless benefits.
Another factor contributing to the low number of jobless benefits applications is the shift towards remote work and flexible work arrangements, which have allowed many employees to continue working despite economic uncertainties. Companies have adapted to the challenges posed by the pandemic by implementing remote work policies and investing in technology to facilitate virtual collaboration, reducing the need for layoffs.
While the low number of jobless benefits applications is a positive sign for the economy, it does not necessarily reflect the true state of the labor market. Many workers who have lost their jobs may not be eligible for unemployment benefits or may have exhausted their benefits, leading to underreporting of job losses. Additionally, the long-term impact of the pandemic on the labor market remains uncertain, with some experts warning of a potential wave of layoffs as government support programs expire and businesses face mounting financial pressures.
In conclusion, despite layoffs in various industries, jobless benefits applications in the United States remain historically low. While this trend may be attributed to a tight labor market, government stimulus programs, and the shift towards remote work, it is important to monitor the situation closely and provide support for workers who are facing financial hardships due to the ongoing pandemic.
